Whenever there is a perceived downturn in the economy (sometimes even when there is not) some companies’ strategy is to save funds by cutting corners. Though this action may be expected, there is a real risk of doing more harm than good.

Here are a few such true stories that might interest you. Please note the names have been changed to protect the innocent as well as the guilty.

Brooke was a controller at The Big Time Produce distribution company. She had worked there for several years and was well respected and highly effective in her position. Then the recession came, and Brooke was called into her boss’s office. "With the impact of the recession, we are forced to lay-off several staff members,” he said. “I am afraid that means you will be leaving us.” Naturally, Brooke was upset, but always a team player and thinking of the company, she replied, “I understand. Maybe I could help the company by working part-time or become a consultant during the transition. That way you would save your funds while ensuring that your books remain meticulously organized.” Her boss politely declined the offer. As Brooke was leaving, she turned and asked her supervisor how the accounting process would be handled in her absence.  Her boss turned and proudly exclaimed that his 19-year-old niece, who was a freshman accounting major in college, would be running the company’s books and that this change would result in great savings.

Six months passed and it was tax time when Brooke’s phone rang. It was the boss’s niece calling to ask a few accounting questions. These questions included: “What happens when there are negative numbers in my accounts payable column? Why are my accounts receivable being deducted from the company’s assets?” Clearly there were significant accounting errors that needed to be cleared up before taxes could be filed; otherwise, the company risked an IRS audit as well as negatively impact clients and vendors. All of which would look very bad for the company.  Brooke was called back to the company to “fix things.”  In the end, the company ended up paying Brooke a full year’s salary to get their books straightened out and she became an ongoing consultant for the company.

This is an example of poor decision making on the part of the company that was certainly not well thought out. However, these types of decisions happen all the time, perhaps in your company?

Here is another example that occurred, but these damaging results were not nearly so evident or quickly discovered as in the previous example.

Sales at The National Sweet Fruit Company were performing well. The company employed several agencies to assist them in areas where they needed professionally trained staff but lacked the personnel to do the work themselves. These various agencies helped execute the company’s public relations, foodservice outreach, and retail business analytics. All these agencies were well respected and effective in their respective tasks. Consumers, foodservice operators, and retailers were all happy which, in turn, made the company’s sales staff happy.  Then a new marketing manager for the company was hired. The new marketing manager wanted to show his value and so the first thing he did was to suggest that these various programs be brought in-house to “cut costs.”

The new manager took over the public relations function and soon convinced his superior that the sales staff should take over foodservice outreach and retail analytics. Of course, the well-intentioned salespeople had little foodservice experience and even less analytical training or experience but found it necessary to fill in the gaps left by the absence of the agencies. Without any formal understanding of analytics, the sales force soon resorted to guessing on how to interpret the data. When making foodservice calls, they fell back on their understanding of retail to provide solutions. Quite simply, everything was guesswork. A significant unconsidered result was that sales staff spent less time selling to retail and more time trying to figure out foodservice while guessing and preparing their “analytics” reports for retail customers.  On the surface, all seemed to go well.  The activity reports showed that foodservice was being called on and retail reports delivered. What management did not see was the effectiveness of each activity. Meanwhile, the company public relations began to feel as if it was on autopilot: a recipe this month, a ripening idea next, then back to a recipe.

The result was at the end of five years the company’s sales volume had fallen almost 20%. Granted this was not the result of a change to any one program but was the collective result of poorly considered management decisions.  Management opted for a Do-It-Yourself mindset when the staff had neither experience nor training to fulfill these new roles.

These same scenarios play out repeatedly in business with perhaps the most obvious being in social media. So often companies bypass professionalism in favor of hiring that 19-year-old nephew. The logic behind these decisions? “Well, he spends all day on social media, so surely he knows what to do.”

In the end, companies that succeed are those that understand their internal strengths and recognize their weaknesses. By utilizing professional, experienced, and trained hires or service providers, these weaknesses no longer exist. Think about these true stories the next time your niece or nephew assures you that, “they can do the job.” Remember, Do-it-Yourself does not always get it done.

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