Page 24 - MS Year in Review 2020

your economic distress as an individual or other factor.” This is a cultural message.

It clearly demonstrates through behavior what the real core values of the
organization are. Although we might say that “people are our most important asset,
“our behavior indicates otherwise. This is also a repudiation or abrogation of an

unspoken value or “implicit bargain” of reciprocity between business and its
employees: “You take care of the firm, and the firm will take care of you!”

Similarly, if companies have agreements or contract in place with vendors, and it

they are peremptorily canceled the same message is being sent. These vendors are
only “partners” when it is convenient for the organization.

These actions will serve to immediately diminish “goodwill” and trust among

employees and vendors. “Goodwill” and trust are intangible assets that once
damaged or lost will be very costly and take a very long time to repair. In fact, they
might be irreparable.

Actions taken to immediately cut costs amount to a “Ready-Fire-Aim” leadership

strategy.

Please note that I am not suggesting that a business should take no action to
reduce its costs and cash outflow. Instead the business should look for more

creative ways to reduce costs without the consequences of the loss of goodwill and
trust. A more creative way to reduce to reduce its costs and cash outflow can only
result from a deep dive and systematic assessment using a disciplined planning

9
process that has been described in a previous article.
It can be argued in rebuttal that during a fire everything must be sacrificed to put
out the fire. True, but the analogy is spurious, because a precipitous decline in

revenue and profit is not the same as a fire.

9 See Eric Flamholtz and Ivailo Illiev, “Overcoming the Natural Human Responses to the COVID-19
Crisis,” Linkedin, March 25, 2020.

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