When Budget Cuts Feel Necessary
When we get into an economic crunch, we tend to cut perks from our budgets. Doing so feels perfectly fair and sane – I often reflect on my library technician days where the acquisition librarian was trying to figure out which periodical subscriptions to cut. Frantically, leafing through paper reports (this was before personal computers), he noted, “Cutting these is better than their cutting us.”
So, yes, keep your staff at any cost. Instead of laying off, cut the budget for top executive travel, consultants who are not helping you increase giving significantly, and lunches/snacks for staff. I worked for an organization that transitioned to all of us bringing our own coffee cups, saving $15,000 per year. It was not much money but we all had a chance to help during the crisis instead of sitting at our desks panicking.
Two Critical Investments During Financial Stress
While cutting expenses is necessary, smart organizations know that some areas require continued investment, even during tough times.
There are two investments to make in a budget crunch. You will need to be creative in finding new gift streams and you do need to keep your best staff on board.
Investment #1: Harness Your Team’s Collective Wisdom
The first is easy to do: Encourage all staff to speak up about ideas that can help in any way. It does not matter if you do not like their ideas – what matters is that more minds are focused on the problem and that everyone can contribute. Sleep on it before you reject any ideas. People in the trenches know what works..
My best allegory for that advice is the Harley Davidson turnaround in the 1980s – one of the steps was to ask the employees who made the bikes how to best do it. See here for more of the story.
Investment #2: Double Down on Training
The second investment that I recommend is training. I know, conference budgets get cut right away when the economy slumps. It makes more sense to cut that travel cost when you need it for gift officers. However, cutting all training will have these effects:
- High-performing staff will stop growing
- You will have a harder time coaching/disciplining/removing low-performing staff because they will defend their quality of work with statements like, “You never trained me on that.”
- The performance improvement of your shop will seize up.
But don’t just take it from me. Take it from Henry Ford: “The only thing worse than training your employees and having them leave is not training them and having them stay.” Or read Nell Hendy’s article, “The Consequences of a Lack of Training in the Workplace.”
Smart Training Strategies for Tight Budgets
Training can happen in a few ways. Consider investing in training that has the highest impact over the shortest ROI timeline rather than cost. For instance, a general association conference where staff pick their sessions and come home with good ideas is excellent, but an intensive workshop may be more important to send them to when budgets are tight.
This counter-intuitive approach—investing when others cut—has historical precedent that nonprofit leaders can learn from.
I am reminded of the story about Kellogg: The executive went to their meeting expecting to be laid off when the Great Depression hit, but the chairman brought them together to talk about increased advertising (read about it here). In other words, investing is actually the best way to conquer your market in a bad economy.
The Bottom Line: Retention Beats Replacement
In the end, staff will still walk away if they feel that they have a better offer, and replacing a gift officer is not as easy as replacing a bag of chips. Replacing operations staff is not as simple, either: Those staff who know your prospects are going to take batter care of them during the crucial donor-retention months of a bad economy.
If you want to talk about staff retention ides, feel free to email me at marianne@staupell.com