Technology Benchmark: Business 101
August 26, 2009
As I have traveled cross country in the past couple of weeks, from Los Angeles to New England, I have continued to hear doom and gloom about layoffs, cut paychecks, reduced benefits and cut hours. Although the effect of the recession is staggering in its depth, breadth and sadness, I want to proclaim that it is good news in the long run-not necessarily for those individuals affected, but for the economy and the companies involved.
Hear me out on this. The whole reason for the cutbacks is not based on cruelty. It is for survival-survival of the organizations making the cuts. Firms have to regain a healthy business status before they can get back to the business of making money, investing and reinvesting in themselves, growing the company, and taking back proprietary advantages that have been lost.
I spoke to a senior manager of an engineering firm last week who told me that his firm had closed offices, laid off people and made cutbacks for those remaining. They were now at a point where if they laid off any more people, management felt they wouldn’t be able to get the work they do have out the door. This became the crux of the subject matter. Think about it: If the company could increase the productivity of its staff in getting the work out the door, it might find that it was actually still overstaffed!
That’s right, overstaffed. The firm hasn’t been very aggressive in providing training to its staff, and it is using technologies that are 10 years old. A company using outdated software combined with a lack of training surely needs more staff than its well trained, self-invested competitor. Training 10 people to take full advantage of the technologies they have can provide a 10 to 20 percent increase in productivity, which would mean that the firm is still 10 to 20 percent overstaffed.
Does this mean that the firm would then have to lay off an additional one or two people? Perhaps. But what is more likely to happen is that the increased capabilities of the staff will lead to new opportunities for work. And if additional layoffs do occur, at least these highly trained individuals will have an easier time finding new employment.
As I look at the marketplace, I see three prevalent management philosophies.
The first is one of continuous reinvestment even in this downturn. Companies that hold this philosophy are proactive and are strengthening their firms by acquiring competitors and bringing ancillary capabilities on board. They are investing in new technologies and training their staffs.
The second focuses on extending current capabilities into new markets. For the firms in this group, resources are scarce, but management is looking for the next source of revenue. These firms understand that land development is likely to stay down for the foreseeable future, and they are adding GIS, data prep for AMG, BIM technologies, infrastructure work or a structural component to their land development markets. The firms in this group often overlap with those in the first group in their willingness to invest in the necessary training.
The third philosophy is just trying to maintain the status quo. Firms following this philosophy are reactive and making cuts simply to make payroll. They are living paycheck to paycheck. Individuals who follow this philosophy might be good engineers and surveyors, but they are poor business people. They have only made it this far because land development was so plentiful and so profitable that even a poorly run and inefficient firm was able to do well in that overheated economy.
What group are you in? If you find yourself in the third group, consider taking a business course where you can learn how to invest in yourself.
What do you think? Please post your comments below.