The trend in government and business these days is to cut workers across the board with little notice and shared strategy. It’s done in the name of improving efficiency. But mindlessly cutting workers doesn’t achieve this goal. Instead, it leaves fewer workers scrambling to provide services and products to your customers, who get worse service.
On the other hand, cutting work processes improves efficiency. You need your current workers to cut work processes, implement leaner processes, and integrate Artificial Intelligence (AI).
I can provide you with many business stories to illustrate this point. In the interest of time, I will share one story from Honeywell Space Systems. The business in the late 1990s/2000s suffered from a dismal 67 percent on-time new-product delivery rate and needed to get at least 95 percent on-time deliveries to satisfy and keep its current customers. Rather than mindlessly laying off workers, we asked each department from engineering to human resources to figure out how it could dramatically improve efficiency and save jobs.
In engineering, it became a race to shorten new product development lead times without hurting quality or product performance. They looked at their processes from when they began with the customer to when they ended with the customer. Where were the long lead times, repeated testing, and failures? They used Lean Sigma tools and found that many times bureaucracy got in their way or some of their initial testing was shortsighted and did not include a complete and affordable battery of tests, causing repeat testing and needless delays. Working with their customers, they were able to streamline approvals. By making changes to their development processes, they shortened the time for product testing, and implemented new digital tools to improve and accelerate test-failure analysis.
Human resources looked at its staffing processes to cut the time-to-hire employees by half. HR used the same tools engineering used, Lean Sigma. Working with the hiring supervisors, the recruiters found they could create hiring standards for each job family (not each individual job) and clarify the time required for each step of the hiring process. Getting excellent new hires trained and on the job weeks in advance meant it was possible to beat the original customer milestones.
Other departments, such as IT, also looked at how to save time, which reduced IT system downtime for maintenance. Manufacturing implemented just-in-time quality techniques to streamline the time to build satellite components.
Every department was required to track its progress using “one-time delivery maps” and metrics to get to the ultimate business goal, 95 percent on-time deliveries. It became a competition to have the most engaging and colorful maps, with some departments adopting cartoon themes, such as the Flintstones. At quarterly, all-employee meetings the business president provided an update, including an update on an all-employee incentive. For every quarter, the business achieved 95 percent or better on-time deliveries, employees received a cash bonus.
We know from our research at InnovationOne, LLC, that when executive leaders share with employees their strategic obstacles and opportunities, ask employees to get involved, and have a process to prototype and
What you don’t want is the top-down leadership exhibited in the 1990s by organizations such as General Electric. At that time, it would acquire a company and cut its workforce by 30 percent to pay for the purchase. I know this from Allied Signal’s acquisition of Honeywell in 2000 (Allied Signal was managed like GE) and GE’s failed acquisition of the Allied-Signal-Honeywell merger two years later. After maybe the first year of cost savings, the business unraveled as productivity and innovation floundered and the best employees left. This practice, bad acquisitions, hanging onto GE Capital, and a murky accounting system led to the fall of the 1990s style GE.
GE also practiced a 10-percent workforce reduction each year (even in good economic times) believing that it improved efficiency to cut the bottom 10 percent of the workforce and hire better workers. After about two years, it didn’t work. In this slash-and-burn culture, employees gave up on suggesting new innovations for fear of angering a boss and ending up on the “10-percent cut list.” Employees also stopped collaborating and began finger-pointing when things went wrong, in order to protect their jobs. It also led to huge legal fees from wrongful termination lawsuits. (To learn more about not doing “forced ranking” and cutting ten percent per year, read this: https://victorhrconsultant.com/2015/05/18/forced-ranking-the-good-the-bad-the-ugly-and-what-to-do-about-it/
Improving efficiency is commendable and continually required in a business world of constant change. Mindlessly cutting workers doesn’t work. Instead, share your strategies with your workforce, ask them to get involved, provide them with analysis tools and AI—and get out of their way.
About Victor
Victor Assad is the CEO of Victor Assad Strategic Human Resources Consulting and Managing Partner of InnovationOne, LLC. He works with organizations to transform HR and recruiting, implement remote work, and develop extraordinary leaders, teams, and innovation cultures. He is the author of the highly acclaimed book, Hack Recruiting: The Best of Empirical Research, Method and Process, and Digitization. He is quoted in business journals such as The Wall Street Journal, Workforce Management, and CEO Magazine. Victor has partnered with The Conference Board the Us Department of Energy on innovation research. Subscribe to his weekly blogs at http://www.VictorHRConsultant.com