Downsizing during a downturn is risky. Instead of using industry benchmarks, managers can turn to their own employees for suggestions of where costs can be saved. When leaders take this bottom-up approach, the authors find they not only cut costs significantly but also realize their goals more rapidly because managers and employees are motivated to help. Leaders should ask employees for four different types of data: the key projects and routines going on in the company; the effort required for each routine and project; the ranking of each project according to strategic priority; and a plan to redesign operations around these priorities.
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Almost every business is reorganizing its operations in response to the economic slowdown caused by the Covid-19 pandemic. Often, companies take a top-down approach to resizing based on a limited set of data such as earnings forecasts and competitive benchmarking. But following this playbook usually results in “wrong sizing” and demoralized employees.