From the Ask Tom mailbag:

Question:
We used to be the big dog in the construction business. We had the technical specialties that others couldn't deliver, but now our market is almost stopped. There is still work, but the projects are further apart and the bidding competition has sliced margins razor thin. We have had to let some people go, but we went from cutting fat, to cutting muscle and now we are in the bone.

How do we put structure around multiple disciplines when we have to choose which discipline to keep? We can't ask a VP of Risk Management to manage a project. And to terminate the position only adds to the chaos. You cannot cut your way to prosperity. How do we stop the chaos and improve efficiency when we are still contracting.

Response:
You are not cutting your way to prosperity. You are cutting your way to survival. Residential construction may have found a bottom, though September new home sales dropped 3.6 percent. Commercial construction is still behind the curve with significant downside ahead. If you think your market is shrinking, buckle up.

Last year, I took my clients into a meeting and asked them to project 2009 revenues. This was after the brew-ha-ha with the first stimulus, so some reality had set in. Across the board, all revenue projections were downgraded. I had the numbers inscribed on a 3x5 card and set in front of each participant. Then, I asked them to take another 20 percent off and explain how they intended to adjust their overhead to stay in the black. There was pushback, never happen, they said.

As I visit my clients today, those cards are still posted around. We talk about that exercise.

Here is the process of survival.

• Eliminate (everything that is not necessary)
• Simplify (everything that is too complicated)
• Combine (things that go together so we can consolidate responsibilities)
• Outsource (whatever you can to reduce your fixed overhead related to a function, especially part time functions)
• Automate (the things that are left. Don't automate things that should have been eliminated in the first step)

Credit to Timothy Ferris Four Hour Work Week

From the Ask Tom mailbag:

Question:
How does one shrink their company and know what services or actions or processes to drop? If we've been doing things a certain way for a few years and now, cannot continue, yet our accounts/clients/customers are used to things a certain way - how do wean them off those things?

Response:
Your customers may be used to things a certain way, and they will soon become used to things in a new way. They are going through the same market strains, no surprises.

But how do you make those decisions. Finished cutting the fat, we now cut the muscle. What are those goods and services that will no longer be provided? What are those goods and services that must be retained?

What are those goods and services that create the profit that allows your company to survive this period. One of my clients could not imagine how to cut overhead lower than $700,000 per month. Today, that overhead is $70,000 per month. What has remained is ONLY those goods and services that customers are willing to pay for, in sufficient volume to create a profitable business. Everything else that is not necessary, must go.

From the Ask Tom mailbag:

Question:
I agree that if you have a Stratum III manager covering a role for a missing Stratum II supervisor, it will only be a temporary fix, but what if we are truly in for a long dig out of this recession and the situation won't change for a while?

Response:
Shades of the "new normal?"

Every minute the manager is being a supervisor is a minute spent away from systems work. The good news is, with lower volume, there will be lower pressure on your systems. Even still, you face the dilemma of a manager with less challenge.

So, take advantage of the situation on two fronts. Time Span can help break down Stratum II supervisory tasks into Stratum I contributions. This will be an opportunity to find your Stratum I team leaders who have the capability to grow into Stratum II supervisors over the next few years.

The other front is true Stratum III systems work. During this period, with less pressure on your systems, your manager, even while covering supervisory tasks, should take advantage of this time to find system efficiencies. Lean initiatives, identifying constraints, reviewing sequence, eliminating unnecessary elements.

But, there isn't time in the day?

I remember something my father told me as a student in college. "Son, if you can't handle a full course-load and a part time job, then maybe you don't deserve to go to college."

From the Ask Tom mailbag:

Question:
Using Elliott Jaques, Requisite Organization, I can see that we let go two important supervisors earlier this summer. We didn't have a choice. Our business volume is down and it was necessary to lay them off. The managers in those departments now have daily and weekly responsibilities for production output. They now have to work directly with the production teams. As I look at things now, to me, this looks like the "new normal." I don't know if I will ever go back. In fact, we are looking at a couple of other supervisor positions if things don't turn up.

Response:
Having a manager cover a supervisor role on a temporary basis may be necessary. Requisite Organization helps us understand the difference between the two roles and it helps us understand why this can only be a temporary solution.

We can all accommodate situations for a short period of time and in these times, it is necessary. Long term, however, your manager will become bored with those supervisor responsibilities, attention to detail will slip and you will have some dysfunction on your hands. And that will occur even at a lower volume level.

Your current situation may appear like the "new normal," but things will change again. You need to discuss the temporary nature of these role assignments, and acknowledge the short Time Span nature of the goals. Also talk about the temporary discipline that will be necessary during this time, to monitor checklists, create schedules and conduct production meetings. That's what supervisors do.

Also understand, that while your manager is playing the role of the supervisor, your systems are being neglected. If your systems are strong, you will survive this, but you still need to have periodic "system checks" to make sure they are still working.

"I'm tired," Jerrold explained. "I'm trying to keep up with everything, but the faster I work, the behinder I get," he smiled.

"What's up?" I asked. (Advanced diagnostic question.)

"I feel like I am buried in work, my team is up to their elbows and, still, there is more to be done. Burned out. That's how I feel. I know we have downsized. I know we all have to pitch in and cover. But there are times, when I feel overwhelmed."

"Are you doing the production work? Or are you making sure the production work gets done?" I followed.

"Both. It's my responsibility to make sure the production work gets done, but we are short handed, so I spend my turn on the line as well." Jerrold sat up.

"Is this an energy problem, or an organization problem?"