Address needed change
In the past, if numbers or prices changed as little as 3 percent, it wasn’t a big deal, but that’s changed in the current environment.
“In many of our businesses, what we did was we said, ‘Well, OK, if that goes up 3 percent a year, no big deal, because we were living in an inflationary environment where it was always easy to say yes to a little bit more. We’re not in that anymore.”
Instead of saying yes, you have probably had to cut back more. Perhaps it was cutting your 401(k) match or reducing health benefits or having furloughs. Whatever the situation was, there was one common necessity: Change was needed, and you had to be able to recognize that fact. You do so by looking at the numbers, which don’t lie.
“In all my businesses and all my divisions, we build [data] matrices so that there’s an objective truth, an ability to have a view,” Ginsburg says. “Then, after you’ve gone through it with your managers, you have the ability to articulate what you want because you want to change the matrix — you want to change your sales, you want to change your expenses, you want to change your outcome.”
When the numbers tell you change is coming, you have to start with honest communication.
“Be candid with people,” Ginsburg says. “Tell them the truth. Don’t tell them what they want to hear — tell them what they have to hear. If you tell them the truth, people can have a tremendous capacity to deal with the truth and no capacity to deal with fiction. A salesperson knows if they’ve sold a sufficient number of units, cars, widgets or whatever it is to know that they’re doing well or they’re not doing well, so you can’t tell them things are bad when things are good, and you can’t tell them things are good when they know full well that their commission checks aren’t doing what they have to do to support their own families.”
You also need to be consistent across the organization.
“What’s particularly important in communication is being consistent about that communication so we don’t say one thing to one group or another to another group and then finally another to a third group,” he says. “What we have to be able to do is come up with a consistency and internal logic, and in order to do that, you have to think about your business 24 by seven by 365. Some people like to run a business over an eight-hour day, over a four-day week because on the fifth day, they’re playing golf.”
Beyond consistency, you also have to communicate things early, which goes back to having your arms wrapped around the business.
“If you are so late in the cycle of understanding the dynamics of your business and what’s happening around you, it’s difficult to communicate to your employees early,” Ginsburg says. “If you can get your arms around some of these issues about where you are with lenders, what’s your leverage, if you have a lack of demand and have too many employees to explain that, so not all of a sudden, you’re six months into the dilemma and the next thing you’re doing is you’re reacting. In order to be a good communicator, you always have to be proactive.”
Whenever changes are necessary, you’ll als
o have to address your managers’ attitudes.
“Denial is what you have to deal with with your managers,” he says. “‘The matrix says that over the last four months, your production is down. Why is that?’ The very first thing a lot of managers will say back to you is, ‘Oh, no, it isn’t.’ Now we have to deal with the belief system. ‘OK — what is it about this matrix that you don’t believe?’ You have to get people to confront what is happening in front of them and what the numbers say.”
