Trim the Fat, Not the Service

When times get tight, make certain your customers don't feel the pinch

How do you maintain service levels when you're headed into a recession? — Rob Chiuch, Toronto, Canada

Given that everyone from Ben Bernanke to the corner grocer is predicting a slowdown of some sort, we expected recession questions, so thanks for being the first to check in. And thanks, too, for picking service as your focus. You're on to something vital. Because no matter how bad the economy gets, your company's response to it should show up last, if at all, in its interface with customers. Instead, its response should show up first, and for as long as possible before the next upturn arrives, deep inside the organization—in its gut, where all the fat is stored.

Sure, we know what most people are thinking right now—that their businesses don't really have any fat and that cuts will go right into muscle. They're thinking: "With all the competition we've been up against in recent years, we can't get any leaner."

But you can, and you will. Because you do have fat. Indeed, virtually every company does, thanks to the past several years of sustained growth. Call it "Recovery Poundage Syndrome." Whatever; it's not new, and it's unavoidable. The challenge, as a leader, is to know where to start looking for it.

The telltale signs are myriad. A headquarters parking lot that's growing short on spaces. A company cafeteria with longer lines. We all know that head offices don't make or sell anything; they're just overhead. But in good times, staff functions tend to "put on weight," meaning more data gatherers, report writers, program analysts, and the like, often simply tallying numbers around the latest management fad.

Even R&D is not immune to excess. During growth periods, managers tend to sprinkle money on all sorts of non-essential projects that seem like good ideas at the time. With a recession looming, it's time to rigorously prioritize. Similarly, businesses also seem to accumulate consultants when the going is good. Now, we're not denigrating consultants: We've written before that they can be useful for clearly defined projects. But a fat-cutting mission calls for a close scrutiny of every contract. If your outsiders are not paying richly for themselves in added productivity and ingenuity, it may be time to say goodbye.

Boom times also tend to enhance, shall we say, the quality of company gatherings. Normally, one simple off-site retreat a year does it. With a long expansion, companies somehow find a way to go to two or more, in increasingly exotic locales. Look, we enjoy these excursions as much as you do. But before people can complain that their company is slicing muscle, such expense multipliers have to go.

To be clear, we're not saying that, down the road, there won't be cuts that hurt. Every recession takes a real and painful toll. But given the natural plumping up that goes on in long growth cycles, we'd make the case that it takes a while for companies to get all the fat out. In the meantime, leaders cannot fall back on the all-too-common approach of across-the-board cuts that trim where they shouldn't.

Finally, stay focused on your customers. You may be on a diet, but they don't need to know it.

I have just been promoted to lead five people. What is the best way to develop my own management style? — Martin Munga, Nairobi, Kenya

One tried and true approach is to test-drive a few management styles and see what works. Surely, you have a notion of how you want to lead. Use that style first, then tweak it relentlessly as you see its impact. Are your people motivated? Are your results hitting the mark?

Second, seek mentors everywhere. If you know someone inside your company or out who hires well, pick his brain every chance you get. If you see someone give a great speech, follow up to ask for advice. Consider magazines and books mentors, too, along with training courses of every sort. In short, resist the standard advice to make one person your ultimate role model. Be open to learning from everyone, everywhere—and before you know it, people will be learning from you.

Before it's here, it's on the Bloomberg Terminal.