There is always a right way and a wrong way of doing things. Take the case of Estee Lauder for example. Recently, they announced their four-year strategic plan and outlined a set of performance goals for fiscal 2010 through to fiscal year 2013. In line with their plan however, they announced that they would be retrenching approximately 2,000 employees or 6% of their workforce.
The company also outlined the geographies where they expected growth to come from over the strategic period (60% of sales would come from outside the USA); the operating margins they will achieve by fiscal 2013 (12% to 13%) showing a step-change improvement annually starting from a low fiscal base in 2009.
In addition, the company provided a time frame for turning around under-performing brands (between 18-24 months) and the time frame for realigning their organization structure in keeping with the changing growth dynamics of the various geographies. They indicated that they would improve productivity and reduce the complexity that was hindering the execution of strategy. Furthermore, the company will invest $50 million to fuel market share growth, a better understanding of their consumers' needs and research and development for future product pipeline.
Now take the case of Pacific Brands which owns the 'Bonds' clothing range which is an icon in Australia. Recently they announced that they would be moving their manufacturing facilities off-shore to China. This would entail a loss of 1,800 jobs - 200 less than the number at Estee Lauder; but two days after making that announcement, it was revealed that their CEO (Pacific Brands CEO) recently had a $1 million salary increase and was now being paid in the region of $2 million / year.
Now, here's the thing. Two different companies with two different approaches to the market. Both cutting their workforce by +/- 2,000 and, I would guess, both CEOs probably earning around about the same salary. Yet, one company leaves you with a warm feeling of confidence whilst the other leaves you feeling ever-so-slightly angry.
One company communicated very clearly their strategic plan and even though they provided the bad news about letting so many people go, they also provided a solution and the good news that they will be investing for future growth which, one would hope would create future jobs. The other company communicated only the bad news which I am sure was an inevitable strategic decision and which their senior managers had given a lot of thought to - but they provided no solution, no 'hope' for the future, nor any indication that they had a strategy for the future. The result, you are left feeling that those people lost their jobs so that the company could some how fund the CEO's salary ( I know this isn't the case, but perception is reality).
Once, a long time ago, I had to cut 10% of my workforce. It must rate as the most difficult and gut-wrenching thing that I have ever had to do. Even though it was painful for all involved, the employees could see the pain that I was going through. They might not have like the cuts, but they supported me because they could see my pain. It is difficult for employees to empathize with a CEO who announces job cuts and then a salary increase for herself of $1 million.
So, the take out is this - in today's climate, we have to step out from under the cloak of fear that has clouded our thinking in the past with regard to providing too much information to the public that may be used by our competitors. We have to clearly communicate our strategic direction over the next 4 years. It is not enough to say that because revenues and profits are falling, people will lose their jobs. We need to show that we have a plan that accommodates the present climate but also outlines clearly what our plans are for future growth. We need to communicate our key metrics and the time frames that we will measure ourselves against. We need to take a leaf out of Estee Lauder and show that we really do know what we are doing. We need to bring 'hope'.
As the old saying goes - Don't tell me the problem, just tell me the solution.
ian
What is happenning? This seems to be the latest one up-to-date 5 June 2009...We are missing your blog!
Posted by: RO, Thailand | June 05, 2009 at 06:58 PM