The prolonged economic downturn is causing CEOs and senior executives to rethink how they do business and unfortunately solutions that may look attractive in the short term may well backfire in the long term.
Restructuring is a good idea when it’s clear that the current structure isn’t working but restructuring can also be a very dangerous strategy, particularly when it’s based on assumptions about what isn’t working and why, and what will work and why. Change based on facts rather than assumptions is always a safer and more reliable strategy but it takes time which can be frustrating to executives who are driven to act immediately. Nevertheless, it pays to look before you leap.
Work furloughs provide a means of cutting costs but they have to be reasonable to work. It may be that employees would be willing to reduce work hours by a couple of days a month to avoid layoffs; however, pulling the plug for months or years until the economy recovers really qualifies as a layoff and employees will be inclined to treat it that way.
Relaunches can breath new life into companies but the success of them depends on several factors including the economy, the effect they have on current customers, and how much more appealing they are to prospects. If you’re planning to relaunch your company make sure your new value proposition is objectively more compelling and that your customers and prospects agree with it. Otherwise, the outcome might be worse than the status quo.
If you’re going to make a major change, make sure the potential benefits and detriments have been carefully identified and contemplated from an objective point of view. Knee-jerk reactions to tough times are rarely a good idea.
The Rainmaker 