Significant financial, political, or leadership disruptions can push an organization with an already tenuous financial or market position to the edge.
As an organization grapples with its short-term survival and long-term sustainability, getting smaller for a period of time is often a necessary consideration. These decisions are tough for everyone involved—They affect service recipients, staff, and the leaders who must make the hard choices. But sometimes, it takes getting smaller to stabilize and eventually grow back stronger.
So, how do you decide what to cut?
The first step is to consider whether the entity can shrink and re-organize and still remain viable—in other words, retrench. A bit of imagination is required if you do not fully know what the lost revenue will be or what parts of the entity are at risk.
In general, there are four models of retrenchment to consider. You may or may not be able to choose freely among these options, depending upon the nature of the disruption.
- Option 1: The entire organization but on a smaller scale.
- Option 2: Retain those elements of the organization that are most adaptable or innovative under conditions of uncertainty.
- Option 3: Retain programs most essential to consumers.
- Option 4: Retain programs that survive the cuts chosen by funders.
You may want to consider more than one option. This exercise involves critical thinking and conversation. Ask yourself: What could change? (High-level scenario planning can come in handy here!) What is your organization best at? What is most essential to fulfilling its mission? What’s not?
As you consider how you might shrink, also keep in mind the following issues in deciding what’s left:
- The economics of service delivery at reduced budgetary levels
- The political or relational effects of the cuts
- Emerging areas of high impact/potential
- The historic mission of the agency.
Your new core programming should sit at the intersection of your mission, your strongest competencies, and the available resources.
Even if you are in good financial shape, a retrenchment thought exercise can help you:
- Determine which issues are worth fighting for or most central to your mission
- Highlight your unique offerings (differentiation)
- Identify staff competencies to protect and emphasize
- Brainstorm ideas for program consolidation, combination, and re-invention
- Identify the resources needed to support your core work and relationships.
And remember, smaller can still be mighty. Identify what’s most essential to your mission and those you serve and decide from there.
