Downsizing Considerations

What size operation fits your style? April 10, 2005

Question
I would like to know who has had experience with downsizing. I am considering cutting some employees to retain my sanity. I am having problems keeping quality up with seven employees in the shop. There is more than enough work, but it almost doesn't seem worth it some days. I am considering going back to two seasoned cabinetmakers and me.

Forum Responses
(Business Forum)
From contributor B:
Everybody has a different style of management, and you've got to do what feels good for you. I've whittled down from 6 in the shop to 3 in the shop over a period of about 18 months. My cash flow is better, and so is my quality. I couldn't stay on top of all the guys, and I was finding things at installation that didn't make me happy. I'm much more hands on now, and it is less stressful. In actuality, I don't think that the quantity of work going out the door has really gone down that much. I know that the quality is better. If you've got seasoned help, you're ahead of me, though. You can probably trust your guys to do it right without having to watch over them too much. I found that I didn't have enough space or tooling to support 6 guys, and I wasn't willing to make that investment. I know a shop down the street that had his main help quit several months ago. He told me that his quantity of work hasn't really suffered and he isn't even looking to replace the guy. I don't know what your relationship with these employees is and what it would cost you to cut back, but you need to keep your sanity!


From contributor I:
I think it really lies in the scheduling of your jobs. If you try to get everything out at the same time, you need a lot of hands. If you can schedule one job after the other... none of this stop on this one, start this one, start that and go back and forth. If you get that scheduling down, then you won't need as many people as you think. And stick to it. If a job comes in, tell them right off the bat - it's 3 weeks down the road before we can start (or whatever time it is). If you lose business, you lose it, but your sanity is intact.

From contributor J:
It looks like you need to delegate some of your work. Out of the seven people, is there one that could take some of your responsibilities? I suggest you research some books on delegation.

From contributor D:
I think I agree with contributor J. Failure to delegate is the number one problem I see with any business that is growing from the small shop to the mid-size shop. It is easy to spot the owner in these situations - he's the one that is rushing around, trying to keep too many corks underwater, while everyone else - employees, vendors, customers - watch and wait their turn. Burnout always follows.

You have to set systems in place that any employee can follow. The sod foreman has job security by shouting "green side up" every now and then. The smart owner will simply post a sign that says the same thing, and send the foreman off to do better things. You will also need to develop an individual to whom you can delegate much of what you do. Perhaps setting up teams to produce jobs will be a way to work. How you spend your day will be very different from a 3 man to a 7 man shop. If you don't know the volume of work performed (per work unit) in either shop, then you need to improve your business skills. Otherwise, it is an indication of the deception, "I'm workin' hard and the bills are being paid."

You also need to decide what it is you want. There is certainly nothing wrong with a 3 man shop, or with a 7 man shop. But they are different. If you prefer the hands on and the shop work, fine. If you wish to grow and increase, you will realize that your workday will be different. The fact that you asked the question is a good sign that you are looking for answers.


From the original questioner:
Thank you for the input. I am dealing with many of the things that all of you mentioned. My priority is to make it work with what I have - 2 cabinetmakers and 5 employees with abilities, but who are still learning skills. I have recently had to rely on my unskilled workers too much to try and keep up with work. I have decided to slow down for a spell and take things slower. I am now delegating authority to my top two people and letting them deal more with the small problems that keep me from doing my work.

From contributor P:
I've been in your situation and got through it. The key to getting the shop to run itself is detailed plans. These take time, but if you put a *complete* set of drawings into the hands of a competent craftsman, then you can go do other things. You have to take a look at information flow in your shop - if you are the only one who knows what's going on, and you are having to give people instructions constantly, then something is wrong. Learn CAD and start using it, otherwise it's impossible to manage more than 2 or 3 cabinetmakers.

There are also a lot of other issues: ration of skilled to new people, and who is training all of those newbies? You might find that two good guys with one helper complete more work than your current crew. Also, for the price of the unskilled helpers, can you upgrade your equipment to make the good guys more productive? Would the added shop space make them more productive? Could you add office help to make you more productive? 3 unskilled workers ($10/hr) are costing you $60k/year. You can lease some damn nice equipment for that kind of dough. As you grow, you should always emphasize success: pay your good people more, give them better equipment, and good information, and stand back. Then when you do add new people, the standards of the whole shop have been raised, and the new guys will want to be as good as the good guys. This has worked for me as I have grown from 1 employee to 16.

It's also critical to start measuring productivity. For years we used a simple formula: how many hours to build (not including finishing) divided by price. This is easy to keep track of - I would issue a sheet with each job that had a block of squares, the guys would write down the total hours spent per day on that job, and then they could easily see the score at the end of building. Once you start measuring something, you can improve it. We started at a target of $40/hour with this method, and 10 years later we are averaging over $90/hr, with some jobs getting up to $175/hr.

Last thing: are you the kind of person that people want to work for? Do you listen to your employees and let them help you figure out how to get the work done? Do you project an air of calm competence? Do you have a sense of humor? Are you generous? All of these things help to make a happy workplace, and give your employees incentive to get the job done well.

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