Cost Reduction: Is Downsizing a Last Resort, or Merely the Road More Easily Traveled?


There have been some high profile layoffs in our industry over the last few weeks. And with our economy in the tank, companies experiencing slumping sales and the outlook for the rest of Q4 painted as “bleak,” it’s safe to expect more downsizing to follow.

Two weeks ago, I wrote about how to bulletproof your career in this economy by cutting costs. And don’t fear, I have many more cost-cutting/revenue-creating tips for you this week. (Forthcoming, stay tuned.)

(For my most recent column, and those cost-cutting tips, click here.)

But first I’d like to address all the C-level folks who read my column (and the rest of you, too, of course). Let me begin by making the assertion that your business is not very efficient. No matter how well you run your business, you’re still bleeding cash out the door in many places.

Here, let me help you out:

1. Your call center doesn’t convert enough prospects to customers.

2. Neither does your Web site. Most likely your Web site converts customers in the single digits.

3. Right now, someone is speaking to one of your call-center reps or is on your Web site, and is getting annoyed and/or frustrated.

4. Did you hear that? That’s the sound of clicking away and the phone hanging up.

These are just four areas I see daily that always need work. They’re usually the lowest-hanging fruit.

In short, no matter how you slice it, both your sales acumen and customer service need major work. And by only fixing those parts of your business, you’ll recoup enough revenue to probably help you through the storm.

Ask yourself the following: How much more revenue will you create by converting 1 percent more sales in your call center or Web site? How much more gross profit will you get by reducing returns by a percent? There’s plenty of stuff here to fix.

That’s why I don’t believe in downsizing, rightsizing, layoffs, cutting head count or whatever euphemism you call it in your company. To me, that’s taking the easy way out — the path of least resistance. And I see it as a sign of weakness, unless all other options for cost cutting and revenue increasing have been completely and thoroughly exhausted.

If not, you’re going to mess up the lives of some people who deeply care about their jobs and your company. And desperately need their jobs, too.

The job outlook is bleak. Many of your employees who are let go will absolutely have a hard time in this economy. Your actions could have devastating consequences on these people. Some could lose their homes, and money troubles at home are one of the leading causes of divorce.

At some point, you really need to look deeply at your company and take the hit. It’s not the market, the economy, your products and/or your employees who got you into this mess. As the leader of the ship, it’syour responsibility.

There’s Hope … Just Follow My Lead
All you have to do is look and I guarantee you’ll find ways to cut costs in your company — and do so without negatively affecting quality. In fact, if you look in the right places, you’ll likely increase quality.

I implore you to look at processes, not people. I beg you to take the high ground here, the road less traveled. Forget about head count; get past the political BS your executives tell you. Remember, they’re scared of losing their jobs, too. Get out and speak with lower-level employees. If you find one who isn’t too scared to tell you what you really need to know (translation: the unfiltered truth), then listen.

And finally, this is my challenge to you: If you cannot find where to cut costs, contact me and I’ll help you. I’ll choose two companies to do this for, pro bono (but only if you let me use the results of my help in a future column here).

Jim Gilbert is president of Gilbert Direct Marketing, a full-service catalog and direct marketing agency. His LinkedIn profile can be viewed at www.linkedin.com/in/jimwgilbert or you can post a comment here or e-mail him at jimdirect@aol.com.

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One Response

  1. Hello!
    Very Interesting post! Thank you for such interesting resource!
    PS: Sorry for my bad english, I’v just started to learn this language ;)
    See you!
    Your, Raiul Baztepo

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