Warren Moss My Blog – My View Search Main menu Skip to primary content Skip to secondary content Home About Warren Moss Contact TAG ARCHIVES: RETRENCHMENT 5 Lessons I learned in a restructure Posted on February 23, 2014 3 The last six months have been a defining period in the journey of Demographica. For those that have followed the Demographica story, you would know that there have been many challenging times but I must admit, the last 6 months have been the most educational and fulfilling to date. In short, I realised last year that the business model needed to change. I had this feeling of angst around the business model for some time but the thinking around the restructure process only started in May/June 2013. This post is not about what we did to restructure or why the business was restructured, but rather about the lessons that I learned. I learned lessons about people and the way they respond to their security at work, I learned lessons about the business community and the impact it has on culture, I learned lessons about challenging your innermost beliefs about what makes a good business, and most importantly, I learned lessons about myself. I’d like to share them with you here: 1. Think before you hire This seems obvious. But is it? Demographica has experienced rapid growth since 2009 and the need to hire more staff to service the growing needs of the business was clear. We hired at will to keep up with demand and during a hiring spree, it’s pretty much impossible to only hire top quality. During the restructure process, my partners challenged me to look objectively and critically at certain positions and people to decide if they were a luxury or a necessity. Once the decision was made a retrenchment process followed. The retrenchment process is ugly. It rips the foundation out of people’s lives and it has a spill over effect on the entire company. It’s not pleasant for you as the employer either, I had many sleepless hours wrestling with the retrenchment process. Lesson: When hiring, take the time to make sure that this person is not only right for the job, but right for the culture of the company, because the process to terminate their employment impacts them, you and the people they work with in ways that are unimaginable. 2. Retrench properly Demographica is a ‘family culture’ environment. Just take a look at our facebook page to get a window in the culture here. I’ve also always had an unusually close relationship with my team. When someone hasn’t worked out, I’ve always taken them for lunch and had a frank conversation with them about their future at the company. That conversation has always ended with a handshake, a compensation package and ways are parted on good terms with no bridges burned. During the restructure, I tried this methodology and unfortunately it didn’t work out. It didn’t work out because during a company restructure, the element of trust between employee to employer is challenged. Things can get ugly and the rumours start to poison the company and the business community at large. Lesson: Get a labour lawyer in from the start and do the process properly. There is no other way. Just do it properly. 3. Look harder at your expense model Restructuring the business gave me the opportunity to look at our expense model and cut away the fat. When my partners and I decided to cut the fat, the first step was for me to look at the income statement and make decisions on expense items that were not needed. I trimmed about 20% of our expenses and felt pretty good about it. I then sat with one of my partners Neil, and he challenged me to cut deeper and we debated every single line item on the income statement. We managed to cut a further 15%, bringing down our fixed expenses by a whopping 35% in total. For business owners, take a second to think about the increase on the bottom line if you manage to slash 35% of your monthly expenses. The truth is, we never ever really needed those expenses. They came as part of our rapid growth and they never really impacted the business that much. Today, Demographica is a significantly stronger business with 35% less fixed monthly costs. Lesson: Think long and hard before committing to another expense. Always ask yourself the question: What else could I use this money for? Is this the best place to invest the money? 4. Perception in the business community This was a lesson that I didn’t anticipate. With hindsight, I should’ve thought about it and managed it but I suppose hindsight is always 20/20 vision. I got many phone calls from people who I work with to ask me about the Demographica restructure. Questions I got asked were along the lines of: “Are you going bankrupt?”, “Is Demographica closing down?”, “What’s with the turmoil at Demographica?”. A wife of a friend even asked me directly: “Is Demographica having financial problems?”. When staff are feeling insecure about their jobs they start to update their CV’s and put the word out that they are open to opportunities. This leads to interviews and when you come from a company with a top reputation like Demographica, our staff have no issues getting interviews. Even competitors and collaborators would interview my staff just to try get some insight into the happenings at Demographica. These staff are generally insecure and a little disgruntled so they are painting a picture of total turmoil and burning at the company. It’s totally not true but that is the story that they tell. Lesson: Share the intent to restructure and the reasons for the restructure with the companies that your reputation is important to. If they get the information from you before they hear the stories it is much more credible than when they hear it from you after their opinions have been influenced by disgruntled employees. 5. Business partners I am blessed with business partners that have held my hand and guided me through every step of my Demographica journey. There is simply no way that I would have got to the place that I am at now without them. To have partners that are incredibly empathetic, experienced and objective whilst at the same time have a vested interest in the company is priceless. Lesson: Seek out a partners. Once you find the right partners do whatever it takes to bring them on board and align your interests with theirs. Most of the successful people who I know have partners, very few do it alone. I started off this post by saying that the last six months have been the most educational for me in my time at Demographica. The lessons I have learned (I’ve only listed 5 here) have been invaluable and have only made me a stronger leader and a better CEO. Demographica is a significantly stronger business today then it has ever been with a team that is hungry and dedicated to our business purpose. We are well poised to take advantage of the advertising industry within our new structure and the people who are currently part of the team are a huge part of that. Watch this space. 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