Economy forecast

Today I read the article "Truth Will Out" at Slow Leadership to which I fully agree.

The article talks about lay-offs - on the way home I heard again in the radio of a big company planning to lay-off many employees.

I hardly think that this is a good general practice. Although I understand that economy has grown enormous during the last years so it seems clear that there must be coming a regression also to reduce everything to "normal". Big companies are like dinosaurs, they get slow and sedated in their movements. But when there is crisis the first thing is that they cut off their legs.

I have seen several companies where staff has been reduced and then they had to buy external know-how or invest more money in long searches to find again matching employees (certainly paying less and hence getting less quality).

From the article mentioned above:
Losing market share is typically a sign of one of three things: your product costs too much, your quality is too low, or your offering is out-of-date.
The problem: Your product costs too much (in relation to it's quality).
The reason: The company has grown too much and the administration overhead is bigger than the amount of workers actually creating the product or providing the service; production runs in outdated manners.
The solution: Optimizing the organization (GTD) and be creative for new ways to provide the same quality or service.

The problem: Your quality is too low.
The reason: Usually because product costs are reduced by using lesser and cheaper employees and cheaper ingredients for the product which means employees do have more stress getting less money being less motivated. What a wonder that the outcome is of low quality...
The solution: Quality costs money as do good, motivated workers do. Sorry, that's the truth.

The problem: The offering is out-of-date.
The reason: Poor flexibility and missing investment in research and development. In bad years budget for research and development is often cut down as well as investment for new infrastructure. Oh wonder, that then productivity is reduced and others perform better on the market.
The solution: Especially in bad times research and development is the most important thing to do - as well as investment into new technologies. In addition to that companies need the courage not following the masses and instead putting effort in doing something different.

Instead of being innovative and showing a serious interest in their customers the companies (their management) do
  • throw away every piece of value (employees, real estates or other properties) they have (in some sort of panic),
  • reduce their offers,
  • reduce quality and service,
  • charge their customers for every finger they move,
  • follow the masses.
So there is no wonder that the spiral of bad economy continues...

Related posts: Masked rot, Hot air, Crash course, Minimum effort.

No comments: