Making bold business decisions: This is how you do it together
We are in economically exceptional times. What seemed like a stable environment, last month, is now suddenly in doubt. Uncertain times and situations like these require far-reaching decisions. But, how do you deal with such a situation and ensure that the decisions you make are supported by everyone?
There are two ways to act when there are radical decisions to be made – you can make the decision for people, or you can make the decision with people.
Decisions that you make together will automatically generate more empathy and be supported by everyone. Having a difficult conversation with each other is easier in these times, because you don’t have to explain to people that the company is currently in heavy weather. But, to make decisions together, it is essential for everyone to think about the same facts and to have the same knowledge.
For that to happen, you need to do the following two things:
Make Numbers Transparent
Without transparency, your employees will lack the fundamental understanding on which they can base their decisions upon. It is, therefore, very important to give your employees insight into the current financial situation.
Make Numbers Understandable
Making numbers transparent is one thing, but it’s more important to keep it simple and clear. Be sure to show the key numbers that are understandable to everyone, without making your employees suffer through lengthy spreadsheets or feel like they need to take a crash course in finance.
Once everyone is on the same wavelength, it is important to show the calculations (or, to determine them together) that clarify which cuts will have to be made in the near future. Of course, the first step is to provide insight into which cuts may have already been made and which schemes you are eligible for (such as, short-time working, credit relaxations and tax deferral).
Now that you have,
- Clarified the figures involved
- Discussed the budget cuts that were made from a business perspective, and,
- Understood the governmental regulations that need to be followed,
it’s time to pose these questions to your employees:
- What are you willing to do?
- In what way do you want to contribute so that we get through the first critical phase, survive this situation and can pay everyone at least a part of their salaries?
Case Study: Semco During The Brazilian Crisis
When Brazil entered a major economic crisis in 1990, and many companies went bankrupt, Semco employees collectively volunteered 20% of their salaries (on average) while the management took a salary cut of 40%. In return, employees got an increase in the share of profit and were given the right to approve other expenses. Besides, voluntarily accepting salary cuts, employees were encouraged to take on multiple roles. By performing multiple roles, during the crisis, people gained deeper knowledge of the entire operation and offered more holistic suggestions for business improvements. Reforms, at the time, resulted in a 65% reduction in inventory, a marked reduction in product delivery times and a product failure rate that fell below 1%. As the business environment improved, Semco’s revenues and profitability improved dramatically.
How SSI International Acts In The Current Situation
Since we practice what we preach, SSI International has also implemented the above recommendations to handle the current situation. Thanks to clear communication channels and great transparency, we decided early on that we would offer up a part of our salary to bolster our financial reserves. We’re confident that we can now handle any possibly uncertain period, that is yet to come, and that all of us will be financially compensated once better times arrive.
Continue To Build A Solid Foundation
We are currently living in economically uncertain times. By remaining transparent and involving your employees, you will see that confidence grows and, with it, the commitment to work together. These are also the moments when the bonds become stronger and the best new ideas emerge. To put things in perspective, we are in a situation where we can (re)build a beautiful, new and solid base together. So, we want you to realize that the current challenges can turn into great new opportunities in the future.
Interested to learn more about this topic?
During a webinar we discussed how to make bold business decisions and how you can do this as a team. You can find a recording of the webinar here.
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