I have run four businesses that needed to be resuscitated. Out of that work, I wrote a book called Small Business Turnaround, published by Adams Media. I have been thinking about what I would advise President Barack Obama to do. My recommendations would fit businesses of any size.
The first thing I would tell any leader is that you aren't going to make everyone happy, and some people are going to feel a lot of pain. The pain will be so bad for some, you will feel heartless and question your own judgment. You will want to save everyone, but unfortunately you can't.
The only thing you can do is minimize the collateral damage and motivate the survivors to focus on a plan that the leader, executive team and board can get behind. You would think being the president of the United States or of any organization would automatically give you all the powers needed to make everyone follow your plan. People in a stressful situation want to be led, but they will follow only if they are listened to and included in helping to solve the problem.
Leaders have to get everyone's buy-in or they will be quietly undercut. Their effectiveness mitigated! Here is what the president should do.
1. Business plan: Every business needs a plan. The plan has to be one that either the company can afford, based on existing cash flow, or can raise because others see it as a potential revenue generator. In Obama's case, it is selling Treasurys to investors around the world who believe in his plan.
2. Salary cut: I have heard Obama say that he and his top people won't get cost-of-living increases, but I haven't heard the president announce any cuts in his or his top people's salary. If you are asking employees, customers, vendors and stakeholders to take cuts, he has to do the same. The leader sets the example. Plus, jobs can be saved if everyone takes a cut. The leader can afford a reduction.
3. Get rid of non-performing assets: Every business offers services and products that provide a minimal or negative return. Sometimes you offer these things because they are a legacy of the company; sometimes because you look at them as a loss leader to sell other products and services; sometimes they are the sacred cow of a once-powerful person in the organization. As much as I hate to say it, the car industry isn't cutting it as it is currently configured. I would find out who would want to buy the assets of the car companies the government is underwriting and see whatever money you can get. This way, you avoid throwing good money after bad.
4. Reduce headcount: No one wants to see more people out of work, but government needs to shrink. It is best to reduce more people than you need to so people don't wonder if they are next to get the ax. Keep only the people who sell and support the product lines or services you plan to continue offering. Give those being let go one's month salary for every year worked, plus unemployment.
5. Focus on competitive advantages: Has anyone in government figured out what our competitive advantages are over China, Russia, India and Europe? I haven't heard anyone mention this. You can't succeed unless you have some type of advantage. For example, China and India have a massive amount of people so they can beat us every day in the low-wage manufacturing game. Our advantages are our entrepreneurial spirit, number of educational institutions, quality of service, cultural mix, mineral resources, manageable weather and, most importantly, rule of law.