***Cut the Fat, Keep the Muscle

A certain amount of redundancy is important in any organization because you need backups. You don’t, for example, want to have just one individual be the only person who knows how to do a key job. On the other hand, you don’t need too many people doing the same job, either. You want to get rid of the fat and keep the muscle.

It’s easy for a rapidly-growing organization to get fat—and it’s just as easy for a company operating in tough times to get too lean. It’s a lot like the human body: We put on a pound or two, and we don’t really notice it so we don’t worry about it. We keep on eating those little extra goodies, and then we’re up four or five pounds and we’re seeing it in how our clothes fit. By the time we hit 10 pounds, we’re buying new clothes, but that’s okay, we tell ourselves, because we needed those clothes anyway. And we keep gaining a half a pound, a pound at a time, until we wake up one morning and realize we’re obese.

Sometimes the situation is the opposite: We’re in good shape but for some reason we decide we want to be leaner. So we diet and exercise. When we get to the point that there’s no fat left to burn, we start “burning” muscle, which leads to weakness and a host of other health problems.

You’ll see the same patterns in companies. Business is good, so we hire more people. Maybe we hire a few more than we need to or we hire someone in a full-time position for a task that really only needs a part-time person, but we figure that the work is going to increase so that’s okay. Everything’s going well, we’re showing profits, and we don’t realize we’re getting fat until something drastic happens, like an economic downtown.

Or in response to economic or competitive conditions, we’ve taken steps to get lean. That’s good—but because we seem to be able to function well at that level, we decide to take it a few steps further and get even leaner—to the point that the health of our companies suffers because we didn’t have any fat left to cut.

Just as you don’t want to be obese, you also don’t want to be too skinny. There is value in having reserves to draw on if necessary, whether those reserves are in the form of money, people, or other resources. You want to be efficient, but you don’t want to cut so deep that you eliminate things you really need. Cut the fat, but keep the muscle.