Good Housekeeping

You may have heard that three Hyatt Hotels in the Boston area terminated 100 housekeepers as a cost cutting measure to offset a decline in revenues. In light of the massive job losses all around the country this wouldn’t seem like much of a news item. But, how Hyatt terminated the housekeepers has resulted in a hailstorm of protest reported by the Boston Globe, The Wall Street Journal, National Public Radio and all the major networks. It was reported that the housekeepers were asked to train some new workers who would be filling in during vacations. The housekeepers discovered on August 31st that they were all being replaced that day by the same employees that they had trained. The trainees were employees of a Georgia company, Hospitality Staffing Solutions. These employees will earn about half of what the housekeepers were earning. So, in one swift move, Hyatt succeeded in reducing some costs, creating a public relations debacle and losing the trust of its remaining employees. Not so good.

Meanwhile, other hotels in the area have taken a different approach in response to declining revenues. Earlier this year one hotel ended its contract with the company that provided its security and night janitorial service and replaced them with hotel workers from other departments who might have otherwise been laid off.

Over the last year many of my clients have faced similar if not worse revenue declines. I talk with many business owners and thought I’d share a couple of stories how two companies dealt with their issues. Although they’re in different industries, they have similar values and take them seriously. Their values guide them through very difficult situations and help them make the right decisions.

The first example is from a restaurant company that began taking action over a year ago in anticipation of a slow economic recovery. In November of 2008 the executive team developed a plan that has resulted in an overhead reduction of $800,000. This included departmental staff reductions, eliminating some benefits and reducing executive salaries 10%. One of the members of the executive team told me, “Our goal was to do as much as possible without impacting our field operations team. We communicated these steps to the field by holding a series of meetings with all of our General Managers and providing them with the complete picture so they would understand what steps we were taking and why we were taking them.”

Despite this action, revenues continued to decline to the point that the initial savings were not enough. What to do? Having fostered a culture of transparency, the executive team called a town hall meeting. “Midway through 2009, we realized that we would need to trim additional costs. We also realized that we had reduced overhead as much as we could and we now needed to impact the field team. We scheduled a General Manager off-site meeting to pull them into the solution. We communicated the impact of our earlier actions, where we NOW stood financially, where we needed to go and, several cost savings ideas. We then let them discuss alternatives among themselves. The next day, as part of a breakout session with our executive team, the General Managers provided their suggestions. We then asked each GM to force rank his or her top three actions. One week later, after we had time to tally the results, we conducted a series of Webinars to share with them the final outcome. They had identified over $900,000 in savings and taken ownership of the decision".

Each year this company conducts an employee survey to gain feedback on how it’s doing as an employer. This year’s survey was completed after the round of cost cutting initiatives. The company surprisingly had some of its best survey results ever. One of the General Managers stated, “It’s great to be able to face upcoming tough times and changes that need to be made for the company to stay afloat. Thanks for being proactive.”

The second example is from a manufacturing company with 185 employees that produces machined parts for the automotive industry. As you can imagine, this company has been hard hit. At the beginning of 2009, revenues were off 40%. Faced with this challenge the CEO and executive team considered its options; massive layoffs, reduced hours across the board, wage cuts, to name a few. They decided on the following: 1) terminate 25 temporary workers, 2) terminate 20 workers whose jobs were no longer needed due to loss of particular business segment, 3) offer 10 employees early retirement, 4) offer furloughs of 4 to 12 weeks to employees on a volunteer basis (15 employees took furloughs), 5) close the plant one week each month from January through August.

The CEO held meetings with all employees letting them know the severity of the problem facing the company as well as the course of action. Individual meetings were held with impacted employees. Both management and hourly employees were affected and shared the pain equally.

Closing the plant one week per month allowed employees to collect unemployment for the week that they didn’t work and they continued to receive their insurance benefits. Throughout the 8 month period, the CEO and executive team conducted plant-wide meetings to keep everyone abreast of the health of the business. This action helped the company survive the most difficult period in its 59 year history. Business began to rebound in August and in September the plant operated for the entire month. The company also hired 8 temporary employees.

I hope these two examples show you that your business can not only survive these difficult times but also thrive in the future. Ultimately it’s the owner who must make the difficult decisions that keep the business on course. By involving everyone in the solution, the weight of the decision is borne equally and the best is made of a bad situation. You’ll live to fight another day. It is good housekeeping.

