Tuesday, June 25, 2024

NEW INC. MAGAZINE COLUMN FROM HOWARD TULLMAN

 

Is This the Summer of Rightsizing?

Let's face it: offices are half empty and many workers aren't really working. Use these four rules to help you make the difficult decision about who stays on the team. 

 

EXPERT OPINION BY HOWARD TULLMAN, GENERAL MANAGING PARTNER, G2T3V AND CHICAGO HIGH TECH INVESTORS @HOWARDTULLMAN1

JUN 23, 2024

 

June could be a very tough month for thousands of entrepreneurs and small business CEOs. Especially for those building putative "growth" companies that haven't resumed their post-pandemic growth yet. The world is going on vacation and they're stuck dealing with those sad revenue numbers. And they're lonely. The data are very clear that we're running, at best, at about 50% of prior occupancy rates in terms of downtown and central business district office spaces. It's also evident that things aren't likely to get much better any time soon -- and certainly not over the summer. Everyone I know is trying to shrink their physical plant and fixed costs.

But that's only half of the biggest problem facing new business builders today.

Despite what you may have read, workers who are allegedly working from home simply aren't working. It's not just a matter of the four-day work week; it's more like four hours of work a day, if you're lucky, and plenty of time during the week for everything else. Leisure travel started exploding months ago and continues to grow as the kids get out of school and the family wants to hit the road. Because they've been told that you can work virtually from anywhere, we're seeing folks saying -- with a straight face-- that they're working virtually from everywhere. Maybe, but they're actually not getting anything much done. Kids, classes, carpools, cooking, big time binging, the occasional brewski, and plenty of chat all take precedence over productivity when you're sitting at home.

And since no one was foolish enough in the last year or two to admit to, or take any "technical" vacation time, companies and HR staffs are now drowning in requests for big clumps of accumulated and fully paid time off just when revenues are likely to be slowing down and buyers across the board are taking their own beach and boogie breaks. Nothing is a bigger bellyache for a boss than signing off on full weekly payrolls when the office is barely half full and employees across the business are on summer sojourns. This situation is already starting to lead to layoff discussions and other attempts to reduce headcounts and cut costs.

If you're not there yet in your business, give it a few more weeks and you'll be part of the payroll posse as well.

These "talks" are inevitable, but the outcomes and the resultant impact on the key players, the people you want and need to retain, and the company's morale and culture are all going to depend on how well you handle the conversations. Many of us have been there repeatedly over the years and the lessons we've painfully learned haven't changed. The faces may be different, but the hard facts are always the same. It's always about getting more done, with fewer resources, in less time. But it's also about how well you tell the story and how quickly you execute the plan. Here are a few tips.

1.     Tell the Truth from Day One

These are never easy conversations and they're even harder to pull off over Zoom or email. Being honest and straightforward is the only way to be fair to the employees involved and to make sure that you are sending the right message to the rest of the company. How you treat the people leaving has an impact on everyone's attitude because they're all wondering and worrying about whether they might be the next to go and how they can expect to be treated. This is why it's also important to make the deepest cuts at the outset. Don't play the salami game - it prolongs the pain and makes everyone miserable.

2.     Tell the Same Story Inside and Outside Your Business

If you try to paint a rosy picture for the press and the outside world while you're firing people and making other internal changes, you're just kidding yourself and demonstrating to your own team that you can't really be trusted. Sadly, with social media and every mope thinking they're the newest media star, there are no secrets these days. Trying to put lipstick on a pig is a bad strategy and a waste of time. Tell one consistent story to the world.

3.     Tell Everyone Why the Actions are Necessary.

The good news is that misery loves company and all you have to do is look around to see hundreds of other businesses that have also over-hired and staffed up for an expected boom that has yet to begin. Most likely, you're in the same boat and made similar bets. Now's the time to take the critical corrective actions, not because the business premise is bad, or the product isn't ready, but because timing is always the great unknown. It's just as bad to be too early as it is to be too late. Don't bother telling people it's not their fault-- it doesn't help.

4.     Don't Make Promises or Commitments About the Future

There's an unfortunate tendency in these tricky times to make promises you can't expect to keep. First of all, no one knows what the timing is likely to be in terms of the return to pre-pandemic levels of demand or how quickly that will positively impact on your own company's circumstances. Putting these folks into some kind of "let's see" limbo is a really bad thing to do -- for you and them. Second, especially with the rapid changes taking place in terms of new technologies, it's virtually impossible to predict whether their skill sets and talents will be the right fit for your needs when you start hiring again. And finally, to be perfectly honest (at least with yourself, if not them), there's a reason they didn't make the "keeper" cut in the first place. I never fired a manager too soon. Most likely, not a lot will have changed for the better with them in the interim and committing to bring them back on "when the time is right" is simply worse.

Bottom line: Now's the time for action and to right size your firm. Do it honestly and fairly. Don't try to do it piecemeal; don't do it slowly; and don't hang on to people that you need to let go. It's not the employees you fire that make you miserable, it's the ones that you should but don't.