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10/7/2001
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Ask The Secret CIO: Cut Back On The Staples, Would Ya?

Herb listens to (and comments on) the experiences of readers faced with management that imposed cuts in benefits--but, of course, not on themselves.

Keeping the world safe for the staple
Dear Herb:

I've followed your columns since their inception and always enjoy the witticism. Your column Let's Cut Out The Petty Perks, though, reminds me of a hard-copy memo we all received a few years ago. It seems folks around here were using too many staples.

You keep writing and I'll keep reading. Have a good day!

George

Dear George:
You have a deal!

After I wrote the column, people let me know about some weird ways their companies tried to cut back on spending. Worrying about staples is the best one I've heard yet.

Some years ago, I had the misfortunate of being appointed to another one of those ever-present committees to eliminate unnecessary spending. My boss told me that he thought I should investigate why the purchasing department was buying paper clips. He said he didn't understand this waste of time and money.

He explained that he personally saved all of the paper clips on correspondence sent to him, both from within the company and outside mail. The result, he told me with a very serious expression on his face, was that he was able to supply both himself and his secretary with enough paper clips for all their needs. Just in case I didn't understand the importance of his point, he illustrated by opening his desk drawer, pulling out a big box of assorted paper fasteners, and shaking them vigorously in my face.


Can't you do something about employees getting hungry on the job?
Dear Herb:
I really appreciated your article on your company's penny-pinching. Last year, we took a loss for the first time in the history of our company, so I've been subjected to a quite a bit of torture on the same topic. I am new to the management sector, having been promoted from the Oracle database administrator position (personally, I suspect it was a demotion).

This month, I lost my best employee because she said the situation had become intolerable. A week later, my boss, the chief operating officer, called to complain about how high our meal expenses were on our last trip to a branch office. My response: "You expect me to say to one of my underpaid technicians that when he is away from his family, working a 19-hour day without overtime, that he should eat at Burger King instead of Red Lobster?"

The real reason we took a loss is related to an ill-conceived merger. Sometimes, I'm amazed at how a small company like ours can have the same frustrating office politics as a large corporation.

Thanks,
Dan Olson

Dear Dan:
Verily, the sins of the bosses shall be inflicted unto the backs of the employees. That little rule holds true regardless of the size of the company.

Your company isn't the first, nor will it be the last, to undergo severe cost cutting--and lose good people as a result--because someone made a rotten acquisition. Just once, I'd like to see an annual report that says something like, "Our company really messed up last year by buying XYZ Corp. Those of us in executive management should be ashamed of ourselves, and in penance, we are not only foregoing our normal obscene bonuses, we are also cutting our own salaries by 30% so our employees don't have to bear the brunt of our stupidity."


Measure with a micrometer; cut with a chain saw
Dear Mr. Lovelace:
Ah, yes, the trim-the-fat (just not mine) meeting. I've worked in the IT industry since 1978, and I've seen this tactic so many times it's almost laughable.

Stephanie, your VP of human resources, is completely correct in her summation of the situation: The company is going to lose valuable people; customers will hear via chat rooms/E-mail; and life at the office will be pretty miserable. What's amazing is that she voiced her concerns. We called that a CLM (career-limiting movement), years ago.

The same song is being sung in many companies: removing cell phones, notebooks, printers, free coffee, etc., in the name of saving money. I equate this to "measuring it with a micrometer, and cutting it with a chain saw." A quick trip to Edgar's and a view of the board/executive salaries will give you an indication of where the fat could be cut.

You know you're in trouble when your board is focused on cutting costs, not making money.

Brad

Dear Brad:
Stephanie impressed me with her willingness to speak the truth, even if it might be a career-limiting move. I don't know whether I misjudged her or whether she has begun to grow into her job. Maybe, like most of us, she just has her strong points and her weak ones. In any case, I think she has rallied people to her side.

The result of her efforts was that, while those of us on Stephanie's cost-cutting committee gave lip service to Phil's idea of so-called symbolic cuts, we implemented very few of them. Instead, we concentrated on intelligent savings. That was the guidance we communicated to the teams at our various sites. We found many areas where we could eliminate waste (cutting needless inventory, not sending so many documents via overnight delivery, etc.) without a lot of pain.

