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If you want to improve your financial results during the economic downturn, involve your employees in deciding how to cut expenses & generate revenue
April 2009 |
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A Story
As an experiment, one group of people was given a lottery ticket with the number already printed on it. Another group was given a blank ticket and asked to write a number of their own choosing on it. The researchers conducting the experiment then offered to buy the tickets from the participants -- right before the winning number was to be announced. They found that those who chose their own number were not as willing to give up their tickets. The researchers had to offer about 5 times more to that group than to those who had received the pre-generated ticket numbers.
The lesson:
When people choose for themselves,
they are more committed to the outcome.
(This story is told by Carolyn Aiken and Scott Keller in their April 2009 article, "The irrational side of change management", McKinsey Quarterly)
Let's Compare
In these times of economic stress, organizations are seeking ways to reduce expenses (and to open up new revenue sources). Let's compare two approaches to achieving this goal.
Scenario #1: The managers of the division sat behind closed doors for several days reworking the budget. They made some very tough decisions. Before distributing the new budget to their employees, the leaders conducted town hall meetings to explain their rationale. While everyone understood why the cuts needed to be made, there was still resistance to the decisions. Employees gathered after work to complain. "I can't believe they cut that program," said one disgruntled employee. "After all the company has invested in it, it was just like throwing money down the drain." "Yes," said another. "And I'm the one who has to explain to our best clients why the commitments we made to them are not going to happen now." Morale (and productivity) plummeted for several months following the decisions.
Scenario #2: When budget cuts were inevitable, the managers of the organization convened employees into small groups. They explained the goal -- to cut 20% from the budget. They asked each group to come up with 5 cost-cutting ideas. Then a trained facilitator led the group through a process to brainstorm, prioritize and then present the ideas. When management reviewed the ideas generated by the groups, they were impressed by the quality of the analysis (and were surprised to see that some groups had thrown in a few revenue-generation ideas as well.) When management convened a town hall meeting later that month to present the revised budget, people saw their own ideas in the final product. The result: increased buy-in to the required changes. Instead of blaming management for the decision, they took accountability for making the ideas work and for helping ease client concerns.
Some Principles to Remember
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The best businesses are those in which people perform their roles with a business mindset
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Dispensable employees just think about doing the task or the job. They take it for granted that they will get paid whether the business performs or not. This is what causes businesses to fail
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Indispensable employees think about how to do the task, do the job AND take accountability for the success of the business at large
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During periods of financial stress, don't focus entirely on reducing costs. Getting employees' ideas about potential new sources of revenue is equally important -- and is more likely to fuel positive motivation
Reflection
- How can you involve members of your team in thinking with a business mindset? How can you educate employees on the relationship between their actions and the organization's ability to stay vital, keep jobs and pay salaries and benefits?
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How can you capture the knowledge and expertise of front-line employees in making tough business decisions? How can you channel their creative ideas into viable business opportunities?
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How can you create opportunities for people to be involved in decisions that affect them -- to increase commitment to the outcome?
Take Action
To learn more about a new Forward Focus program that facilitates employee involvement in cost-cutting & revenue-generating decisions, contact Beth Williams at bwilliams@forwardfocusinc.com.
Forward Focus Webinar Series
How the Brain Works
The first Forward Focus webinar on brain research and what it can teach us about communicating and leading change was a huge success.
As one attendee wrote,
"How the Brain Works webinar is full of information that is useful to anyone who desires to communicate more effectively with groups or individuals in situations where one is communicating new knowledge, negotiating, or trying to change behavior in some way. Material on how we as humans process, store, retrieve, and use information in our brains is presented in a logical sequence that not only allows the participant to discover new ways of effectively presenting information to others, but also to understand and improve one's own learning capability. The presentation is clear, well documented, and moves along at a good pace. This webinar leaves the participant with many ideas to implement in future presentations and interactions with others. "
We plan to offer the 4-webinar series again in June. For more information, please contact Margaret Maat at mmaat@forwardfocusinc.com.
Copyright 2009 Forward Focus
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