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The last thing one should do is keep quiet about the company losing money. Do not clam up, start asking questions. Surprisingly, a number of your own employees know a variety of reasons why you are not making money. None have all of the answers, but each most likely has some unique insight if only asked. They want to help so start asking.
Ask everyone; each of your employees can contribute. You as a manager must coax them to talk because it most likely involves a few people who need to be replaced. Ask them and give them anonymity. Start talking about this problem as fast and thoroughly as you can. You need input and ideas because yours has obviously not worked thus far. Start involving as many people positively as possibly. Now is the time to invite others’ input.
Tell your employees how things will get better. If your firm is not making money, tell the employees what the turnaround plan is and how they can directly help. When the company is not profitable, the employees want to know their managers are doing something to change that so everyone’s job is no longer in jeopardy. Talk every day about cost cutting and ask for suggestions to help make money. Convey the turnaround plan and tell your people how they can help.
Talk about your progress and the company’s improvement going forward. Talk about cost reduction programs, product cost evaluations, new sales and marketing plans, new sales personnel to be hired, new products that will be offered soon and other programs that will streamline costs and boost profit margins. No matter whether it is profitable or in trouble, keep your people informed and involved.
Start asking these questions when your firm is in the red:
- Because we are not profitable at this time, we need everyone’s help in cutting costs, raising quality and improving sales. Do you have any ideas now that you would like to offer to boost the bottom line?
- How can we make more money? Do not worry about your idea not being detailed; in simple terms, what do you think we are doing wrong?
- Where do you personally (concerning your job or department) see every day that we need to cut costs?
- Where do we waste the most money? Describe the department, group of people, product involved, position, function, etc.
- What about the company procedures of taking orders, processing orders, buying materials and supplies, spending labor dollars and shipping product seems to be inefficient to you?
- What part of the company manufacturing process needs to be evaluated because it is wasteful and takes too long?
- What is wrong with the company’s service? What can be done to improve it and make the customers want to call us again in the future?
- Why do you think we have rework and rejected parts? Who primarily do you think causes these problems in the company? Who is not doing their job?
- Where do you see the largest waste of valuable company funds?
- Do you think there is too much overtime spent by the company? If so, who would you say in what department?
- Why do you think we have too much overtime?
- What one thing could the company do to reduce overtime?
- Do you see waste in the company in labor or spending? If so, where do you see it on a regular basis?
- If you had to cut costs, what would you cut right now starting today that you feel is hemorrhaging money?
- What is the second thing that you would cut right now?
- What would you suggest to in order to increase sales? What group of buyers are we missing?
- What do you think we need to do to improve customer relations?
- What machines (cost centers) that you know about need to be serviced and improved in order to cut costs and improve product margins? Tell us the specific machines and why they do not operate properly. Which need to be replaced?
- What items are too costly or wasted in the plant?
- What service performed needs to be brought back in-house?
- Ok, tomorrow you are in charge and need to cut costs. What is the first thing you would cut or reduce the cost because it is wasteful?
- What material that we buy gets wasted or generates a lot of questionable scrap? Please provide some examples.
- Assuming your answer is kept confidential, are you aware of any theft occurring in the company that you feel you want to discuss or disclose?
Offer anonymity if necessary – mail suggestions outside. For those answering questions, offer them the following response option. If you do not feel comfortable about publicly answering the above question about theft or questionable activities among employees, we are posting an outside address of our CPA firm where you can mail an anonymous tip. You may address your tip to “Company Name Tips”, c/o of our CPA firm.
Instruct your CPA firm to retain the anonymity of requested when submitting ideas.
