The Cost of Restructuring
A badly-done restructuring
can, instead of restoring a business to health, bring it to its knees even
faster.
A business exists to provide a product or service that
people want where and when they want at a price they are prepared to pay. To this end, the business employs fixed
assets (buildings, machinery, equipment), current assets (debtors, stocks,
cash), current liabilities (trade and other creditors), debt and share
capital. The final asset is, of course,
people.
These days, the focus on costs results in things being seen
very one-dimensionally as costs to be reduced or eliminated. “If you only have
a hammer, you tend to see every problem as a nail” as Abraham Maslow said.
At any one time, a business’ people, assets, liabilities and
processes will be arranged and balanced in a certain way to deliver products or
services to a certain standard. When you
remove one element (e.g. reduce staff), you alter the balance.
One familiar example is reducing costs by offshoring customer call
centres. We hear frequent complaints
about being unable to understand operators in another country, poor language
skills, attitudes and problem-solving abilities. Result: increased customer complaints (which cost more to resolve) and a shift to another service provider.
If a process has been set up with a certain number
of inputs in mind, it will have to be changed to cope with the
new environment. As many are discovering
to their cost, you can’t change one side of the equation without changing the
other.
One way of avoiding potentially disastrous scenarios is to
review the business process before
making changes and/or cuts. If the
changes proposed will result in a poorer quality product or service, then the
question to be asked is “Will this result in a reduction in income, reputation
or both, and can we afford it?” Get it wrong and customers will switch, unless they are prepared to accept a poorer
product/service in exchange for the same/a lower price.
This all pre-supposes that a business understands what its
customers value, i.e. what its Unique Selling Proposition (USP) is.
Those deciding where to make the cuts may not
have this information.
If a business
has
to cut costs or risk going out of business, it needs to decide which cuts will
result in the least “fallout” and then communicate to all stakeholders
why it is making those cuts.
Generally, few will dispute the need to
ensure the continuing health of a business that is providing a product or
service that people consider important.
This is even truer in sectors where competition is intense.
In the latter case, you either reduce consumer
choice by going out of business or maintain it by cutting back.
If a business doesn’t know what its target market is, and
what it values and is prepared to pay for, how can it make money? If relocating a call centre offshore results
in increased dissatisfaction (and therefore reduced need), this will reduce
revenues as word of the poor service or product quality spreads. As a result of this, one UK bank has relocated its call centre back to the UK.
I have spent more than half my life working in different world markets from the most developed to “emerging” economies. With more than 20 years in the world financial services industry running different service, operations and lending businesses, I started my own Performance Management Consultancy and work with individuals, small businesses, charities, quoted companies and academic institutions across the world. An international speaker, trainer, author and fund-raiser, I can be contacted by email . My website provides a full picture of my portfolio of services.
Labels: Crisis Management, Customer Care, Financial, Productivity, Selling, Strategy
Secure Your Business - Effective Business Continuity Planning
A number of the businesses with whom I deal have some kind of contingency
plan for when something goes wrong, but a larger number don’t. Faced by an ever-faster moving world where
information is available almost instantaneously and where there is either more
than plenty of competition or potential for hugely negative publicity and/or
litigation, all businesses need to be aware of what events or hazards could
seriously impact their ability to do business.
No one business will require the same solution as another,
so each Business Continuity Plan will be unique. The good news is that there’s a relatively
simple framework that you can follow. It
doesn’t matter in which order you address the points below, but address them
you should. Here are some of the issues
to consider:
Location: Where
is your business located and how easy would it be for staff, suppliers and
emergency services to get there in the event of (say) floods or other
disasters? How do raw materials get
there?
Product: What’s
your product or service? What could
interfere with its production? Suppose
your main supplier of raw materials can’t deliver? What if your distributor can’t take goods
from the premises?
Premises: What
would you do if your premises suddenly became unavailable for whatever
reason? How long could you operate
without them? Do you need a
“contingency” or “backup” office and/or warehouse?
People: Who are
the critical members of your team who keep things going? Who are the ones who must be functioning as
soon as possible in the event of a problem?
(Hint: it’s not always who you think it is).
Power: Most
businesses need electricity, gas, water to function. Suppose your utilities are cut off?
