Okay, I admit it. I’m confused. Nearly every day we are inundated with financial news sending mixed messages about the state of the economy. How can consumer confidence be down when the GDP and sales of new homes are up? Wouldn’t that indicate consumers are at least somewhat confident? On the other hand, if unemployment rates are on the rise and workers see signs of continued downsizing in their companies, then we would expect consumer confidence to be on a downward trend. Economists are doing everything short of reading tealeaves and tarot cards to predict the future of the economy, but one thing is crystal clear: layoffs create a trickle-down devastation that affects our lives and communities.

For example, when a company lays off 10 employees who live in the same community, each having earned $30,000 a year, their disposable income—money spent to fuel the economic engines of their community—gradually dries up until they find other employment. As a result, nearly every business in the community that depends on those disposable dollars is effected, from gas stations to grocery stores, churches, schools, beauty salons, dry cleaners, restaurants, home improvement stores, drug stores, etc. Then they start to react to their lower revenues by laying off their people, which then causes a knee-jerk reaction from their suppliers, causing more layoffs…and so on.

The solution to this insidious chain-reaction is Profit Building Teams. Simply stated, a Profit Building Team is a team of employees whose sole purpose is to systematically work within every line of the company’s profit and loss statement to find opportunities to reduce costs and improve profit.

It is important for the Profit Building Team to represent a cross section of departments within a company--out-of-the-box thinkers who have cross-discipline, complementary skills that cover the vital areas of operations, marketing, finance, information technology, human resources, telecommunications, and administration. Once identified, the team goes through a process of preparing itself and the organization for innovation management. Ultimately, the team will develop creative cost reduction and revenue enhancement scenarios that will improve profits and strengthen margins, thereby allowing the organization to survive revenue shortfalls and economic downturns. Increased profits potentially mean that layoffs can be minimized so that the trickle-down devastation is reduced.

The characteristics of a Profit Building Team include the following:

• It is a group of no fewer than five and no more than eight people who have been selected because they have demonstrated their ability to think “out of the box.” The cross-discipline, complementary, cross-sectional skills they offer must cover operations, marketing, finance, information technology, human resources, telecommunications and administration.



• Team members are committed to reducing costs within each line of the profit and loss statement.



• Team members must set performance goals that will be easy to track and measure directly from future P&L statements.



• Team members must hold themselves accountable for reduction of cost and the profit improvement directly associated the team action steps.



• Team members must meet on a regular basis on the same day of the week, at the same time of day, and in the same place.

Although Profit Building Teams work best in large organizations where there is a diverse pool of skills and experiences to draw upon, small businesses can also benefit by partnering with other small companies from diverse industries to form a Profit Building Consortium. In this manner, several small companies pool their talents into one highly skilled team that serves all the businesses involved. Representatives from a range of small businesses, such as an accounting firm, marketing company, web site developer, and mailing service, would meet weekly to contribute their specialized skills and knowledge to the consortium. Like the large organization’s Profit Building Team, the consortium would focus on ways to improve profits and reduce costs in each organization. In addition, the consortium shares a cost-cutting advantage: they can leverage or barter their skills and resources within the group whereby each company offers its services at a reduced rate or in trade for other services within the consortium thus, cutting costs for all.

I am not an economist, but I do have a solution to improve the economy. Traditionally, Wall Street analysts have supported companies that reduce costs through layoffs. What if Wall Street created a Profit Building Team Index to evaluate corporations taking the approach of putting profit teams into place before resorting to laying off employees? Wouldn’t more people keep their jobs during economic downturns? Wouldn’t this help to sustain consumer confidence levels? I believe so.

It has been my experience that companies with Profit Building Teams uncover cost savings that offset labor line costs so that fewer layoffs are required, which helps to slow down the devastation spirals that effect our communities.

Let’s face it, corporations live and die by Wall Street mandates; when a massive layoff is announced, share prices increase. Shouldn’t it be different? What if Wall Street started giving the nod to the corporations announcing that hundreds of jobs were saved because the company used Profit Building Teams to cut costs that offset labor line costs?

Putting a Profit Building Team into place falls somewhere between job preservation and a downsizing strategy. It is a middle-ground approach that all effected parties embrace. Any company that can survive an economic downturn while holding on to valuable employees is better able to help reduce the negative effect of a slow economy and respond more effectively to improved market opportunities.