Company Austerity

While working in the Mediterranean region this week I have enjoyed the international news. Sky news, BBC even RT gave me an escape from the U.S. networks 'junk' that fills our programming which range from self absorbed Hollywood "stars", sex and programing of non-reality-reality shows..

One of the big issues followed closely by all in the region is the austerity programs which EU countries are engaging in order to "set things right" and regain financial sanity once again. From a political stand point, the UK, Greece, Germany and others are trying to get their systems where we were (elimination of socialized health care to a privatized system, higher retirement ages etc.), while the Obama administration is trying to drag us to where they are now. Watching our administration operate is disgusting. I admire the guts of the leaders in UK, Germany, and France who are making the tough decisions which may not be all that popular but absolutely necessary.

However, that is not the purpose of my blog today. For many years I have worked to get companies to focus on two primary things. It is my desire that every employee in each organization I work be consumed with these thoughts.

1.) An unrelenting focus on the CUSTOMER. Not just satisfying them but as Seth Godin says "making fans!"

2.) A constant and consistent COST awareness and knowing the difference between error cost (EC) and cost for improvement (COI.)

Accomplishing number one is much easier than the second one. Why? There are many reasons but here's the top 3.

1.) Lack of basic understanding of finance.
We have given over the 'thinking" of money to accountants. Our employees are much smarter than we give them credit for and will help us find money if we will engage them in the process. Our employees don't know because we have not taught them. We have not taught them because it's hard work and (possibly) might take away our leverage in "fooling" them about the financial health of the company. Not only is this unhealthy for the bottom line not to engage them, it also creates suspicion about management efforts to cook the books.

2.) Lack of imagination among accountants and those responsible for the finance of the business.
The standard answer for some accounting types is to automatically say NO to anything that cost money. Many have not seriously considered the true calculation of Cost versus Investment. There are true costs for doing things wrong and the costs to make improvements. It is hard work digging out the difference and making the tough decisions necessary. The best way to make sure nothing goes wrong is do nothing. And "just say no" to spending is the easiest way, but not necessarily the wisest.

3.) The practice of keeping people around who do not add value.
The fact is that most organizations have people sitting in lots of offices or in jobs doing little but still drawing a salary, vacation pay, holidays and other benefits, without contributing or adding value. I see this in almost every organization I work with and always think about how ridiculous this is. Especially in the midst of economic survival conditions. Oh, I know these are people who have been with the firm for awhile and we have gotten use to their presence. They are nice people who come in every day, read, get a few cups of coffee, answer emails and visit with others in the office. BUT... how much work do they actually do in a weeks time that moves the ball down the field? These folks have become "fixed" cost and are never viewed as money being lost.

There is more to say, but let me conclude by saying while there are countries making the hard decisions to survive, I wonder why more business leaders in business don't take a stand and put in place the Company Austerity programs that will position them for not only survival, but financial growth for the global future.

One other thing. Thanks Cyprus and OEB for a great week of work!! You are doing a lot of things right!