Use your strategic filters to guide the way as you continue to build a team that sees the big picture.
We’re all aware that 2021 could be a lean year for earnings, given that loan losses are expected to increase, the low rate environment is expected to continue, and the unknowns seem to outnumber the knowns for the pandemic and the economy.
Many organizations are in expense control or cost-cutting mode. One of the challenges, beyond the obvious, is how to get your team on board with the decisions that are being made. Making equal cuts across departments might seem like the best way to avoid “being unfair,” but it’s rarely the best path for the organization as a whole.
Strategy and reality are the filters. When making tough decisions, your strategy must be paramount. Think long and hard about any cuts that could chip away at your business model, the ability to generate income, acquire members, cross-sell or the member experience. As you consider, ask how long these decisions will have an impact, and what they might do to your competitive position in the future.
For more questions to help with your decisions, see our blog, 7 Filters for Strategic Cost Cutting.
Next, be realistic about your current situation and how it should impact decisions. Perhaps you’re already running very lean on head count or have a lot of ground to make up on the digital front, or maybe the net worth ratio is a concern. These not only factor into the decisions, but will likely become part of the communication to the organization as you explain why specific decisions were made (e.g., “We’re behind in our digital progress so we can’t cut back in this area and might need to increase expenses,” or “We did not reduce FTEs in accounting because they are already down two positions and we won’t be adding more).
A strategically-minded team is the foundation. A strategically-minded team understands the importance of the strategy and can understand why cost-cutting decisions are made to support it, rather than using subjective ideas of what is “fair.” This is another reason having a clear strategy is so important.
Building a strategically-minded team that is focused on success as a whole takes focus and practice. Communicating the strategy and explaining how each area contributes is a good place to start. When teams think and act as a part of the whole rather than in silos, they are in a better position to understand the reasons behind decisions and support them, even if it’s difficult.
This doesn’t mean that employees will be happy with all decisions. Acknowledging that the decisions are difficult and carry tough consequences can go a long way toward helping people accept them, as does continuing to provide the “why” behind the decisions.
It’s OK to let go. As you face hard choices, it can be a challenge to change the way things have been done for a long time or to let go of projects and ideas that are exciting. Applying the strategy to the prioritization of expenses can provide the clarity and the reasoning for saying no or not now, helping you and your team to let go.
Cutting expenses in times of need has the potential to create risks to your strategy and bring employee discontent along as an unwelcome sidekick. Use your strategic filters to guide the way and continue to build and communicate to a team that sees the big picture. Teams that understand how their contributions and sacrifices lead to the success of the organization are better able to understand that fairness is ultimately about supporting the strategy of the organization as a whole.
c. myers helps financial institutions take control of their future by linking strategy, desired financial performance, and consistent execution with the right talent. Their experience and thought leadership allows them to work as a strategic collaborator and help uncover opportunities that result in continuous business model optimization. They have the experience of working with over 600 financial institutions, including 50% of those over $1 billion in assets and about 25% over $100 million. c. myers helps credit unions think to differentiate and drive better decisions through strategic planning & business model optimization, strategic solutions and implementation, strategic leadership development, real-time ALM and financial planning, education, and thought leadership.