In partnership with the Greater Memphis Chamber’s Small Business Council, Independent Bank is proud to sponsor yesterday's Lunch in the Know featuring Mark Billingsley, Chairman of the Shelby County Commission. He joined us to discuss “Leading and Budgeting in a Pandemic.” We can't thank him enough for taking time out of his schedule to share his insight into the current dialogue of our county government. As always, we have put together our Top Takeaways:
Chairman Billingsley was open and honest in his discussion of the Shelby County government and how it will address the issues it faces from COVID-19. It seems that they face the same issues that our businesses face: concerns over reduced revenue streams and increased costs. Like many of our business owners, the Shelby County Commission along with the mayor and municipal leaders are exploring options to fill a budget deficit. Knowing that local businesses are in the same boat, Chairman Billingsley had some words of advice.
- Look to organizations who can help you with best practices, like the Greater Memphis Chamber, or professional organizations in your industry (for example, the American Banker's Association has offered a multitude of guidance throughout this pandemic).
- Look to others in your own field. Although you may be competitors, our community is always stronger with more thriving businesses, so we need to collaborate and share ideas how to recover.
- Try to hold onto your employees. Make adjustments where you can to avoid layoffs.
Certainly, cost-cutting measures such as layoffs are a tool that business leaders need to make use of when they face difficult times. It's important, however, that they use compassion in the interests of a stronger future. When the authorities allow businesses to stay open, it's up to you in a crisis to decide whether to keep on your employees. Before your company makes a call on announcing layoffs, it makes sense to consider alternatives:
Manage cash flow
The obvious alternative is to find a way to manage cash flow that avoids any kind of reduction. Here are some ideas to consider when budgeting for an unpredictable future:
- Offer discounts for early payments
- Negotiate better terms with your suppliers and vendors
- Some of your suppliers may be willing to give you discounts, especially if you've been a good customers and always paid on time. If your current suppliers don't offer discounts, explore alternatives.
- Raise prices
- Sell assets (i.e. company car or piece of machinery)
- Reassess insurance policies for rate and deductible amounts
- Send out invoices immediately
- Bring bookkeeping tasks in-house
- Cut discretionary costs.
- Coffee/tea for the whole office, the highest speed internet (switch to a lower speed), magazine subscriptions, switch to a cheaper mobile plan)
- Consider your office space costs.
- Your landlord may be willing to lower your rent or even create a new lease for you. Explain the challenges you're facing and the possible outcomes if you don't make significant changes. If your landlord won't reduce your rent, consider moving to a less expensive building. If your business is small enough, you may want to think about running it out of your home, at least temporarily. This can significantly reduce insurance costs, taxes, utilities, and more.
It's important, as a business leader, to be on the front lines when you impose austerity measures on the company. If you're proposing pay cuts to every employee in the company, for instance, you need to make sure that upper management accepts pay cuts, as well, especially those in the C-suite.
Crowdsource ideas among employees.
It can take considerable skill to open the floor for ideas for the direction the company should take. You might worry about how some employees may resent it when their ideas aren't accepted, or about how inviting ideas from everyone robs management of control. CEOs may worry that such decisions invite pandemonium, rather than participation. Crowdsourcing, however, does not need to lead to a loss of control. Instead, when employees are asked for their ideas, they tend to feel greater engagement in the decisions that are finally taken.
To make sure that a crowdsourcing effort proceeds in an orderly fashion, leaders can offer structure by communicating with employees about how they plan to prioritize ideas that require less capital, less risk, and ones that come with the ability to save jobs. It may even be possible to present all final initiative packages to employees, and have them vote on the ones that they favor the most.
Make sure to review even unconventional ideas.
Before you make a call on laying off employees, consider novel ideas to help save them. As an example, if you go with a three-day work week in departments that have excess capacity, you may end up saving 20 percent in staff costs. Employees may agree to the plan if they realize that offering to work fewer hours helps save their jobs.
Offering employees the opportunity to take sabbaticals can work, as well. Terming unpaid leave as a sabbatical can help take the stigma off. When you make it clear that avoiding layoffs is your primary goal, you may find that employees are far more sympathetic to other ideas that involve sacrifices as well, such as an end to overtime, salary increases, retirement fund contributions, and vacation days.
A pandemic is a time to be empathetic to the needs of your staff, rather than a time to maintain emotional distance. As worried as your staff is likely to be for their own future, public crises tend to bring out the best in people. You can expect that if you look out for the needs of your staff, they will look out for the needs of the company. Once your company emerges from the crisis, you will find that you have greater employee engagement than ever before, because they know that you stood by them.
Thank you again to Chairman Billingsley for his time and insight! We’d also like to thank our fellow sponsors Southland Casino Racing and Baptist Memorial Health Care as well as Waddell and Associates for making the Zoom meeting possible. If you missed the webinar or would like to see it again, a recorded version, along with previous webinars, can be accessed here.