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Little Find

Cut yourself some slack!

For decades now, corporations have been tracking down redundancies, surpluses, and any wiggle room in a constant quest to cut costs. They have taken this logic about as far as it can go, a management expert says. In fact, the current crisis shows that maintaining a little slack in terms of personnel, stock, and procedures contributes to a company’s resilience.

The constant search for increased productivity is now having a negative impact. Middleclass Americans gain nothing from these savings, and companies become weaker. According to University of Toronto professor emeritus Roger Martin, it’s time to redress the balance, and blow the whistle on this race to eliminate even the slightest inefficiency. Costco, Walmart, and Southwest Airlines have already understood this. These companies no longer restrict themselves to the bare minimum. They have been increasing salaries, hiring more employees than is strictly necessary, offering more training, and favoring promotions from within the company. 

Suicidal? On the contrary: staff are more committed, so give customers better service; customers appreciate improved service, so they come back to buy more. Overall, companies that have a little slack are faring better in the current crisis.  

What is the cost of these margins of comfort? In fact, these organizations are forced to be more innovative and smarter to keep their prices attractive.  

 

To go further: When Efficiency Goes Too Far podcast by Roger Martin and Curt Nickisch (Harvard Business Review, 29 September 2020). 

Françoise Tollet
Published by Françoise Tollet
She spent 12 years in industry, working for Bolloré Technologies, among others. She co-founded Business Digest in 1992 and has been running the company since 1998. And she took the Internet plunge in 1996, even before coming on board as part of the BD team.