A CEO who attacks an organization’s problems with the Cut and Fill approach is choosing the most difficult but also the most rewarding approach. This balancing act requires high levels of skill and wisdom. Once you’ve begun implementing this method, expect to take a lot of heat. But the objective is not to make the CEO happy today; it’s to make the CEO and the board and the shareholders happy a year from now. If reasonably good decisions are made, sustainable results will be enormous.
Just as with targeted workforce reductions, the CEO makes personal and often unpopular judgments about how much or how little to cut from each department, the Cut part of the process. At the same time any business needs new initiatives, and certain departments or functions need to be enhanced or increased in size and capability, the Fill part of the process. But there's much more to it!
The actual implementation utilizes a war-room approach, using a locked off conference room, and following these three steps. First we had each manager (only those that I had decided were probably keepers) draw their departments’ organizational structure on white boards. Each manager then walked us through that structure and justified how it operated. In every case it quickly became obvious that most had little idea of how the total organization truly functioned. Many managers were surprised by the lack of clarity within their own and others’ departments, and how many cross-functional band-aids had been put in place!
Next we “hypothetically” fired every person in the company and simultaneouly did the same with the existing organizational chart. Starting fresh, we then laid out the company’s principal organizational requirements on the clean white boards on the remaining walls. We consolidated duplicate functions and threw out nonworking history. Some managers lost responsibilities, others gained; but this was not a popularity contest. Because everything was in the open, the typical destructive behavior of threatened individuals was somewhat quelled.
The last step was to “rehire” employees from the original boards. Each manager had his pick to fill out his new function; and they were told that they had no responsibility for previous hiring decisions or employees in their departments that they had supported. "History if history". Think of this as a drafting process but with all existing players on every team also thrown into the pool. It is quite amazing to see the difference between the view that each manager took on given employees before this process, and during it. Many previously supported employees didn’t get drafted. In other occasions individuals who had been thwarted were highly sought. The cream of the crop rose to the top; the non-performers didn’t make the cut.
Believe me, this is excruciatingly hard work. It’s intense. It requires amazing attention to detail by the CEO and a Solomon like approach. However the hard work is over in a couple days, and in every company in which we did this exercise the organization was both smaller and significantly more effective, in a matter of weeks.
It’s easy for a CEO to shirk from making tough Cut and Fill decisions. Just blame the company’s financial problems on a lack of meaningful management information or on ineffective marketing initiatives. But the CEO is responsible for fixing the root of the problem. At the risk of creating additional dissention during a forced downsizing, the CEO must muster the courage to undertake strategic hiring programs. The result is a streamlined company better prepared for long-term success.