Problem
A leading high-end clothing retailer had to cut costs. They had options but knew that the lion's share of the cost savings would come from reducing payroll, specifically the sales staff.
Solution
The company decided to reduce the hours for sales consultants across the board. They felt this was a fair, equitable and humane approach to dealing with the economic downturn. They could achieve their cost cutting target and at the same time no one would lose their job entirely.
Result
The decision had two unintended and very unwelcome consequences:
- They suffered an even bigger hit on revenues than they had forecasted. The across-the-board meant that their star sellers were given fewer hours to shine and sales production dropped accordingly.
- Top performers were unhappy and many went to the competition. High performers have mobility even in a down economy.
Conclusion
You might find it hard to believe that a successful and seasoned leadership team could have made such a decision, but they did. And they are not alone.
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