Technology: How
reliant is your business on “the computer”?
What happens if “the computer crashes”, or premises aren’t available?
Finance: How will
you make/receive payments if you can’t get to your premises? How do you track which bills are becoming due
and which debts owed to you are due?
Communications:
How will you communicate with staff, suppliers, buyers, regulatory authorities,
banks, lawyers, accountants, etc? Who
needs to know if there’s a problem? What
will their role be?
Records/Information:
What records and/or information are critical to your ability to do
business? How do you secure this?
Environment:
Could a problem at your premises affect the local environment?
There will be other issues that you will need to think about
for your own business, but the list above covers the main areas of concern to
most businesses.
If there’s a disaster, how long will it take you to recover
to “Business As Usual” (BAU)? What
intermediate stages will you go through?
You can only really know the answers to this by TESTING your plan and
processes. The first time that they
tested their plans, one of my clients found out that their data recovery
processes and plans weren’t effective.
They were able to address this with their external IT contractor, rather
than find out “the hard way” that they had no information when it really
mattered.
Although you might be able to “wing it” when disaster
strikes, the likelihood is reducing for many businesses, so it pays to invest
time in planning. If you need help, talk to me.
I have spent more than half my life working in different world markets from the most developed to “emerging” economies. With more than 20 years in the world financial services industry running different service, operations and lending businesses, I started my own Performance Management Consultancy and work with individuals, small businesses, charities, quoted companies and academic institutions across the world. An international speaker, trainer, author and fund-raiser, I can be contacted by email . My website provides a full picture of my portfolio of services. Labels: Crisis Management, Customer Care, Risk
Experience Counts
There seems to be a “bias” against hiring older workers,
however much employers deny that this is the case. Youth seems to be the dominant factor
(especially as it’s often cheaper to hire a youngster). If you have a younger person at the head of a
company (or, as is more often the case, sifting through CVs and candidates at
interview), it’s possible that their attitudes may interfere in the selection
process.
Older people may be put lower down the order in the
interviewing pile for a number of reasons:
Cost: “they’ll be more expensive” (maybe
in the case of minimum wage jobs), but ask what they expect;
Attitude: “you can’t teach an old dog new tricks” (myth
– age and experience often find a way around a problem);
Health: “they’ll probably need/take more
sick leave” (myth);
Longevity: “they won’t be with us long before they
retire” (does it matter if they add real value?
What are turnover rates amongst your younger staff?);
Threat: “they may have more experience than
I do and I don’t want to be shown up” (insecurity).
All of the above are prejudices which are not always founded
on fact. So what are the benefits of
hiring an older worker?
·
Maturity and experience. An older worker is used to working and will
have previous experience that you can use without providing additional training. They may well give more value for money in
less time.
·
With the increasing ageing of the population,
they understand how other older customers
think and what they may need. I
watched a young assistant try to sell my mother a new mobile – he hadn’t a clue
as to what might suit her, and tried to sell her something she didn’t want.
·
Some jobs or roles may actually suit an older
person better (see above). I’ve spoken
to a number of recruiters who have told me that their clients are looking for
people with “gravitas” (credibility).
·
Older people may
suit the requirements of particular jobs more than younger ones. Whilst they may not suit “heavy lifting”
jobs, they may be ideally suited for, say, customer service.
·
Younger
people have different aspirations and may be more inclined to move jobs
after a short period of time, whereas older ones show more “loyalty”.
·
Younger
recruits may need more training, meaning that the needs of business and
customers take second place.
·
Older employees with prior relevant experience can
“mentor” younger ones, allowing business
owners to concentrate on growing and running the business.
Of course, where there are roles where a younger worker is
more suitable, but youth and inexperience are, sadly, not ideal requirements
for every job…
I have spent more than half my life working in different world markets from the most developed to “emerging” economies. With more than 20 years in the world financial services industry running different service, operations and lending businesses, I started my own Performance Management Consultancy and work with individuals, small businesses, charities, quoted companies and academic institutions across the world. An international speaker, trainer, author and fund-raiser, I can be contacted by email . My website provides a full picture of my portfolio of services.
Labels: Customer Care, Productivity, Selling, Strategy
