In my over 15 years of experience consulting with organizations from 3-150,000 people, I thought I had seen it all. Start-ups growing exponentially only to shed all but 5 resources as the bubble began to burst in 2000, large organizations building a cadre of resources only to have them benched for months at a time and then layoff that strong bench without those highly skilled individuals ever seeing action or as I personally experiences, arriving to my first day of work to find the CEO locking the doors for good. But the following truly takes the proverbial cake... I recently witnessed the most ill-informed way of conducting a layoff I have seen in my meanderings through the Silicon Valley, Boston Tech area, and global outsourcing arenas. The following lay-off process was obviously engineered and implemented without consideration of key communications strategy, resourcing options, business continuity planning or long-term client engagement and retention. Employees of recently purchased Company X arrived to work one day in July to find red, yellow or green slip of paper on their desks. Red indicated immediate termination, yellow indicated that they would be changed to contractor status for an undefined period and green meant that they were safe. This occurred without any warning, explanation or advanced communication of any type. The result was complete and utter chaos. The now former employees of Company X and those "transitioned" to contractor status were left feeling betrayed. Those that were "safe" wondered how long before they received a red or yellow slip themselves and quickly updated their resumes. From a change management and communications perspective, my business core consulting capability, I have to ask, "What was Company Y (the purchaser of Company X) thinking?"
Who thought that this would in fact be an appropriate way in which to deliver this news?
Did they not consider the backlash or repercussions of this approach?
Were they thinking about it at all?
Did the person responsible for this think, "Wow, I know how we can do this quickly and easily!"
Or was there some type of rationale for conducting layoffs in this way?
Unfortunately or fortunately I will never know their reasoning for taking this approach since I nor my company were involved in this tragic event but my curiosity in like a plague. I think about it constantly and felt compelled to write about it.
Before I close with a lesson learned, the repercussions of their actions were immediate and severe. Client files and data were lost and resources with solid client relationships on high profile and critical projects had no time to transition or hand-off.
Lesson Learned:
In the end the people of Company X suffered and I am very sorry for what they have been through, a lay-off is horrible enough to experience without the added insult of this method of delivery but as I have experienced personally, there is solace in the fact that a lay-off is really a business decision and that it no longer carries the stigma in the job market it once did, and that job market is good right now.
The other victim of this ill-formed plan is the customer. The customers (I have heard and seen first hand) have suffered as a result, projects have been delayed, project management has suffered or become non-existent and that sends a message. Company Y was short-sided in their approach and ultimately did not think about the business impact of their actions. I predict that the clients formerly of Company X and now unwillingly of Company Y will not remain clients for long and word has gotten out that Company Y is not someone you want to do business with. Perhaps Company Y will blame slow sales or declining market share on the economy or some other unforeseen variable but in reality it will be their own actions that ultimately caused this.
Wednesday, August 29, 2007
Friday, August 24, 2007
Grief to Earnings Ratio
I can remember a time not long ago when the term "grief to earnings ratio" was met with confused looks and very rarely mediocre curiosity. Now it seems that it is as common as P&L or Revenue.
Interestingly enough, the term "Grief to Earnings" has now become an actual metric within our company.
We have created an online calculator that is accessible to all in the company (but mostly used just by me) that helps me to determine whether a potential target, new or existing client is worth targeting, engaging with or walking away from.
The calculator works as follows:
This proved most valuable when I was discussing our most current problem client with my business partner. The conversation went something like this:
Alex: Ann, we need to talk our "Current Client", our contract is nearing the end, we have more work that needs to be completed but they will not agree to an increase in scope. After the last year with this client, I think it might be time to walk-away.
Ann: Well they have given us quite a bit of business and really the issue is with the team and not the client in general.
Alex: Yes agreed, but we have to look at the cost and grief to earnings (g to E) ratio before agreeing to do any additional work with them.
Ann: So what is the G to E ratio for this client?
Alex: 5= High grief and no earnings.
Ann: What is considered no earnings on this client account?
Alex: We are over-run by approximately 35K dollars that they either have no agreed to pay, have yet to approve and is potential additional amount needed to finish the current project.
Ann: Let's get out!
The moral to this story is that regardless of how you calculate or evaluate your business it all comes back to Profit and Loss, no client is worth keeping if it is costing you to do business with them which in the above case it was. Sometimes for personal or ethical reasons we need more than the bottom line to make our case in our own heads but really in convincing others it is all about the money.
If I had had a different conversation with Ann that did not involve the ethics, feelings or grief aspects that the G to E tries to calculate then the conversation would have happened as such:
Alex: Ann Client X is costing us money to do business with them I think we should end our relationship as soon as the current project ends.
Ann: How much is it costing?
Alex: $35K this year alone.
Ann: No more work with Client X after this project!
