Cost reduction communication mistakes I have seen

Here are some examples of cost reduction communication mistakes I have seen.

Compaq reductions in Nordic countries

Compaq went through a rare bad patch around 1999 and we needed to put some cost controls in place. A corporate leadership team member went to Norway, Sweden, Denmark and Finland to explain how serious the situation was. He explained that teams all needed to work on reducing cost. He had a major problem communicating this. It became known before his arrival that he had leased a private jet to minimize the time it would take to get around the four countries. It is irrelevant whether that saved cost in some imaginary or real way. It destroyed his message, and nobody seemed to take any particular action after he left. We then had to work on the various initiatives in detail, country by country, facing a bit more resistance than usual because of the communication mistake.

Senior executives behave as though restrictions do not apply to them

The leased private jet example is part of a wider phenomenon. The most senior people sometimes do not change their own spending habits while making “difficult decisions” that only affect others. Personally I think of this as cowardly leadership. Issuing travel freezes for your business from the comfort of your Gulfstream as you cross the Pacific is perhaps the most egregious, though unfortunately common example of a complete disconnect between leadership and employees. A G550 costs about $45 million. This is the same as 300,000 advance-booked return flights from Chicago to Atlanta on United by people who now have to jump through hoops to bring in business or cut costs due to the travel freeze.

As a general rule, the easiest way large corporations can cut travel costs significantly is to temporarily ground or totally eliminate their corporate aviation fleet. The symbolic value of such a move is also high. Employee reaction will be “Wow, we really need to get serious about reducing cost.”

Avoid cultural references when communicating internationally

I remember being with a group of young English Autonomy software employees in Cambridge when a US-based HP colleague came to visit. One of the English audience interrupted him the second time he said “We are going to hit the ball out of the park!” My English colleague asked why anyone would want to hit the ball out of the park, rather than putting it into the opponent’s goal. Similarly, you should avoid any references to television shows that are popular in your country, but which others may never have heard of. TV show names are often totally different when translated.

Understand who is present

Former US Secretary of State Condolezza Rice was a guest speaker at an HP annual kickoff event in Las Vegas. Our event team did an outstanding job with all but one single aspect of the multi-day event. What happened was really not their fault. Ms. Rice’s team prevented the event organizers having any direct contact whatsoever with her. While the team was given extensive briefings, I suppose they decided they did not want to bother Ms. Rice with all the details. There were about 1,500 of us in the room. We had come from all over the planet, representing over 100 different countries.

Quite soon after starting, our star guest said, “As you know, I spent a lot of time with leaders of countries around the world while I was Secretary of State. HP is a great company and you are great leaders. I am sure we have Italian-Americans in the room, and Irish-Americans, and even Russian-Americans…” A buzz started around the room. She clearly had no idea who her audience was, and her entire speech was off-target. The first step in preparing any communication is to understand who your audience is, in detail. If you are going to talk to a new audience about cost cuts, do your utmost to understand what they have already been told, and what they have learned through the rumor mill. If they have already been told that 20% of the jobs in their location will be eliminated, you should skip the part of your speech about future growth, and get directly to the point.