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Value Conflicts: Do Your Customers See Slashing Your Organization's Size as Good for Them?

Mar 1, 2008
Value conflicts arise frequently in enterprises, leaving those who work in them confused about what to do next and losing effectiveness as a result. A common value conflict arises when a company chooses on-going "head-count reductions" as a key strategy for increased earnings and faster corporate growth.

The message that the employees may infer from this behavior is that the company is going down the tubes, any improvement in company financial results is going to come from extra work by employees for no more pay, the remaining employees may lose their own jobs next, no one is valued by the organization, and employees should leave if they can find a better offer. Employees who are high performers the organization wants to keep spend their time looking for new jobs, leaving for better ones, or worrying about their futures.

In the meantime, the organization's customers often receive the message that this supplier feels that they, the customers, could be served equally well with fewer people, that many of the key supplier employees they work with now are going to be unavailable to help them in the future, and that the supplier may focus its attention on growing in some other area. Naturally, many customers start looking for new suppliers.

A vicious cycle develops. With less business, the company finds it has too many employees, so it soon becomes time to pursue faster earnings growth through more downsizing. And so it goes. If you think this scenario is overblown, look at the history of some companies that downsized themselves virtually out of business.

Wang Laboratories was a high-flying company that offered the first word processing equipment through harnessing the potential of modern electronics. The irresistible force Wang faced was that people wanted multipurpose computers (for word and data processing) that sat on desktops and were cheap and flexible.

Wang wanted to sell proprietary equipment that was single purpose. The company's sales began to falter when personal computers and competing open software programs for word processing began to appear on the market. Wang's wind sock was blowing in the wrong direction, but Wang kept flying into the gale anyway.

Wang eventually shifted its focus to become a software company, but only after many thousands had lost their jobs. Constant downsizing to pursue earnings growth for the company created an environment in which the critical software development teams experienced enormous voluntary turnover based on the company's chosen direction.

The result was that critical software projects were always way behind schedule. Without that software, the company had little future. Few felt as if they were valued, so the company lost its ability to compete. During the company's critical juncture, Boston-area employers reported getting resumes in the same week from as many as five different former heads of Wang's software development activities.

What Wang should have done was have realized sooner the implications of, or reacted more quickly and effectively to, the personal computer. The growth strategy then could have been a combination of providing personal computers and open-system software for word processing and other applications.

In fact, Wang made some half-hearted attempts as a manufacturer that were unsuccessful in this direction. But the organization's leadership did not believe that success in this rapidly growing marketplace had to be based on using the talents of all its people to aid such a transition.

Employees and customers could have been energized by such a changed direction, based on a clear organizational value of serving both customer and employee needs in the best possible way. The value conflict in pursuing earnings improvement through continual downsizing killed that opportunity.
About the Author
Donald Mitchell is an author of seven books including Adventures of an Optimist, The 2,000 Percent Squared Solution, The 2,000 Percent Solution, The 2,000 Percent Solution Workbook, The Irresistible Growth Enterprise, and The Ultimate Competitive Advantage. Read about creating breakthroughs through 2,000 percent solutions and receive tips by e-mail by registering for free at

http://www.2000percentsolution.com .
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