This is the fourth in a series expanding on my friend Ross Sturleys’ Ten Things to Cut in a Recession Before You Cut Your Marketing (presented at last month’s CIMCIG conference and in recent Construction News marketing e-newsletters).
Number four: “Cut executive costs”
Ross argues that some businesses are over-blessed with expensive directors. He suggests that getting rid of one director will save the equivalent of five junior staff (not sure where that ratio comes from, but it has the ring of truth), though they can be expensive to retire or pay off (remember: “just because someone’s been around a long time, it doesn’t make them inherently valuable”).
So what can you do? Ask yourself: what value do they provide (is it what they know, is it who they know, or is it simply because of who they are)? How do you manage the succession of the old guard?
- Capture what they know. As previously outlined (see Number three: cut administration), businesses should be routinely capturing the knowledge gathered by all their staff (directors or not). Intranets, wikis and extranets can help collate the ‘life histories’ of key projects, explaining who did what and when, and providing all the associated documents and drawings. Project insights and key lessons learned are thus no longer ‘trapped’ inside an individual’s head – they are downloadable and capable of assimilation by other people in the organisation.
- Capture who they know. While compulsory competitive tendering has meant some aspects of the ‘Old Boy Network’ have pretty much disappeared over the past 20 years, the importance of interpersonal relationships should not be under-estimated. Word-of-mouth recommendation is still an incredibly powerful marketing device, and previous experience of working with someone can be a great aid to collaboration. All the more reason, therefore, for staff to network energetically both internally and externally, and for senior staff in particular to think about succession-planning. Online networks such as LinkedIn, Plaxo or Xing can play a part in documenting those relationships (as can some of the social networks run by professional institutions – assuming, of course, that you are happy to network in a professional ‘silo’), but it helps if such networks also lead to face-to-face meetings.
- Find someone else to do what they do – more cheaply. Are directors doing tasks that are unnecessary, or could easily be undertaken by a junior member of staff, or even outsourced? (Again, see Number three: cut administration.)
- Be radical: ignore who they are/were, and go ‘virtual’. If you are from Generation Y (see post), then you may have little respect for silos or conventional command and control hierarchies. ‘So what if somebody leaves, I’ve got contacts.’ Yes, you could build a virtual organisation based upon people you know with the same (or better) skills and contacts than the person you’re replacing. This is a notion I started promoting about four years ago, when writing my book on construction collaboration technologies. I argued that:
… some AEC professionals have already opted to work as freelances or as independent consultants, undertaking a succession of contracts of their own choice instead of working for an employer. Particularly in the consultancy sector, just as small firms might combine with others with complementary skills and/or resources, so experienced individual professionals could combine with other independent practitioners to compete for work and then form part of the multi-disciplinary team appointed to undertake the project. Such teams would have a more direct relationship with the customer and this may help customers procuring a succession of projects achieve greater continuity of people…. Being formed of a group of independent ‘e-lances’ or ‘tech-nomads’, the operational overheads of such a multi-disciplinary consortium are also likely to be lower, making their services more cost-effective – an advantage likely to be underlined if the team also uses low-cost collaboration technology to manage and share its data.
What other strategies could help you downsize your executive costs? Let me know.
Coming soon: Number five: “Cut power”