Regarding 2023
Not what I predict.
After reading a some economics forecasts, I decided to offer something more reliable. Here is a link to my article on LI: https://www.linkedin.com/posts/apexdeployment_there-are-plenty-of-economic-forecasts-out-activity-7018004279063969792-_QmI?utm_source=share&utm_medium=member_desktop
Cutting Costs Versus Productivity
This question will become more common in 2023: ‘Are you being fiscally prudent, or are you just managing the dialogue about the project, budget, etc.?’
Whether you’re in retail, manufacturing, farming, mining or hospitality, productivity will soon be the new “Bottom Line”
“Take care of the pennies and the pounds will take care of themselves”
Andrew Carnegie
That quote sounds so obvious, so clearly beneficial and prudent, that it is to wonder why anyone would argue. Like “the Bottom Line”, it is an entire discussion summed up with what sounds like finality. However, common sense has been coming around to the value of productivity for many years now, and it behooves people who leap at arguments like ‘the bottom line’ to understand the difference in perspective. This question will become more common in 2023: ‘Are you being fiscally prudent, or are you just managing the dialogue about the project, budget, etc.?’ That question will be relevant because it is not cost cutting, but productivity that equals profit. The extent to which cost controls mitigate productivity, and the details supporting that discussion, will define the “bottom line” of your business.
Every restaurateur remembers a time that they or someone they know cut staff at key times to save money, while failing to anticipate sales. The sudden arrival of a full seating overwhelmed the one or two servers while the manager was busy elsewhere. The result was just a bad experience for most of those guests, who then told twelve people each. That is a significant loss in sales, to save a small investment in staff. The logic reduces to a sensitive estimation of staffing needs based on many factors, rather than a ‘rule of thumb’.
I am certain there are other readers saying to themselves that their business, or industry, is different. It is not.
I can almost hear some readers out there saying, “Yeah, yeah, everybody knows you put the right people in the right places, yada yada yada.” Yet my wife and I, with 40 years experience combined in restaurants, have watched places fail spectacularly at that very thing. It seems like something that can’t be taught, (several of those places went out of business later). Likewise, I am certain there are other readers saying to themselves that their business, or industry, is different. It is not.
Pick a jobsite at random, and you will find that cutting costs without considering productivity can be disastrous. At a pulp mill, do those safety committees seem like a waste of money? They certainly won’t after the first horrific accident and, when it is discovered that the accident or death was preventable, it won’t be socially safe to make the argument. It is the same at a sawmill, or a car factory, a mine, farm, warehouse or even a retail outlet.
In logistics, I have watched, in real time, the powerful difference between locations of the same company, where some site managers cut costs by ignoring equipment maintenance or ignoring staffing needs. One location is efficient and orderly, while another comes to rely on the compensating by over-worked staff or even by associated contractors. The resulting customer complaints and needless conflicts are at times ridiculous and chaotic. Perhaps there is no obvious causal relation to lost profits, but you will notice it on the balance sheet.
In retail I have watched the unfortunate lack of focus on the clerks, who are often hired and thrown into the job with no training. Could we not wonder what it would look like if the focus was on productivity? The simple fact is that even one or two more sales per employee per shift equals greater product turnover. That lack of attention to one of the biggest costs is like a kind of freedom to the ‘bad actors’ among your staff, supervisors, or management. Once problems like those arise, maximising productivity will feel like a pipe dream. We budget maintenance costs into most physical assets, but maintaining untrained people is somehow expected to make money?
The real question to ask- the Bottom Line- is whether there is a preference for profit over a preference for appearing to be in command of the dialogue. The dialogue won’t be valuable when the speaker seems oblivious to productivity. Productivity may look different for each different industry or business, but the manager who can’t express what they are doing to maximise it, with the stats to prove it, is the cost that needs cutting first.
How to Tell When the Conversation is Over
In my book, “Nobody Wants Princess to Succeed”, I label it the “Enron High Five”, after the blatant and notorious way that Enron’s frontline employees bragged about ripping off their clients. If you recall, these workers were actually caught on audio bragging to each other about their underhanded activities. Like the canonical “Shoeshine Boy” story of Wall Street, those employees were a sign that the end was near.
The Shoeshine Boy story of Wall Street
It’s more than just cultural dialogues and politics. It is #companyculture and #leadership.
