Cruel to be kind - in the right measure

Cruel to be kind - in the right measure


Unfortunately, it won't be a merry Christmas for some channel workers this year. On the back of essential cost-cutting measures brought about by a frightful year of business, the axe has been wielded through the ranks of many of the larger channel players in the last quarter.

Some people must be hurting and you do have to feel for some of the unfortunate managers who were delegated to pass on boardroom decisions and make judgement calls on who stays and who goes.

I can only imagine what a nasty shock losing your job just before Christmas is so it is very easy to point fingers at the executioners and declare them to be nought but cold, callous, heartless rationalist pigs.

Without doubt, such drastic action at this time of the year is a tough call to make on people you work with, but the truth of the matter is these were probably the right decisions for the companies concerned to make.

Let's be brutally frank. Not too many people go into business for the love of their employees. Employers may recite spiels that they are all about their "people", but the bottom line is they are only answerable to shareholders, either public or private.

This year, Australian distributors and resellers have had to deal with a slowdown in buying, a blurring of channel commitment from vendors and a foul wind blowing over the whole technology investment sector. Add to this, a continued squeezing of margins and a plummeting exchange rate and the fundamental necessity of staff reductions in many organisations becomes obvious.

Forgive me for destroying a few misconceptions some people may hold about the world owing them a living, but entrepreneurs roll out business plans primarily to make money. They then grow those businesses based on real and/or potential profitability.

Naturally, therefore, the moment profitability is eroded -- as has been the case under Australia's severely stressed economic climate of this year -- immediate measures need to be taken to return to profitability or at the very least to eliminate losses. That leaves two options -- slash overheads or boost revenues. Generally, putting the razor to costs is an easier course of action to embark upon.

The rash of recent channel sackings, retrenchments, lay-offs, redundancies -- whatever you want to call them -- are nothing new to the process of business decision making or even the channel. They also in no way reflect the long-term viability of the organisations concerned. The year 2000 was a true annus horibilis for the Australian IT industry, as one speed hump after another stifled all attempts by most companies to accelerate operations and/or meet forecasts.

The swift, ruthless action taken in recent weeks by players such as Siltek, Logical, Praxa, Data#3, NetRegistry and Com Tech, to name but a few, is perhaps best viewed as a barometer for how determined these companies are to survive and prosper.

Any organisation with strong accounting and business methodologies will immediately be aware of a downturn in their revenues and profits. They will then make the necessary adjustments to the business model, focus on core competencies and ride out the storm.

Anyone in business will understand human resources are generally the most expensive of all overheads. So when push comes to shove -- staff become cannon fodder.

This is not necessarily a good scenario if you are now on the outer -- but it is not necessarily heartless beasts that have run you through. It is simply good business practice to trim the human fat as the costs versus profitability equation loses its balance.

Not only does this doling out of pink slips bring costs back into line with revenues, but it also leaves an organisation with clear opportunities to restructure, refocus and attack greener pastures. Sometimes you have to be cruel to the troops to be kind to long-term viability.

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