How To Cut Costs Without Damaging Your Culture

Companies sometimes have to make difficult business decisions. One of my clients is a company like that. They recently needed to make major expense cuts, in the range of half a billion dollars, and this meant dozens of policy changes and lots of changes to the way that the company’s procurement policy and vendor management works. These large, systematic cuts are a big deal and have a real impact on the strength of the company, its ability to invest and compete in the future, and so they should be easy to explain.

But, when you’re a big company, there are a lot of savings in things that have a more immediate effect on your employee’s day to day lives, and these are harder to explain, or at least harder to get people to understand. These changes can indeed have a powerful impact on business results, but can also create a real ruckus, even if they make a lot of financial sense. Changes to how far you have to go when you send your work to a printer that is farther away is a small matter (and who prints things anymore anyway?), but changes to the travel policy and expensing of meals and entertainment can start a real wildfire of discontent.

When our client rolled out the changes that they had to make, they took the typical approach, explaining the rationale logically. And while logic is good, it often isn’t enough, in part because it’s not as compelling as a message that also deals with the emotions and the goals and interests of the audience in question. And so, while advising a leader at the company who was wrestling with helping his team to understand and implement these changes, we discussed how the company’s message did not touch on the impact to the company’s culture and to his individual team members.

While this might be the right and necessary decision for the company, it is always curious to me that companies don’t try harder to understand the impact on their audience (their co-workers) when decisions like this are made. They tell people what a good decision it is as if it was the only way to see the decision. The typical approach doesn’t acknowledge the various impacts of these decisions. Believe it or not, these hard decisions are an opportunity to have a real discussion about what’s important at the company, what the company values, how leadership wants people to work together. These big changes also create a valuable window that allows us to be able to see the company’s ability to grow and change.

I worked with my client, who we will call Lincoln, on a plan to discuss (yes, actually discuss) and implement the changes that his company was making. Having an actual two-way discussion about the changes, rather than a one-way presentation about them, is a brave move and one that many managers skip over, in my experience. Most of the time no one in leadership faults managers for rushing right into implementation because having a discussion of cuts and changes can often devolve into a raw emotional expression of frustration by at least one member of the team, and no one likes to deal with that kind of thing.

The thing is, ignoring people’s feelings dilutes the value and power of a team, and a great manager knows that you cannot only deal with the aspects of your team that you like and expect high performance. That’s just not how humans work. People are at their best when they feel like their boss is supportive and has high expectations. Having a supportive boss is not about getting your way all of the time, it’s about having a manager who helps you understand and adapt to the ever-changing expectations you face at most companies today.

And Lincoln is one of those great managers who’s not afraid of the reality of his new situation. He believes that the culture in his company and the function he runs is critical to their success and so we worked on translating the new rules and policies for his team in a way that would encourage discussion. Lincoln was concerned that the changes could leave his team with a sense that the company did not value the way that people connected, got to know and care about one another, and how they worked together. We created a few open-ended questions to start a conversation with his team that showed that he did care about how the team worked together. The three questions we developed as the start of this conversation were:

  • How do we want to work together and what did the opportunities the company previously provided for us do to help us work better together?
  • How well did these opportunities work?
  • How can we achieve these same outcomes, or even find better ways to work together now that there won’t be as many company-funded lunches and after hours get-togethers?

Not being afraid of having the conversations that are on everyone’s mind is an important part of showing your team you understand what their day to day work life is like, that you recognize the importance of the culture that you create together. This approach also creates a sense of confidence that you believe the challenges faced are solvable. This is a small way in which strong leadership and strong individual leaders make such an enormous difference in helping the company make important changes without leaving its employees feeling like the company doesn’t care about them. Leaders like this ensure that your company and culture are stronger, not weaker, as a result of the necessary changes you make.

John Philbin

John is a co-founder of Happy Work Spectacular Life who, if he wasn't helping people with their careers, would consider himself a ghost researcher. His claim to fame is that he is a champion race walker (he actually came in second place).

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