Short-Term Pain, Long-Term Gain

For almost 40 years, I’ve been working with distressed businesses to create value for stakeholders. Unfortunately, the one common theme is that at some point during its life cycle all companies will experience financial difficulties caused by our economy or by management making the wrong decisions. Some companies will experience these difficulties more than once.

It’s how the companies deal with these issues that determine whether they survive or become a statistic of another failed business. The same could be said for individuals — how we deal with adversity can determine our survival or success.

I come from a humble, poor background. We were so strapped for cash that we had to borrow money to bury my WWII veteran father in 1964. Thanks to Social Security, my sister and I received death benefits until we were 21. To make additional money, I mowed lawns at age 12, sold peanuts at football games and had a paper route. The entire family chipped in to help with finances.

Many families also implement survival strategies for the greater good of its members. Some cut out dinners in restaurants so their daughter can go to cheerleading camp. Others drive their cars for 200,000 miles so the family can live in a nicer home. One parent works a day shift while another works at night so they can always have one parent with the children and save on daycare.

We deal with short-term pain for long-term gain.

The same concept goes for the companies I work with. My job is to educate people at these failing companies and implement survival strategy. It’s a tough, stressful job because it does involve people’s lives. I know what it’s like to struggle financially and I don’t wish to take anybody’s job away.

However, generally a turnaround does involve cutting jobs, reducing pay, closing plants, changing products or product lines, and sometime firing senior management that made the wrong decisions. Companies must change direction to survive.

Just look at all of the companies throughout the years that have changed for survival — Coca Cola, GE, Home Depot, General Motors, Chrysler, banks, insurance companies, probably even your company. All of these businesses have made tough decisions for survival. Unfortunately, some don’t. What ever happened to the buggy whip and wooden wheel businesses?

Yes, it’s always tough when people lose their jobs. But I learned to view those necessary job cuts in a different way. Years ago I was driving my son Sam to school. He asked me what I was doing that day. I told him that I had a rough day ahead of me because I was going to Philadelphia to lay off 200 people and close a division of a company. He looked at me like I was an ogre and asked how the kids of those laid-off parents would be able to afford camp, get baseball gloves and enjoy candy (now with kids of his own his concerns still lie in these three areas).

I told him that by laying off 200 people and closing one plant, I was saving 600 jobs and keeping the company alive. Certainly what I had to do was terrible for some people, but it was for the greater good. If I didn’t let 200 people go today then I’d have to let 800 go next month.

The strategy worked. Less than a year later, the chain was merged into a national retail chain and jobs were restored as the footprint expanded. It was another case of short-term pain for long-term gain

Another analogy of a turnaround is that of being in an accident and going to the emergency room. The dedicated doctors and nurses sole goal is for you to survive. Hours of surgery, many stitches, amputation of extremities may be in order. Later, the patient goes to the plastic surgeon, buys a wig or obtains a prosthetic. But, we survive thanks to these dedicated folks. Short-term pain for long-term gain.

All of us individually have made decisions that involved short-term pain for long-term gain. And companies have to do the same.

Dump, Delegate or Deal: Tips on Delegation

I read a quote recently by Daniel Doctoroff, CEO of Bloomberg L.P., who said, “I either delegate something, I dump it, or I deal with it.”

In my last column, I mentioned that the problem with many CEOs is that they end up dealing with tasks they should have dumped or delegated. Many never learned how crucial delegation is to the success of their business. The simple truth is that you can never grow a successful business unless you learn to delegate.

An article on references London business school professor John Hunt who says that only 30 percent of managers think they can delegate and of those, only one in three is considered a good delegator by his subordinates. I’ll do the math for you: only one out of 10 managers know how to delegate effectively.

Here are a few tips if your delegation skills could use some refining.

Be clear about what is necessary for the success of your business

In an article I read recently on, “A Reformed Workaholic on How to Work Smarter,” author Kate Matsudaira wrote, “Take a long, hard look at your to-do list and your big-picture goals. Some of these items are critical and must be done by you, but most likely many aren’t. Ask yourself, ‘How does this grow my business?’ and be ruthless about cutting out anything that doesn’t fit.”

Don’t micromanage

Hire the right people and let them do their jobs. Being micromanaged fosters bad morale, resentment and employees feeling that they are not trusted. Employees want to feel like they “own” their work and feel trusted to get their jobs done.

Learn from the example of K.T. Keller, cited in the article “History’s 10 worst auto chiefs.” K.T. was president of Chrysler from 1935 to 1950 and put himself at the center of an organizational chart that resembled a wheel. All communication went through him and he involved himself in details of design, much to the detriment of the company. He thought cars should have roofs high enough so people could wear hats inside them, which led to unfashionable cars and declining sales.

Give employees the ability to make decisions

In addition to delegating work, also delegate responsibility for that work and the authority to make decisions regarding its completion. Your employees will feel empowered, trusted and more positive about the work environment. And guess what? They will also be more productive and the company won’t waste a lot of time sending decisions up the organizational chart that could be handled at a lower level.To get started, try these four steps from the article “Delegate now, before it’s too late.”

  1. Define and hand over the full responsibility to the identified candidate(s) as an experiment.
  2. Step back, do not interfere and observe the process for a few weeks.
  3. Iron out the kinks, pull back some tasks or give extra responsibility based on the observations of what went right or wrong during the period.
  4. Stabilize the process, get the documentation in place and set up reporting timetables and templates to get ongoing feedback on the delegated process.

Repeat as necessary, and watch your business grow.