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When the Pain Gets Too Great, It’s Already Too Late

To try to minimize our own pain and suffering during these economic doldrums, let’s see if we can’t learn something from two of the Big
Box boys and their recent experiences:

1. Home Depot announced the closure of their 34, high-end EXPO stores after a 17 year run. The company press release read: “The EXPO business has not performed well financially and is not expected to anytime soon. Even during the recent housing boom, it was not a strong business.”
   
   
2. Two years ago, the sages at Circuit City decided their best, most successful and experienced salespeople were earning too much and that the company could save a lot of money by letting them go. After 60 years in business and an impressive 567 stores, Circuit City announced it will “seek bankruptcy court approval to begin the process to liquidate the assets of the company.”

What these two stories have in common is that while the health of these particular organizations hadn’t looked good for some time, they both ignored the symptoms and the pain until the only remedy left was risky, major surgery. Home Depot lost an arm in the process, but will be able to carry on without it. Circuit City died on the operating table.

The take away is that smart business people in every industry must constantly monitor non productive and/or unprofitable stores, products, services and employees. Once identified, then you can decide whether to cut your losses immediately or launch a concerted campaign of specific duration to turn things around. No improvement at the end of six months? Time to pull the plug on the profit drain.

This advice meets the most reluctance when the underperformer is an employee. It seems most of us are hard-wired to avoid confrontation or are too hard headed to admit we made a hiring mistake. This doesn’t do the underperforming employee or the organization a lick of good. (I can’t tell you how many stories I know about people who stuck with a job they hated for the paycheck, who finally got fired, thought it was the end of the world, and then found the perfect career or job niche.) Do yourself and your employee a favor and cut the cord as soon as possible.

Imagine this… You’ve just jumped off a sinking ship into the only life raft and, to make matters worse, it has a hole in it. Your employees are treading water all around you. Who do you save first? It’s got to be the ones who are strong enough to either help you pull others in or help bail out the boat while you do. company wide layoffs are sad, gut wrenching affairs at best, but it is an opportunity to make sure the people on board are the ones who deliver the greatest return-on-investment.

What these stories do not have in common is how these two employers value their employees. In the struggle to complete recovery, Home Depot is:…“also initiating a salary freeze among all officers. But, it will continue to offer merit increases to non-officer associates, as well as earned bonuses and the Company’s existing 401k matching contribution for all associates, including officers. The Company will offer severance, earned bonuses and other benefits to all impacted associates. We’re very fortunate that the soundness of our company lets us live our value of taking care of our people, even in this time of unprecedented economic hardship. These changes will make us a stronger company and will allow us to continue to grow associate employment over the long term to benefit our customers.”

With core values like these, I predict a full recovery.

I cannot fathom the convoluted reasoning (if any) that led Circuit City to believe they could “save money” by releasing their top producers. Talk about cutting off your nose to spite your face! And I hope this cautionary tale keeps anyone else from making the same mistake. There are plenty of other ways to cut costs. There is always fat that can be trimmed somewhere and you need to look at every line item expense, but what you cannot do is compromise the lifeblood of your business – your best people.

Most everyone is losing sleep over the floundering economy, but, good times or bad, make it a practice to identify and cull your non productive and/or unprofitable stores, products, services and employees before the pain is too great and you find it’s too late.

Editorial is provided by Mel Kleiman, Certified Speaking Professional. To learn more about having Mel speak to your group go to www.HireTough.com. To join KleimanHR Exchange the only community dedicated to people who manage hourly employees go to www.melkleiman.com.