Interestingly enough, the term "Grief to Earnings" has now become an actual metric within our company.
We have created an online calculator that is accessible to all in the company (but mostly used just by me) that helps me to determine whether a potential target, new or existing client is worth targeting, engaging with or walking away from.
The calculator works as follows:
- Enter in the average project budget.
- Enter in the average project cost to our company.
- Enter in a rating of difficulty to manage (1-10 based on the primary project manager's assessment of time, project overruns, client difficulty, etc.)
- Results: a G to E rating from 1 to 5
- Scale: 1=High earnings with little to no grief, 2=High earnings ration with some but reasonable grief, 3= Equal earnings to grief (i.e. we really earn our money), 4= High grief to little earnings, 5= High grief to no earnings
This proved most valuable when I was discussing our most current problem client with my business partner. The conversation went something like this:
Alex: Ann, we need to talk our "Current Client", our contract is nearing the end, we have more work that needs to be completed but they will not agree to an increase in scope. After the last year with this client, I think it might be time to walk-away.
Ann: Well they have given us quite a bit of business and really the issue is with the team and not the client in general.
Alex: Yes agreed, but we have to look at the cost and grief to earnings (g to E) ratio before agreeing to do any additional work with them.
Ann: So what is the G to E ratio for this client?
Alex: 5= High grief and no earnings.
Ann: What is considered no earnings on this client account?
Alex: We are over-run by approximately 35K dollars that they either have no agreed to pay, have yet to approve and is potential additional amount needed to finish the current project.
Ann: Let's get out!
The moral to this story is that regardless of how you calculate or evaluate your business it all comes back to Profit and Loss, no client is worth keeping if it is costing you to do business with them which in the above case it was. Sometimes for personal or ethical reasons we need more than the bottom line to make our case in our own heads but really in convincing others it is all about the money.
If I had had a different conversation with Ann that did not involve the ethics, feelings or grief aspects that the G to E tries to calculate then the conversation would have happened as such:
Alex: Ann Client X is costing us money to do business with them I think we should end our relationship as soon as the current project ends.
Ann: How much is it costing?
Alex: $35K this year alone.
Ann: No more work with Client X after this project!
Fun Client Relationships
One of my favorite clients, a healthcare services company, is my favorite because of many things: they value my company's experience, they appreciate the time and energy that goes into the services we provide, they are professional and reasonable and of less importance but very critical, we have a good time working with them.
I often tell them that they are my favorite or at least one of my favorites. I wish more of my client relationships were this jovial.
The fun factor. Some of our weekly status meetings, although very productive, actionable and necessary have digressed to the following unrelated topics (please remember that we are delivering organizational change management):
- Vista Support Group Meeting: your applications not hard at work for you.
- Discussion of the Microsoft applications that are NOT compatible with Vista
- Project Management: let's see how much paper the other vendor can waste while NOT communicating any type of schedule information.
- Sanity Assessment: whether the sanity of one person can be judged by another person whose sanity might be questionable.
- Conference Calling: what's in a name, when asked by my client what conference calling service I used and whether he could get the name, I responded "promise you won't laugh, Budget Conferencing" (the actual name of the company) and he responded, "well I know you are cheap that is why I asked for the name of the company you used."
The list could go on....
The other primary reason why this is a fun client relationship is that we have a mutual respect for each other and that is not something we take for granted. Our client asks for something (typically well within scope but sometimes a little outside), we deliver on time or communicate the reasons why it won't be delivered on time, and they like our work product. Without that, we wouldn't have the never ending list of things we need to discuss at the end of our meetings that have nothing to do with our engagement.
I often tell them that they are my favorite or at least one of my favorites. I wish more of my client relationships were this jovial.
The fun factor. Some of our weekly status meetings, although very productive, actionable and necessary have digressed to the following unrelated topics (please remember that we are delivering organizational change management):
- Vista Support Group Meeting: your applications not hard at work for you.
- Discussion of the Microsoft applications that are NOT compatible with Vista
- Project Management: let's see how much paper the other vendor can waste while NOT communicating any type of schedule information.
- Sanity Assessment: whether the sanity of one person can be judged by another person whose sanity might be questionable.
- Conference Calling: what's in a name, when asked by my client what conference calling service I used and whether he could get the name, I responded "promise you won't laugh, Budget Conferencing" (the actual name of the company) and he responded, "well I know you are cheap that is why I asked for the name of the company you used."
The list could go on....
The other primary reason why this is a fun client relationship is that we have a mutual respect for each other and that is not something we take for granted. Our client asks for something (typically well within scope but sometimes a little outside), we deliver on time or communicate the reasons why it won't be delivered on time, and they like our work product. Without that, we wouldn't have the never ending list of things we need to discuss at the end of our meetings that have nothing to do with our engagement.
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