Letting Go

Teddy Roosevelt once said that “the best executive is the one who has sense enough to pick good men to do what he wants done, and self-restraint enough to keep from meddling with them while they do it.”

There are two parts to this challenge. The first is finding and selecting people who fit your company and who have the capacity to learn, to grow and to do their jobs well. The second is staying connected with your people so they are clear on expectations and held accountable for results. If you don’t do both of these things well you’ll never build an effective team, one capable of taking your organization where you want it to go.

If you find yourself feeling guilty for taking time off from work or not enjoying a family vacation because you’re worrying about your business, you have to question whether you’ve picked the right people and why you’re not comfortable with them doing what you’re paying them to do. Does your anxiety stem from not trusting your judgment about the leadership team you’ve selected or from not trusting that they’ll do what you want them to do, or both?

Assuming that you’ve picked the right people (ones who share your values) and that they’re in the right seats (have the capacity to do their jobs well) the next step is to let go. But in letting go, you’re not abdicating your leadership role. You’re creating a framework for your leadership team to stay connected and engaged.

To keep people connected, establish a meeting pulse for your leadership team. You must meet weekly and follow a specific agenda that lasts no longer than 90 minutes. Stay focused. The first half of the meeting is to report, review and create your issues list. Webster’s defines an issue as “a point, matter or question to be disputed or decided.” The second half of the meeting is to prioritize, identify, discuss and solve the key issues. The solutions lead to action items that get completed within the next 1 to 2 weeks.

To keep people engaged, establish quarterly priorities for your company (3 to 7, not 37) and for each member of the leadership team (again, less is more - 2 to 3 is a good start). Choose these priorities carefully. Ask yourself, “Do these quarterly priorities help me achieve my goals for the year? Are they tied to my company’s financial performance?” You should also ensure that each priority is SMART – specific, measurable, achievable, realistic and timely. And, ask each person to establish a process by which they’ll achieve their key priority. You’ll find that no person is an island and that they’ll need each other’s support to complete their priority.

With the right people in the right seats connected and engaged you’re ready to let go. By letting go, you’re not stepping away you’re actually empowering your people to step up, to take responsibility and hold each other accountable to do what they say they will do. Exercise self-restraint while staying connected and engaged.

Now, go enjoy some time off. Your team will keep things running smoothly while you’re gone and you’ll have fewer issues to deal with upon your return.

Why Cyclists Shave Their Legs

A life-long passion of mine is cycling. I started riding seriously about 30 years ago when I got tired of running. I’ve averaged about 3,000 miles per year ever since. My non-cycling friends enjoy ribbing me about the lycra shorts, flashy jerseys and in particular about the fact that I shave my legs. One friend once asked “How far up the leg do you shave?” That would be like asking a Highlander what’s under his kilt. Anyway, you get the picture.

The leg shaving started right after seeing the movie “Breaking Away”, and it has nothing to do with aerodynamics but more to do with hygiene. I tell my cyclephobe friends that in the event of a spill it’s almost impossible to escape without some amount of road rash. The higher the speed the more of a “strawberry” you have to show for the experience. So, it’s much easier to clean, sterilize and bandage the wounds on a shaven leg than on one that could be harvested for two blankets and a throw rug.

Through all my race and road miles I’ve been fortunate to have never had a serious mishap. Call it luck or being alert, I just count my blessings. Well, my luck (and alertness) ran out last night as I had my first bang-up in a long time and fortunately I’m able to write about it. I was riding my usual route and was less than two miles from home when I made a right hand turn onto a road that was being repaved. And, surprise, surprise … the road bed was strewn with fresh gravel and tar. A car was approaching the intersection as I was turning into it and, with nowhere to turn, I went down. It’s amazing how banged up you can get at a relatively low speed. As always, I was wearing a helmet but I neglected to wear chainmail.

The incident left me with scrapes, bruises and a sore shoulder but, other than that I’m no worse for wear. And, fortunately the clean up was made easier by the silky-smooth legs. So, in this case an ounce of prevention (a dab of shaving cream) really is worth a pound of cure. I expect to be out again this evening and will be more alert for sand and gravel and, I’m getting another can of shaving cream.