Time to "Hunker Down?"

Not necessarily. Drastic cuts in travel, benefits, and training can be devastating to long-term viability and success

While watching the seemingly endless coverage over the past year of the near financial collapse and subsequently demoralized economic environment, we have heard from talking heads and even senior level executives that now is the time to "hunker down." Such phrases as "pull in your horns," "keep your head down," and "weather the storm" are also common vernacular. All such colloquialisms share one general meaning—things are tough out there, so let's dig in for the long haul, lay low, and wait this thing out. Such tortoise-like reactions to this level of distress are intuitive. Unfortunately, they may also be detrimental to the long-term health of your organization.

For example, we are aware of a firm that struggled several years ago to move from a traditional lending environment to a very proactive sales culture. Although institutionalizing such change was painful and difficult, the efforts were rewarded with a several-billion dollar increase in business. Now they fear any focus on new-business development might send the wrong message to their people.

While we understand their decision in the current milieu, we also think such a radical departure risks losing the significant momentum previously gained. So, if "hunkering down" means the avoidance or reduction of strategies, even core competencies, which have led to organizational successes, we think now is not the time to "hunker down."

Innovation vs. Fear of Failure

We have also heard decision-makers assert that in the current economic slump, it's time for managers to clamp down on their people—mistakes are simply unacceptable when things are this bad. This notion brings to mind the business where the management team was concerned about the lack of innovation—so much so that a requisite week-long "dog and pony" show with the consultant was scheduled to enhance their employees' problem-solving creativity. On the way from the airport to the corporate office, the young man providing transportation missed the exit and became noticeably distressed. He was terrified that his superiors would realize his error.

Of course, it didn't take long to discover a culture in which even insignificant blunders were long remembered. Yet we know that for creativity to flourish in the workplace, managers must provide at least some freedom to fail. And to dig ourselves out of such difficult circumstances, don't we need imagination and resourcefulness more than ever? So, if "hunkering down" means the systematic suppression of employee ingenuity, we think now is not the time to "hunker down."

We also see that some companies associate "hunkering down" with a disturbingly myopic focus on cost reduction. Again, cutting expenses during such periods is clearly an instinctive reaction. Moreover, we agree that monitoring costs in an attempt to conserve cash during a daunting economic downturn is a prudent policy. Regrettably, though, the single-mindedness on cost elimination during tough times frequently leads to shortsightedness. While organizational expenditures in travel, benefits, and training may be considered low-hanging fruit, drastic cuts in these areas can be devastating to long-term viability and success.

To make matters worse, it is often the companies that find themselves cash-strapped whose need to invest in those things is the greatest. So, if "hunkering down"" means ignoring employee retention and development—effectively trading worker morale and productivity for cost reduction at any cost—then we think now is not the time to "hunker down."

Now don't misunderstand, we are certainly not proposing we return to what many would consider business as usual. We are, however, suggesting that organizations must take advantage of these still-difficult times to make a concerted effort to use their resources efficiently and effectively. This means moving beyond a simplistic approach to budgets and broad-based cost cutting. It means investing in people and tools that promote sustained quality. It means liberating employees who are trapped in ineffective processes. It means tweaking those systems to foster continuous improvement, involving people in enrichment measures, promoting unity by sharing rewards gained by implementing new work methods. It means a complete examination of the organization to determine where, when, and how customer value is created, facilitated, and maintained. If this is your definition of "hunkering down"—YES, now would be the time.

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