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When in doubt, take it to the owners

By Dan Carrison

At least three business realities threaten the continued existence of many brick-and-mortar facilities: the recession, the rise of e-commerce and outsourcing. Sometimes it seems as if businesses are closing left and right — from mom-and-pop stores to large manufacturing plants.

Anyone who has been through a merger, the sell-off of a subsidiary or the closing of a production facility knows the feeling of helplessness shared by all who must wait while the “powers that be” make the fateful decision. The suggestion that these remote decision makers might be open to persuasion often is met with derision. There is a sense among the employees that the owners and investors already know that the numbers do not pencil out.

Local uncertainty can create great managerial challenges. Since it seems to the employees that nothing can be done proactively, the “fight or flight” instinct usually leads to flight. Resumés are sent out, absenteeism increases, company stock is sold, and the focus on the day’s production goal is distracted by rumor. Many who read this, in fact, may be experiencing the nearly unbearable suspense — and the managerial challenges — of being on the chopping block. It may be of interest, then, to hear how a group of managers in another part of the world took their fate into their own hands and prevented a mass shutdown.

By the year 2000, terrorist attacks in Israel and the ensuing negative press had taken its toll. The collapse of the tourism industry affected every business that transported and catered to the millions of visitors who habitually came to Israel. But none suffered more than the deluxe five star hotels in Tel Aviv and Jerusalem, which had to contend with catastrophic drops in occupancy rates.

Many of the luxury hotels were owned by European consortiums, which received the dire monthly financial statements from their besieged properties in Israel with increasing alarm. Word soon spread that the owners, unable to endure such losses, had no choice but to shut down operations.

In what must have been one of the most serious business meetings of all time, the managers of the luxury hotels — competitors all — came together to develop a strategy. They knew that only a strong business case for continued operations would have any effect on the panicked owners.

The managers began to see ways to change hotel operations drastically. Desperate and creative innovation soon swept away traditional organizational structures. The business of running a hotel was revolutionized.

First, the European owners had to be shown the costs of shutting down operations in Israel. Since the hotels would be reopened at some future time, there would be interim security and utility costs, as well as maintenance fees, insurance and property taxes. Then, of course, there would be the costs of reopening, which would include hiring and training a new staff, as the hotel began from “square one” in terms of regaining its branding and reputation.

These costs were juxtaposed to the operational savings that would result from the totally re-engineered hotels. The bottom line: The owners agreed that it would cost more to shut down and reopen than to remain open under new and innovative efficiencies.

And today, you’ll have a hard time booking a room without advance reservations in the bustling five star hotels of Israel.

Remember that the owners may not be in the best position to make that fateful decision. And the owners want to hear sound reasons why their investments are viable. So don’t wait passively for the axe to fall. Take your business case to the owners.

Dan Carrison, a business writer and consultant, has authored or co-authored four management books: Semper Fi: Business Leadership the Marine Corps Way, Deadline! How Premier Organizations Win the Race Against Time, Business Under Fire and From the Bureau to the Boardroom. Carrison is a general partner of Semper Fi Consulting and founder of www.ghostwritersinthesky.com. Carrison lives in Los Angeles, where he teaches corporate communication for the University of La Verne. He can be reached at dan.carrison@gmail.com.

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