Posts Tagged Public company

In today’s difficult economy, it is too easy for company leaders to become over zealous in making cuts. While it is understandable – particularly in public companies where pressures to meet quarterly Wall Street expectations drive short term decision making, it is important to be aware that many companies fail as economies pull out of recession due to the fact that cuts in various departments cause companies to be unable to keep up with customer needs.

An extreme example of this phenomenon is the Sunbeam story. Wall Street celebrated the actions of “Chainsaw” Al Dunlap, in downsizing Sunbeam boosting the Sunbeam stock price by 50% when he took over in 1996. Within two years, the company was nearly bankrupt. Dunlap was fired and Sunbeam limped along until 2001 when it finally filed chapter 11.
As we learn from Jim Collins in “Good to Great”, great companies have a long term horizon and are far less likely to take dramatic measures in order to address short term needs.
It is particularly shortsighted to reduce your customer support capacity even when there is a reduction in demand. Layoffs have a demoralizing effect on the remaining employees which impacts the quality of service delivered. An alternative is to utilize the additional capacity on proactive customer experience initiatives. Taking this approach leads to greater employee engagement and as Gallup has shown – that engaged employees are more productive, profitable, safer, create stronger customer relationships, and stay longer with their company than less engaged employees.

Remember – “Don’t eat your seedcorn” – your valuable resources will be needed as the economy recovers.

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