When you’re working in a lean organization, you’re normally always striving for expansion and constant improvement. However, that’s not always possible in some circumstances, and when your company enters a period of stagnation, or worse, shrinkage, you must know how to deal with the new circumstances as best as possible.
Usually, when the organization is shrinking, this indicates a deficit in a certain type of resource. It could be money, time, or even raw manpower, if your company’s work requirements are more specific and lead to a stricter candidate selection process. The important thing is to understand that every period of a lack of growth can be traced back to some specific factors, and once you’ve been able to nail those down, dealing with the situation can be much more manageable.
Go Against the Stream
An interesting tactic sometimes used by experienced managers is to double down on the shrinkage instead of trying to block it. That is, if you’re running out of funds in a specific area, instead of trying to take the money from another part of the company, you can try lowering the funding for the starved one even more, but only temporarily of course.
While this might sound terribly counterproductive, it can actually lead to some interesting results when applied right. It can help you see some potential waste-related problems with the way this resource is being allocated, for example, and it can also tell you how well that department can work under additional pressure. Of course, you should do this in a careful and controlled manner that allows the people in that department to react to the situation appropriately, instead of pushing their limits for the sake of it.
It’s also a good idea to rearrange priorities – only temporarily, of course – until the issue is resolved. The current positions of your different employees may have worked well when the organization was larger, but now certain people might need to have their duties adjusted. This can include the consolidation of multiple departments into one, and even demoting someone if there is not a large enough workforce under them anymore to justify their leadership position.
It’s important that you make it clear to everyone in the company that this is only a temporary situation and won’t go on forever. Otherwise, you may see a sharp decline in morale across the board as people start to lose trust in the organization. It’s your duty as the leader to reassure your people that this is a brief period of instability and not something indicative of the future.
Evaluate Your Own Position
Also, don’t forget to take a long, hard look at your own current place in the company. It may very well be that your position itself can benefit from some adjustments, even if it may seem like it would hurt you in the short term. Of course, you shouldn’t deprive yourself of some critical duties that allow you to define the overall direction of the company, and it might be best to consult your employees as well before cutting your power too much.
Last but not least, don’t forget to immediately start planning for the future and thinking of ways to resolve the situation, as well as know exactly what the organization should do once it starts growing back to its original sizes. There will be a period where everything feels slightly awkward as your employees are adjusting to the changes, and you have to move quickly in restoring people’s previous positions and ensuring that things are brought back to order.
A period of unexpected shrinkage can actually tell you a lot about your organization if you’re willing to look more deeply into the situation. You’ll figure out exactly where the biggest instances of waste are, as well as how your different employees perform under additional stress. This will be quite valuable in the long run, especially when it comes to determining who to promote and how to organize the new duties of the organization more efficiently. Negative developments can actually be quite useful, so learn how to harness their potential and know how to recognize a situation that requires you to scale things down instead of striving for even more growth.