Thursday, January 29, 2009

The Cutting Edge

Cutting costs is always difficult; the trick is to do so without cutting the soul out of our business. Since our people are the soul of our business, small-market owner-operators do everything they can to avoid outright staff reductions. After paring everything else to the bone and it’s not quite enough, some readers tell us they have cut part-time staff; others say they have implemented pay freezes or cuts. But most of the readers with whom I speak view cutting full-time staff as an absolute last resort.

Operators who live with their people and their communities know firsthand the negative consequences of staff cuts. Those operators know their own people well, and in some cases have formed close friendships with them. They are embedded in their communities, and they see firsthand the intricate interconnection among the station, its staff, the advertisers and the community. They realize that a staff cut ripples negatively throughout the community. Sometime it’s necessary, to be sure; after all, most of our operations today employ far fewer programmers, for example, than 10 or 15 years go.

On the other hand, larger and publicly-traded companies approach cost cutting in a very different way. It’s about the numbers, and since payroll accounts for the largest percentage of most companies’ budgets, that’s one of the first places such companies look to achieve drastic and immediate—and shareholder-pleasing—cost reductions.

The business climate in which we find ourselves has become so singularly focused on shareholder value that we have lost balance. We have a generation of executives who will do anything and everything to maximize shareholder value; those executives are praised for getting results, with no thought to the means used to achieve those results.

This is a shortsighted approach to business. But it is difficult—impossible, really—to change it without a fundamental shift in the thinking of everyone concerned—corporate executives, their boards of directors and the shareholders themselves.

We seem to be entering an era in which balance is valued once again. The days of black-and-white thinking seem to be over. My hope is that eventually the heads of large corporations will be able to acknowledge theirs hearts—and their souls.