Are You Cutting Your Own Throat?

Imagine an organization that does a patchwork job marketing its products for a year because it wants to save money. Little was sold and then there is no money to put in the budget for next year to market products. Then it cuts salaries across the board by 10% until "things improve." How are things going to improve -- by divine intervention?

Leadership is about taking the tough situations and turning them into growth successes.

Stop looking only at expenses

Cutting salaries of critical members of your organization will not have any positive outcome. It will either cause those under-appreciated (in their minds) employees to look for other employment, or provide more than 10% less performance. Cutting salaries says to the employee, "You are not important and I care more about my bottom line than I care about you." Trust me, it will not improve the situation and it will only make it worse.

Instead of taking the less courageous way out and cutting expenses, why not solve the real problem in the first place? The problem isn't these salaries are too high. The problem is, not enough money is coming in to pay for the well-deserved salaries. So what are your alternatives?

1. Determine your financial shortfall.

How much additional revenue would be needed to replace the 10% you think you need to cut? My guess, it's not going to be that much -- so go get it! Cutting salaries is the lazy way out, a stroke of the pen and as long as it's not your own salary (and it rarely is) problem solved pain-free. Wrong. Restore those cut salaries and restore those employees faith in your leadership, and then go find a way to pay for them. How?

2. Be creative.

The old quote says if you want significantly different results do something significantly different. It still holds true! Don't listen to; "It's a slow economy, unsavory or unfortunate conditions, and the old ways aren't working." Those are the excuses of people in positions of leadership not invested in the solution. Look for alternative ways to generate income. Look for new ways to market, sell, and position and work to drive new revenue. Instead of spending hours thinking how to cut your expenses, spend that time thinking of ways to increase revenue.