One of the hardest things to do in any area of life is to make a tough decision. We have all had to do it at one time or another. It is one of those things that never gets any easier but is always necessary to move forward or maybe even survive. This is very true in the business world as company continually strives for an adequate profit margin, positive cash flow, sales growth, and increasing value. Tough decisions can take on many forms such as, deciding on the pricing of a product or service, entering new markets, investments in capital, branding initiatives, along with many others. I suppose the very toughest decisions revolve around people. The cost of labor is very often the major expense of a business and people decisions involve pay issues, the placing of key people in leadership positions, hiring, and the toughest, possible reduction in a workforce. Though the tough decisions never get easier, there are some things that can be done to ensure a discipline is in place to make these decisions when necessary. Consider the following four step process.
- Have a Standard of Excellence in each Major area– These standards of excellence are the result of a strategy and plan for each year that is set during the budgeting and planning process. The end result is a financial goal that serves as a guideline to measure against.
- Measure versus the Standard Continually– Actual results must be measured against the standard, monthly at a minimum. Only then can gaps be seen and dealt with timely to move the company back toward the standard. The reality must be continually known and adjustments made.
- Always be looking Ahead– Once the standards are set and actual results known, forecast ahead several months considering several scenarios but at least two; the result if the current gaps from the standard continue and the result if actions are taken to move back to the standard. This forecast should take place monthly.
- Hold Your own Feet to the Fire– The company leader, as a result of the three previous steps, must have the courage and resolve to make the right decision, quickly, to ensure the business moves forward and in many cases survives.