Every once in a while, we need something or somebody to remind us of mistakes to avoid.
Step forward, Ford Motor Company.
Ford recently announced it is eliminating 7,000 salaried jobs. How could that be? I thought the economy was in good shape.
According to this article, this reduction is an effort to reduce bureaucracy, flatten management structure, and cut costs. By doing this successfully, the savings could be around $600 million.
In the article, Ford’s CEO is quoted as saying, “To succeed in our competitive industry and position Ford to win in a fast-charging future, we must reduce bureaucracy, empower managers, speed decision making and focus on the most valuable work, and cost cuts.”
I’d like to ask this question of the CEO: As a member of the leadership team, how did you get your company in a position of having to recalibrate these fundamentals of business—that is, eliminate bureaucracy, empower managers, make decisions faster, focus on priorities, and also have to cut costs?
Regularly monitor the cost and purpose of your organization’s overhead. Make adjustments sooner than later.
As you analyze your overhead, challenge yourself and your team with questions such as these:
- What is the purpose of this overhead?
- Is it necessary? Can we do more with less?
- What value does the overhead bring to our stakeholders?
- How can we deliver more value with the same overhead?
- What would happen if we added more overhead?
- What would happen if we reduced the overhead?
Good leaders keep their eye on the ball and act proactively, not reactively.
Also this week, Tesla’s CEO (Elon Musk) and CFO have tightened spending controls. Things have gotten so bad for this automotive and energy company that its leaders have taken to micromanagement. The CEO and CFO are the only ones who can approve certain operating expenses in their company. Yet this is not what senior leaders do. In fact, this is not leading at all; they’re neck deep into managing.
On the topic of financial responsibility, take another look at the May 2, 2019 Leadership Tip – Pay Attention to What Your Pennies Cost You.