The Idea in Brief
- When you’re closing or shrinking an operation, you’ve got to be a tough guy, right? Making the hard decision and then getting on with it in order to reap the maximum savings is what matters, isn’t it?
- This conventional approach may please Wall Street, but as Kenneth W. Freeman learned from his experiences at Corning, Quest Diagnostics, Masonite International, and Accellent, it can alienate surviving employees, anger customers and suppliers, and destroy shareholder value.
- A better way is to treat these important constituents with consideration and compassion and manage the shutdown like a complex project. When the medical components maker Accellent shut its Memphis plant, in 2008, it gave employees and core customers several months’ notice, assisted customers through the transition, and helped most workers find new jobs. The results were stronger customer relationships, a highly appreciative group of ex-employees, and greater loyalty among remaining workers.
As the recession has intensified its grip on the world, and I’ve watched companies resort to extreme actions to weather the storm, it has struck me that this is a new experience for a whole generation of leaders. Many managers have never had to shrink their operations or workforces drastically, and as a result they are making a common mistake. They assume that they have to be the tough guys who make the decisions and that afterward they can delegate the implementation to others with one marching order: “Go fast!”
A version of this article appeared in the May 2009 issue of Harvard Business Review.
