The metaphor "trimming the fat" rests on the belief that some parts of the organization are expendable, and we can remove them with little impact on the remainder. Ah, if only things actually worked that way...
hen organizations cut costs, decision makers often assume that the parts of the organizations that remain unchanged continue to produce at pre-reduction levels. They rarely do. For example, downsizing the Purchasing function can have ripple effects throughout the organization. And canceling one project can actually affect other projects even if they don't depend on the canceled project.
A recently reclaimed, formerly vacant, property near Buffalo, New York. Offshoring and outsourcing tend to produce local surplus property, which often remains unused for extended periods. Reductions have fairly obvious effects on the organizations that undergo the reductions, but even thriving neighbors can feel the effects. Vacant or abandoned properties surrounding the facilities of otherwise healthy firms can be depressing to look at, and the long-term effects of such sights can depress productivity. When these effects are considered, it can make economic sense for healthy firms in such circumstances to develop neighboring properties, lest those healthy firms themselves become less healthy. Photo courtesy National Vacant Properties Campaign.
Fundamentally, organizations are systems. Moreover, they don't "factorize" easily — their parts are interconnected in ways that are outside our awareness. These interconnections sometimes propagate the effects of cost cutting. We tend not to notice these channels, in part, because they don't correspond to connections in the org chart or line items in the Chart of Accounts.
The effects of cost cutting tend to propagate along personal lines — the relationships between people, and the perceptions and emotions of everyone in the organization, including the people who we believe ought to be "unaffected" by the changes.
Here are some examples of how the effects of cost cutting propagate. If your job entails estimating how much time or effort tasks require, and if your organization is in the midst of reductions, you'll do a little better if you take these effects into account.
Personal network disruption
Waves of reductions in force tend to disrupt the networks people use to find out how to do things — how to prepare requisitions, which procedures to follow, or where to find the answers to burning questions. Relocations and site consolidations have similar effects.
Change-driven chaos
The effects of cost cutting tend to propagate along personal lines — perceptions, emotions and the relationships between people
The entire organization can descend into change-driven chaos. People become distracted and performance degrades, especially when procedures and job responsibilities change rapidly. Many begin working for new supervisors, with whom they must establish new relationships. Some find themselves working for supervisors with whom they might have unpleasant history.
Termination-induced grief
When groups of friends are separated because some have been terminated, the survivors enter a period of grieving, sometimes called "survivor's guilt." Their productivity can degrade significantly.
Voluntary turnover
When things get sour, people begin to fear they will be targeted next. Those with alternatives elsewhere (usually the most talented) start job searches preemptively. Vesting schedules for stock options, profit sharing, and pension plans lose their ability to hold people, because of skepticism about the value of the underlying benefit.
The what's-the-point effect
People who notice ways to reduce costs, and people who would otherwise either contribute innovations or prevent catastrophes, start to ask, "What's the point?" They begin to feel that they won't be rewarded for their trouble, or that they might be terminated before being rewarded with the next merit pay increases, which have often been suspended anyway.
If you're weighing a decision to cut costs, estimating the full impact of these effects might improve the quality of your decision. And remember that personal network disruption, chaos, survivor's guilt, and the rest, might affect you, too. When that happens, it can degrade your ability to notice these effects. Is it already happening? TopNext Issue
Are your projects always (or almost always) late and over budget? Are your project teams plagued by turnover, burnout, and high defect rates? Turn your culture around. Read 52 Tips for Leaders of Project-Oriented Organizations, filled with tips and techniques for organizational leaders. Order Now!
In the workplace, some things can't be discussed — they are taboo. When we're aware of taboos, we can choose when to obey them, and when to be more flexible. When we're unaware of them, they can limit our ability to change.
You may have heard the phrase "plenty of blame to go around," or maybe you've even used it yourself. Although it sometimes does bring an end to immediate finger pointing, it also validates blame as a general approach. Here's how to end the blaming by looking ahead.
Outsourcing is now so widespread that it has achieved status as a full-fledged management fad. But many outsourcing decisions lack the justification that a full financial model provides. Here are some of the factors that such a model should include.
Changing anything in an organization reveals how it's connected to its people, to its processes, to its facilities, and to the overall context. Usually, these connections reach out much further into the organization than we imagine.
A new year has begun, and I'm contemplating beginnings. Beginnings can inspire, and sometimes lead to letdown when our hopes or expectations aren't met. How can we handle beginnings more powerfully?
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hen organizations cut costs, decision makers often assume that the parts of the organizations that remain unchanged continue to produce at pre-reduction levels. They rarely do. For example, downsizing the Purchasing function can have ripple effects throughout the organization. And canceling one project can actually affect other projects even if they don't depend on the canceled project.
Top 
Next IssueAre your projects always (or almost always) late and over budget? Are your project teams plagued by turnover, burnout, and high defect rates? Turn your culture around. Read 52 Tips for Leaders of Project-Oriented Organizations, filled with tips and techniques for organizational leaders. Order Now!
Workplace Taboos and Change
Plenty of Blame to Go Around
Outsourcing Each Other's Kids
The Ties that Bind
On Beginnings
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Ever wonder if there isn't a better way to travel? Travel is essential, but the hassles of travel aren't. Read 202 Tips for Business Travel to learn how to convert business travel from a time-wasting hassle to a breeze. Revised and updated for 2008 with 101 new tips! Check it out!
Projects never go quite as planned. We expect that, but we don't expect disaster. How can we get better at spotting disaster when there's still time to prevent it? How to Spot a Troubled Project Before the Trouble Starts is filled with tips for executives, senior managers, managers of project managers, and sponsors of projects in project-oriented organizations. Check it out!
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Are you doing work you love? Are you less in love with the job? Bad boss, long commute, troubling ethical questions, hateful colleague? Read Go For It! Sometimes It's Easier If You Run to learn what we can do when we love the work but not the job. It helps you get moving again!
The key to managing virtual or global teams is creating a sense of team despite the obstacles of separation. Read my tips booklet, 303 Tips for Virtual and Global Teams, to learn how to make your virtual global team sing. Newly revised and updated for 2008 with 101 new tips! Check it out!
Are you managing a change effort that faces rampant cynicism, passive non-cooperation, or maybe even outright revolt? Read 101 Tips for Managing Change to learn how to plan and execute your change efforts to inspire real, passionate support. Check it out!
A Tip a Day arrives by email each business day. It's 20 to 30 words at most, and gives you a new perspective on the hassles and rewards of work life. Most tips also contain links to related articles. Free!
Do you ever wonder if all these meetings are really necessary? (They aren't) Or whether there isn't some better way to get this work done? (There is) Read 101 Tips for Effective Meetings to learn how to make meetings more productive — and more rare. Check it out!
