I’ve had a really interesting week.

I've spent a lot of time catching up with people who I’ve gotten to know over the years and chatting about how their businesses are responding to the recession.  Recruitment is great like that – you get to interact with some exceptional people who are at the coal face and you get to experience their reality. 

A couple of recent conversations have really got me thinking about business focus.  One was with an experienced Commercial Manager who works for a fairly large nationwide company.  She’s developing a syndrome I’ve dubbed CCF, or Cost Containment Fatigue. This was her observation:

Where the perceived power lies in a company is a good reflection of where the business is at, both as an entity and in its response to macro economic factors.

When business is forging ahead and all is well, it’s Sales and Marketing who have the limelight and perceived power in the company.  They’re driving things ahead.  Then something happens – a recession hits, a key client is lost, or a top performer leaves.  All of a sudden, it’s Finance that steps up to this power position as the focus switches to cost containment.  In most businesses it’s the wages and salaries of staff that form the bulk of costs, so it’s logical that redundancies will follow.  Enter Human Resources, because when you’re dealing with staff you need all the assistance you can get!  And thus, the perceived power shifts to the HR function.

There are many books written about business success by people far more qualified than myself.  But in my experience, if you look at the businesses that are doing great despite of the recession, they all seem to have a good balance between these three functions.  When businesses blow out in one particular area – cost containment at the expense of employee engagement, or failing to look at the top line and having the courage to drive the business forward through Sales and Marketing initiatives – they tend to suffer.

So I’ll finish with these points to ponder:

  • What is the cost of your cost containment?  Are you spending more analysing the cost than the cost is worth? 
  • Is your cost focus at the expense of common sense?  (Take the company who recently outsourced their large accounting function to Melbourne to save costs.  Really?!)
  • While a strong HR team is a massively valuable resource in a company, it’s a support function and it should be focused on supporting the business to grow and to hire and retain the best employees it can attract.

It seems to me that from the outside looking in, we’re reaching the end of the cost containment and HR involvement stages.  I, for one, am looking forward to the focus to go back on the top line and driving businesses forward.

 

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