Why “Making the Numbers” is Stupid (Part 2 of 3: Ten Stoopid Short-Term Behaviors)

In my last post, I covered the moronic tyranny of expectations. Hopefully it’s apparent how external pressures can get an organization to focus on the wrong thing – the mile marker rather than the destination.

Once your organization falls into that trap, you’re sure to see some of the following behaviors (or ones of similar colossal stupidity). These behaviors eventually become part of the culture because by performing them, the organization is simply mortgaging its future to bring forward good performance into the current period. Doing so helps meet near term expectations but then creates an even higher hurdle to meet expectations in the next period. It goes on and on until the organization crashes in a blistering ball of flames and worthless stock options (can you say Worldcom? Enron?).

So without further ado, I give you some of my all-time favorite moronic business behaviors guaranteed to help you make your numbers today at the expense of your long term strategy tomorrow:

Figliuolo’s Top 10 Stoooopid Short-Term Focused Behaviors

10. “No color copies.” I’m not even going to dignify this with an explanation.

9. “All expenditures over $16 need to be approved by a C-level executive.” Try this math – take the “approving authority’s” total annual compensation. Divide by 120,000 (work minutes in a work year). That’s how much every approval signature costs you assuming they write quickly and sign things in one minute or less. A better idea? No approval needed, fire the executive and take the direct cost savings (I told you this post would be full of blasphemy).

8. “We should cut discretionary expenditures like Post-It Notes, Styrofoam coffee cups, and kitchen snacks.” Do the math. You can’t Twix and Snickers your way to profitability and all you’re doing is pissing off the people who stuck around to do all the incremental work for no pay increase (mmmmmmm… Snickers….).

7. “Why don’t we automate all our customer service and try to get ‘high-maintenance’ customers to go away?” Have you ever spent 20 minutes navigating an automated phone system? For more on this stupidity and its ilk, see this post on customer disservice. You won’t just piss off the high maintenance customers. You’ll piss off ALL your customers. Then they defect. Then you implode.

6. “If we defer investment in the new system, it won’t hit the P&L until next year.” Sure, the expense won’t hit the P&L. Nor will the revenue or margin improvement. If the investment has a positive ROI, do it. The expense you’re deferring has a corresponding benefit deferral that goes along with it.

5. “Let’s reduce the frequency of our maintenance programs to the minimum standard.” Yep. Fewer dollars on repair parts, reconditioning, etc. Do I even have to say why this is naughty? You’re going to pay for it at some point. Either pay the maintenance fee now or the equipment repair cost plus the negligence lawsuit cost later.

4. “Let’s cut prices and give discounts to drive sales this quarter.” It’s called cannibalization Dr. Lecter. You’re simply pulling sales forward. You’ll just have to replace those lost sales next quarter. And discounting? If you’re going to make $100 next quarter, why would you sell it for $90 this quarter just to make some chogie boy analyst on Wall Street happy? Stooopid with three O’s.

3. “No raises.” Have you seen the price of gas? If you don’t at least pay them to keep them reasonably whole, they’re going to go get their scratch elsewhere. If that happens, do the math on recruiting, hiring, and training costs to replace them and you’d be better off paying your meager 1.25% raise than trying to find a new employee unless of course you’ve decided…

2. “Let’s have a hiring freeze!” Dumb. Flat dumb. Let me be sure I understand – you have a lot of work to do so you planned to hire people to do it. Now things are bad and there’s even more work to do. Eureka! Don’t hire new people and make the people who are here do both their old work AND the new work. Yeah. And then they quit… so you have to hire more… but you can’t because of the hiring freeze. Dumb. You’ve effectively driven off all the institutional knowledge your firm possessed and destroyed future innovations and improvement opportunities these individuals would have otherwise contributed.

1. “Hey fellas! Let’s cut the training budget!” Hey Skippy, that’s great. All that expense avoidance will absolutely fall to the bottom line this quarter. Problem is your folks won’t be properly trained to do their jobs in the future nor will your performance ever improve without the requisite investment in proper training and skill building (full disclosure: I run a training and development consultancy. This point is in both your best interest and mine. Please don’t cut the training budget because then I’d have to come seek employment at your company and that would be bad for all of us…).

Coming up in our final installment of Why “Making the Numbers” is Stupid I’ll lay out some recommendations on how you can avoid and prevent this kind of abject stupidity from cratering your business, your strategy, and your people. READ PART 3 HERE.

– Mike Figliuolo at thoughtLEADERS, LLC