I overheard an interesting scenario recently.
At the onset of the downturn, a professional services firm made a strategic decision to avoid layoffs. The goal was to create a competitive advantage in the recovery. This, in comparison to competitors who took the butcher knife to the meat as the economy plummeted, trimming fat and and some even cutting deep into the bone.
At the point when business demand picked up, the Non-Layoff firm would immediately be able to deploy a rapid response initiative — to swoop in, capture and service new business without delays in hiring people to staff the work. They would be billing new business as competitors would be focused on hiring to rebuild their ranks. This would deliver a significant, sustainable edge in gaining and maintaining market share. A bonus effect might also be achieved.
This would deliver a significant, sustainable edge in gaining and maintaining market share. A bonus effect might also be achieved. The Non-Layoff firm could benefit from client defections — even before recovery — as Layoff firms struggle to service business with more skeletal teams, thus triggering levels of dissatisfaction and quality issues in existing billable relationships.
Definitely a legitimate, albeit aggressive, business strategy. But, who could have predicted the depth and length of the recession?
Eighteen months later, the Non-Layoff firm, which started the recession on stronger footing than the Layoff competitors, is feeling a high level of pain. They have been carrying a higher expense load for a protracted period of time in comparison to the Layoff firms. The balance sheet has been impaired. Retired partners are concerned about pension fund payout rates. Now they are evaluating various scenarios, unfortunately, from a defensive rather than offensive position.
Which way do you weigh?
- Cull the top end. Get rid of expensive, non-producing partners who are not delivering the income needed to support the premise of the downturn plan?
- Keep the top end — to some extent. But re-structure partner compensation to reflect contribution to billings and profits — with less entitlement?
- Counsel out the career conflicted. Be creative in creating sabbaticals or part-time involvement or “of counsel” arrangements for those who might want a break from the grind but not a complete plunge into a new career path?
- Purge the lower-pay, low-utilization ranks. Why pay for the double whammy of down-time and training/development of early career low-performers?
- Assess the “stickiness” of non-partner personnel. There are high levels of unhappiness throughout many organizations during these frustrating times, but people stay put because there’s nowhere to go. Who is likely to stay or go, once business picks up?
- Engage all levels in the hierarchy in all-out new business campaign. Test the chops of young up-and-comers who might show promise when unleashed?
- Offer free assessment, pre-planning of consulting for desirable targets — with option to execute on billable basis when the upturn hits?
- Target pro bono assignments for non-profits — particularly those with clients or key targets on the Board? Or those with whom team members have a special affinity?
- Musical chairs option. Let people shadow account teams in different functional or industry areas so they can learn on the job and deliver extra value in high-opportunity sectors that can absorb/use new teams in the future?
- Temporarily assign billable team members to non-billable staff positions in HR, marketing?
- Generate new, compelling thought leadership that can utilize research teams throughout the organization for high-impact deployment in the recovery?
It will be interesting to monitor. Is it more painful to backtrack and retract a bold strategy? Or to think and act at an even higher level of out-of-the-box — and flex into a new way to navigate disruptive up-and-down times?
Welcome to the new normal.
November 18, 2010