As we expected, Phil was happy with the savings. By that time, his attention was already on other more important issues; the lack of recovery of our sales was one. He decided (correctly) that he could help us more by playing golf with major customers than by nitpicking about whether we were doing enough double-sided copying. In the meantime, Stephanie has increased her level of respect in the eyes of the rest of us.


The bosses went to Italy to discuss how to save money
Dear Herbert:
Your article on cutting out the petty perks really hit home. Having been in our industry for 30 years, I've seen what happens when companies try to make cuts to minor, relatively inexpensive benefits. If the top brass don't share in the real pain, then it's pretty much guaranteed that the rank and file won't take the cuts well.

At Tandem Computers, where I worked in 1994, everyone knew that lay-offs were imminent. The fact that one of the VPs flew to Italy (first class) and rented a villa for a director's staff meeting didn't go over too well with the rest of us. Needless to say, when the lay-offs did come, a lot of us volunteered--and some of the best people left on their own within months.

Bill

Dear Bill:
Thanks for your letter. Smart executives don't waste money while others in the company have to give up little perks. Instead, they work to make cost avoidance part of their company culture, not an add-on for use in bad times only. Wal-Mart, for example, keeps its offices in Benton, Ark., very Spartanlike. The objective is to make sure that its employees (and salespeople calling on them) are aware that low prices to the customers are key to its success, so there's no point wasting money on unnecessary frills.

Over the years, it has amazed me how clueless some of the people in the executive suite are when it comes to understanding the image they project--whether it's by giving themselves perks that they can well afford to buy on their large salaries or by setting aside executive pensions that are huge multiples of what the common folk get.

A few years ago, I wrote Team Building Is For You, about a meeting we held at a local retreat at which we were directed to find ways to lower costs and reduce head count. I still remember the elegant dinner that concluded the summit. I thought at the time that Phil would have to fire at least two clerks to pay for the meal.


Even we old guys can be young at heart
Dear Herbert:
Let me begin with a sincere thank you for your many wonderful articles in InformationWeek. I confess that yours is the first article I read.

Your article Youth Can Lead The Way was, as usual, full of practical information and thoughts of the future. I have only a single "but."

Based on my years of experience, I can attest to the value of a youthlike attitude in enabling imaginative thought and a willingness to reject the past. However, I would disagree that youth necessarily has dominion over this trait. While young people tend to come by it more naturally, it can be--and should be--encouraged in all of us. Employers who create such environments leverage the power of all of their employees and avoid a generation-gap mentality.

The good news for top managers is that they needn't change the demographics of their companies. The power to innovate is locked inside of us all.

Regards,
Jim

Dear Jim:
Rereading my column, I wish that I had made the point you have. I suppose I was too busy trying to communicate that we need to listen to young people, even if ultimately we decide to reject their ideas.

The real difficulty is in keeping that innovative spirit alive in a large company. The problem is that basically it's a lot easier for an executive to shoot down someone else's ideas than to support something that's risky. For a further discourse on the reasons, take a look at The Law Of Corporate Failure and The Unbelievable Promotion.

I've seen too many instances where people will ridicule a good idea, either because of an inability to grasp a new concept or simply because of professional jealousy. It's a shame, but it's real.

Your letters to my print column and this E-mail forum raise some serious issues about managing information technology in today's world. Since today's world is essentially absurd, my serious responses may sometimes sound a little whimsical, and my occasional whimsical one, serious. In any case, if you want to participate, or comment, write to me at lovelace@home.com. I reserve the right to edit for size and content. Just sign your E-mail the way you want it to appear online. And feel free to join me in my discussion forum.

As I've mentioned, I am planning to put my InformationWeek columns together into a book with a little bit of additional commentary around the events and people about whom I write. If you'd like to be notified of such an event, please drop me an E-mail, and I'll build a mailing list to let you know about it. Just use the word BOOK as the subject line.

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