Many businesses have had to go through the pain of downsizing and all the disruption that this entails. Strangely in many companies remaining team members rally around to ensure the business can still function. They often make their own arrangements to:-
- Combine roles
- Check each others work
- Take a “big picture view”
All this is truly great, however as business starts to pick up this can pose some serious problems. As work levels pick up the jobs which people “picked up” to make sure the company continued to operate get dropped, and this can lead to:-
- Unexpected holes in business procedures.
- Opportunities to control costs neglected.
- Lean principles and flow forgotten.
- occasional but highly important jobs neglected (for example reviewing contracts).
It is for these reasons and others that recovery does not deliver the bottom line performance that are hoped for.
I have been involved in several businesses who have gone through reductions in work force, and then suffered serious challenges when trying to ramp up again. For example:-
- A company making a highly technical product had needed to downsize dramatically and was weathering the downturn, however as the recovery started product yield dropped to below 25% even though they were making less product than before the downturn. The company had “lost” some of it’s procedures and practices and it did not even know what procedures it had lost. The recovery was achieved, but it took 6 months and involved costs that could have been avoided.
- Another company making a capital product had unfortunately to endure a number of redundancy rounds. Quality costs built rapidly and customer dissatisfaction increased dramatically. The company had weak procedures but there were a number of “glue” people who linked various operations together – these people were not identified or understood by the management and some of these people were casualties. In particular the company lost the ability to review the contracts of their customers, and also the ability to translate this into a build specification. Recovery was achieved, and although rapid progress was made it took almost to work out all the issues and return to profit.
In conclusion if a company is planning for growth it should check its operating procedures and work practices in preparation for the change if it is to maximise the benefits of growth.