An Open Letter to CEOs Who Are Considering Layoffs to Cut Costs

If “misery loves company,” as the saying goes, you’re in luck. Hundreds of companies, just like yours, are scrambling to survive these difficult economic times. Most CEOs will default to “cost-cutting,” which generally translates into layoffs, salary reductions, reduction or suspension of benefits, etc. Sound familiar?

These solutions are not inherently evil (as the press may choose to paint them), but they do pose a real challenge:

• Cut too little … and your organization loses market share and potentially “dies” in the near-term
• Cut too much … and your organization loses market share and potentially “dies” in the long-term

The hard-dollar cost/benefit analysis associated with cost-cutting alternatives is fairly clear. However, the predictable soft-dollar costs associated with the negative operational impact these alternatives can have (i.e., on productivity, organizational trust, corporate reputation, etc.) are often overlooked and, unfortunately, tend to be far more significant and insidious.

Having been involved in successful corporate turnarounds for over 30 years, I can confidently say that the greatest challenge lies within knowing how to surgically cut costs while optimizing near and long-term organizational performance. Regrettably, tradition decision-making processes are ridiculously inadequate in this regard.

For example: layoffs are traditionally driven by hitting a “hard” financial number; i.e., you need to reduce costs by “X” dollars (a number that usually has a lot of zeroes after the first digit). Someone within the organization does a “rough cut” of how many employees this will impact, and you announce it to the press to “soften the blow.” It’s always a round number (i.e., “Citibank will eliminate 53,000 jobs,” “Dell will cut 8,900 worker,” etc.), which means that their CEOs really haven’t got a clue about how many people will need to be severed and, more importantly, who they will be. As a result, the huge risk associated with any layoff is picking the wrong people. So, how are they traditionally picked?

Generally speaking, the selection occurs in one of two ways: (1) Managers select “known” poor performers, add a few employees they personally dislike, and guess at the rest, perhaps using some criteria like length of service, subjective evaluations, etc. to make their decisions seem less arbitrary; or (2) companies construct an “early/voluntary retirement” program, which costs more in severance but mitigates some of the organizational stress otherwise associate with layoffs. The reality is that your company loses good employees under either scenario and your remaining employees, having witnessed the randomness of the staff reductions, exhibit a diminished level of focus, commitment and productivity. This deadly combination ultimately weakens your firm’s operating performance.

There is an alternative; one that is so powerful that it enticed me to reevaluate how I consult with firms. Some associates of mine developed a series of workshops that significantly improve the performance of participants, both personally and professionally, in a way that inures to the benefit of the organizations they serve. These workshops have been consolidated into what has become known as the EnCompass Program™ (www.EnCompassResources.us).

The EnCompass Program™ helps individuals gain clarity of purpose and potential and provides them with the tools to effect immediate and sustainable change. As a result, many participants gain a renewed sense of commitment to their careers, passion for what they do, and the confidence to unleash their creativity and best efforts in a way that dramatically increases productivity. Others are confronted with the reality that they are not committed to their present career and should pursue their passions elsewhere. This revelation results in their self-selecting “out” of your organization, which results in no severance exposure and a collateral benefit of removing their negative influence from the rest of the employee-base. The business results are stunning.

This is not sales “puffery.” The impact of the EnCompass Program™ has been measured against standard psychological tests that are extremely well recognized within the context of organizational development and clinical psychology, and its performance exceeds anything of which I am aware (http://www.encompassresources.us/results.html). Participants routinely enjoy a higher level of performance, improved communication, and much greater satisfaction with respect to their personal and professional lives. Friends, family members and co-workers also note an almost immediate positive change in interacting with these individuals.

With the challenges you face today, you can’t afford to be wrong. In the past, when I was in your position, I had to rely on business instincts and a bit of luck to go along with the limited information that was available. Today, there’s a new tool that can help you execute the most important element of your job; i.e., how to attract and retain the very best employees to optimize business performance. If you do that right, you effectively will insulate your company from economic downturns and position it to capitalize more quickly when the economy rebounds. You will enjoy the competitive advantage of having the right employees in place all the time, regardless of economic conditions.

As a former CEO, I always thought it was my responsibility to provide the best possible work environment for my employees and the best possible results for my shareholders. If you share that philosophy, I seriously encourage you to explore the EnCompass Program™.

2009 © Dr. Terry O’Hara. All Rights Reserved.

“These are the times that try men’s souls.”