You want some way to predict what the future will bring, but the news is all about instability and #economic troubles. At least, that’s what we hear until October, when the news is all about how much money the consumer is spending this year.
With regard to #smallbusinesses, this post on The Discourse is really about managing the talking in your shop and around it. You want to impose some professionalism and standards because allowing others free reign on the talking means you are not in control of what people know about your business. It means you are not in control of your destiny. To keep control, you don’t need to “drop the hammer’ on everyone, but just demonstrate the standard you want by how you talk about your people and your competitors.
In the corporate world, as my example in the post demonstrates, it could be far more serious. You need your managers and supervisors to be on YOUR message. It is not a ball you want everyone to run with.
People have questions like, “How do I keep control of the staff without acting like a dictator?” and, “How do I maintain quality control when I have to be out of the store?”
APEX Deployment has the answers.
When is Staff Burnout Not Staff Burnout?
What about when the troubles in your business don’t even make sense considering all the effort you have put into taking care of the staff. In those situations, it is useful to wonder what is not readily seen
What about when the troubles in your business don’t even make sense considering all the effort you have put into taking care of the staff. In those situations, it is useful to wonder what is not readily seen.
Leadership & Bad Actors
There is some truth to the dialogue about leadership on LinkedIn, because leadership is where responsibility for the business begins and ends, but every owner/manager knows that there is more to it than that. The staff respond in ways that popular dialogue often omits. Sometimes, when the boss is busy conducting business, the staff pretend that they need more from leadership, and owners/managers fall into a trap of trying to manage people who are trying not to get along. That doesn’t happen for any good reason. It is almost always one or more bad actors within the staff, and they are almost always trying to be promoted over other people. Failing that, they are sometimes just bored and causing trouble because they can.
It's easier and more realistic than it sounds. I can recount a dozen examples of office dynamics that seem designed for promoting that kind of dark virtue. Here’s one: A franchise with multiple owners and multiple locations. The competition between the owners devolves into illicit and unethical strategies, such as sabotaging other locations within the company. Astute staff who are ‘players’ can see that going on around them and, to them, it represents opportunity. In the locations suffering from that competition, bold individuals play games of their own, leading to an attrition in which good staff flee for other jobs to avoid being associated with the toxicity. It’s only shocking until you witness it over and over.
Another example: A giant nation-wide corporation contracts services locally to a medium-size provider, displacing a much smaller local provider who somehow gets employed at the national company. Strangely, in the years following, the new provider has an inordinate amount of trouble finding reliable staff, leading to constant turmoil. Only when a third party observes the work does it come out that the displaced party has been employing a consistent barrage of petty sabotage and passive aggressive omissions. It is all supported by plausible deniability until the volume of misdemeanors sum up.
We feel confident saying that good people are hard to find but, that is especially so when bad people are actively driving them away. The boss may never even notice if the bad actors are well-placed and moderately clever. One more example: A prominent retail chain, locally owned, looks and sounds like a winning place to work. They have great service and a shiny appearance. It’s just that the staff turnover is shocking. You would wonder why that is until you witness the internal ‘welcome wagon’ that is gleefully on-boarding new employees- outside of work- and blaming them coverly for all of the gossip that plagues the location. One new employee stayed for a single afternoon shift before fleeing in horror. It certainly is hard to find good people when they’re horrified by your culture.
High Turnover & Quiet Quitting
You will hear people say that, “High turnover is just the nature of the business!” But it’s not. I have worked as a GM for businesses that do budget for staff turnover, and I’m saying it is just as manageable as any other aspect of business. The ‘problems’ mentioned above are not “natural” problems. They don’t just happen because the sun came up, or because it’s Monday, or something. They are artificial, sometimes arising because of unskilled leadership and very often for ‘instrumental’ reasons- that is, because somebody has something to gain from causing trouble.
Down on the ground- in the trenches- as they say, it can be very hard to add up all of the troubles into one single problem that can be solved. There is no solution in acrimonious blame yet, these issues do represent a cost way out of proportion to the presenting problem. In fast food restaurants, for example, just controlling staff turnover is a winning strategy for success because the costs of it are so high. It is when you take a step back and look at the big picture that the costs become clear. That step back is necessary to see if the problem is a natural one or an artificial one and, that will tell you what needs to be done about it.