Downsize and Shrink or Hire Rainmakers?

Decreasing revenue typically means that management has to start looking at costs quite seriously and the first step they take is to decrease staff costs.  However very often the real malaise of decreasing revenue may often lie with the CEO and top management. And it may mean that there are not enough rainmakers amongst the key leadership. People with influence, who are well known in their industry who can increase sales and revenue by looking at new avenues of business. The dictionary meaning of rainmaker is ‘a person who generates income for a business or organization by brokering deals or attracting clients or funds.’

 In business, a rainmaker is a person who brings in new business and wins new accounts almost by magic.  It means generating substantial new business or additional cash flow from sources sometimes outside established business channels, sometimes by connecting with people in non-traditional or hidden markets, and sometimes by prompting current clients to spend more money. A rainmaker is usually a key figure in the business or organization, not merely a sales person but a principal who is usually highly regarded within the enterprise.

 Two Global Stories

 1.

An Indian company has seen revenue falling steadily for the last 12 quarters.  Currently the revenue is a third of the what the revenue was 3 years ago.   On the recommendation of the CEO, the company has been downsizing regularly over the last 3 years to keep pace with the decreasing revenue.  The company is located in the better business districts of one of the main cities. However, there has been no attempt to look at cheaper alternate office space or look at decreasing other costs besides staff.  A move to the suburbs has still not been considered.

2

 The UK office of a global company has reduced to half its size in revenue over the last two years.  To make up for the decrease in revenue, the company has been regularly announcing redundancies in staff.   The company is located in the one of the top business districts of a key city.  The high rent is a cause for concern, but a move to the suburbs again is being thought of as a blow to the company’s image, especially since this company is housed along with the other companies in the group.

 Some Learnings for Top Management

Both companies are in industries that are showing healthy growth year on year.  The CEO and the Board of Directors of both companies have been blind to the fact that there are no rainmakers in the top management teams. No one in the industry really knows their CEO well enough, nor does he appear in the trade or business press, nor would anyone recognize him easily at a business conference. Amongst the other staff, management is not quite sure if they lost the hunters or the farmers while they were downsizing.  On one hand both companies have been losing existing sources of business, suggesting that the competence of the farmers itself was not good enough.  If they lost hunters in the process of downsizing their capabilities to add revenue would be significantly reduced.

Both companies are caught in a downward spiral of shrinkage.  They will both lose market share steadily because they are doing nothing about creating a disruption in their system.  Both need to hire rainmakers in the top management who can stop this downward spiral. The regular managers who are managing the P & L may be incapable of pulling the companies out of their downward spiral. The rainmakers in the leadership can then work closely with the hunters in the organization to take the company up the revenue ladder again.

 Key Questions to Ask

1. Is your CEO or anyone in your top leadership team a rainmaker? Do you have enough rainmakers to disrupt the current situation and pull your company out of the downward spiral?
2. What is the composition of your staff? Do you keep a constant count of hunters and farmers? Do you have a right proportion of hunters: farmers?  Farmers will help retain existing business.  Hunters will work with rainmakers in the leadership team to disrupt the situation and increase revenue and arrest the downward spiral.
3. Are you putting your CEO and leadership team on review or just senior and middle management?

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