March, 2009

Fresh Options for Strange Times

Driving down expenses is a reality for many dealers.

By Tom Fife

The times are strange and strained in today’s market for many in our industry. I know that is not a news flash; however, let’s consider different ways of dealing with business basics during slow times. Until droves of customers are banging at the door once again, the focus for many must be on cutting costs.

There are many ways to drive down expenses without a total slash-and-burn mentality. I would like to share what some of your peers are doing around the country. While there are select markets that have sidestepped the downturn, and are actually growing, the majority are facing fierce economic challenges.

Broad-based pay cuts are being imposed by a growing number of companies big and small. Some experts say that this is a risky strategy that can sow discord in the workplace. Others prefer cost-cutting that preserves as many jobs as possible, even if it means more workers will be affected. There are no easy answers, but here are some solutions that dealers across the U.S. are using:

Reduce payroll, should be broadbased, affecting everyone from frontline employees to management.
• Freeze wages and salaries, for one year.
• Eliminate bonuses and cease matching any payments to 401(k) retirement plans.
• Mandate unpaid furloughs, or extend holiday furloughs by several days.
• Reduce overtime.
• Require workers to take vacation time in your slower months
• Require unpaid leave during the first and second quarters. We need to get through winter and spring before we can detect summer business.
• Cut hours as a team until business picks up. A shorter work week for all is a team builder, not separator.
• Boost efficiency and productivity by putting smarter procedures in place. Waste happens in good times and bad; take this opportunity to streamline your operations.
• Communicate more regarding your goals and actions taken during this tough time. The more you share the big picture with your team, the better they’ll understand the decisions you’re making.

Use layoffs as a last resort. When the customers come back (and they will come back), we need to serve them with extraordinary care to retain their business.

Yes, people will be disappointed and hardships will occur among your employees. However, salary cuts and other measures can be valuable tools as you work to save as many jobs as possible. Countless companies have seen the damage resulting from massive layoffs. That’s why smart companies are retaining as many of their people as possible, being as creative as they can be—and turning only to the blunt tool of massive layoffs as a last resort.

Most employees would rather have a scaled back job than no job at all. Everyone wins when we can delay (or avoid) the loss of the very folks who will be sorely needed as the industry rebounds. While this downturn is extreme, it’s not the first one we’ve seen—nor will it be the last. And each time, our companies come through stronger as a result.

Let your team know there is a light at the end of the tunnel. Enlist the help of your team to navigate the many options that exist in this critical test of business savvy.

I can help, just holler.

TOM FIFE is a 20-year veteran of the construction supply business and president of Unionville, Ind.-based Challenges Inc., a speaking, training and consulting firm. Seminar topics include employee motivation and retention, customer service, management skills and yard foreman skills. For additional information, call at 812.330.1640, e-mail tom@tomfife.com, or visit www.tomfife.com.