Thomas Paine wrote those words in The Crisis; a collection of articles he created in 1776. In that very same year and on this very day (January 10th), he wrote a 50-page, politically-charged pamphlet entitled, Common Sense.

Given that the quote still seems particularly applicable, it would seem that the title of his pamphlet, Common Sense, has yet to catch on in Washington, D.C. We’ve already witnessed a $2 million acceptance ceremony; Senators and Congressmen have continued the tradition of hosting parties (at taxpayers’ expense) to kick off their new terms, and we are about to foot the bill for a $10 million inauguration … all in the middle of an economic crisis.

When do you think we will begin to elect individuals who exhibit true leadership … and, most of all, “common sense?”


2009 © Dr. Terry O’Hara. All Rights Reserved.

Top Ten New Year’s Resolutions

Have you ever wondered what the Top Ten New Year’s Resolutions are? Well, according to a recent survey, here they are:

1. Spend More Time with Friends and Family
2. Improve Your Fitness
3. Lose Weight
4. Quit Smoking
5. Enjoy Life More
6. Quit Drinking
7. Get Out of Debt
8. Learn Something New
9. Help Others
10. Get Organized

Now, these are all nice resolutions, but did you know that 22% of people give up on their resolution in the first week? Actually, more than half of us will have abandoned our “resolutions” by the end of March. I guess we’re just not very “resolute.”

Perhaps it’s because we tend to make several resolutions, and in the end, they overwhelm us. Since I’m a professional consultant, I thought I’d help “resolve” this dilemma once and for all.

Let’s look at the Top Ten Resolutions to see how we might consolidate them to make them more achievable.

The first one, “Spend More Time with Friends and Family,” seems reasonable enough, so I think we should try to keep it.

The second and third resolutions, “Improve Your Fitness” and “Lose Weight” both make sense as well. However, they seem somewhat similar. If you “Improve Your Fitness,” you’re probably going to “Lose Weight,” so let’s just combined them into “Improve Your Fitness.” Already, we’re making progress!

Numbers 4 and 6 also seem to be a bit similar: “Quit Smoking” and “Quit Drinking.” If these two make your Top Ten Resolutions, you’re probably not very “fit” either. If we just merge these into “Improve Your Fitness,” we’ve already eliminated three resolutions.

The seventh resolution, “Get Out of Debt,” seems apropos for the times. We may not even need to take this one off the list if we can get Congress to agree to include us in the bailout. But wait a minute! The next one is “Learn Something New.” You know, if we learned not to spend more than we can afford, we wouldn’t need to “Get Out of Debt” because we wouldn’t BE in debt. Great! Let’s just go with “Learn Something New,” and now were down to six.

Numbers 9 and 10 have some synergy as well. If we “Get Organized,” we’ll have more time to “Help Others.” Since resolving to “Help Others” seems to have the greater potential between the two, let’s just stay with “Help Others” and assume we’ll “Get Organized” to do it.

That leaves us with five resolutions, which is certainly more “doable” than ten. We’ve got:

1. “Spend More Time with Friends and Family”
2. “Improve Your Fitness”
3. “Learn Something New”
4. “Help Others” … and one we haven’t talked about …
5. “Enjoy Life More.”

Now, that’s what I call progress!

What else can we do?

Well, it seems to me that if you “Spend More Time with Friends and Family,” you’re undoubtedly going to have more opportunities to “Help Others.” Similarly, if you “Improve Your Fitness,” you can live longer … and if you live longer, you’ve got more time to “Learn Something New.” But, hey … you’ve also got more time to “Spend with Friends and Family” and to “Help Others.” So, maybe “being fit” is the real key. That leaves with just two!

I guess it’s time to look at the last one: “Enjoy Life More.” That one seems a bit nebulous to me. What does it mean? Well, for one, we’d probably “Enjoy Life More” if we spent more time with our friends and families. I guess the same would be true if we improved our fitness, lost some weight, quit smoking (if we smoked in the first place), and quit drinking (if drinking was threatening our health or the health of others). Come to think of it, we’d probably “Enjoy Life More” if we weren’t in debt and were able to learn something new. The same could be said if we found a way to consistently help others and to organize our own lives in a way that would relieve some of our stress.

So there you have it. You really don’t have to try to stick with ten resolutions, when you only have to concentrate on one. So, as we enter into the New Year, I offer this sage advice: commit to only one resolution.

“Enjoy Life More!


2009 (c) Dr. Terry O'Hara. All Rights Reserved.