Does it ever occur to you that perhaps fewer people could easily do all of the work that your business requires? Certainly, one indication that the people-to-work ratio is off-kilter is when team members are sitting around waiting for work; another is when they’re asking supervisors for something to do. Sometimes, though, it’s not so obvious. Team members will go out of their way to look busy. Extra labor can also hide in an organization following an economic downturn. People get used to the low level of productivity and forget that they once accomplished much more and can do so again now that business is back to good. With all these scenarios, the possibility does exist that just a portion of your staff could do the same amount of work—If that is the case, then why are you paying all those other people?
While all your team members may be wonderful, personally and professionally, no business can afford to pay people to do nothing. The clear course of action when there are more people than tasks is to let some of them go. Although it’s never an easy thing to do, it must be done, or the organization will suffer. So how can we determine if we have too much labor, and where we can eliminate team members, if we do? That’s where the Brazil Test comes in.
The Brazil Test is a highly efficient means of identifying and resolving the issue of surplus labor.
What is the Brazil Test?
The traditional way to handle a surplus of labor would be to do a cost-benefit analysis for each team member. We would ask ourselves what each person brings to the organization and what it would cost us to lose him or her. With this method, we’d also have to sort through a lot of data to determine how much each team member is billing, among other statistics. The power of the Brazil Test is that it lets us focus only on those team members whose departure would have the least impact. Since there is no need to go through the entire organization and do individual cost-benefit analyses, clearly this system allows us to make much quicker decisions.
Quite simply, The Brazil Test asks us to consider whether our organization would suffer if particular team members suddenly decided to, say, pack up and move to Brazil. Lest we get caught up in a daydream of rich food and lively dancing, though, we determine what their absence would mean to our organizations, let’s take a look at the process.
Applying the Brazil Test: The Three Questions
First, let’s be clear that we’re assuming certain things with the Brazil Test. We’re assuming that people want to make as much profit as possible, that labor is an important component of the company’s cost structure and that we have a clear understanding of what each person does at the organization. If any of these assumptions don’t hold for your organization, then you may have to adjust the model.
Now we can ask ourselves the three meaningful questions that comprise the Brazil Test:
1) Would we lose any revenue if we let the individual go?
2) Would letting the individual go render us incapable of delivering on our promises to clients?
3) Would we need to replace the individual to fulfill demand for our products or services due to capacity, knowledge, or some other reason?
We apply the Brazil Test company-wide, asking ourselves the three questions about every team member, where possible.
Analyzing the Results
If someone is a yes-no-no, then that means that we would lose sales if he or she left. It is probable that the person has relationships that generate sales for the company that nobody else can manage. Therefore, if we lost them, we would probably also lose that client. Since this is not a good position in which to be, we work out a way to ensure that the individual doesn’t own that relationship anymore.
If someone is a no-yes-no, then that means that we would not be able to deliver to one or more of our clients if he or she left. It is probable that he or she is uniquely capable of delivering to a client, and again, that may be due to a relationship with them. A no-yes-no individual may also be uniquely capable of knowing how to deal with a particular client or have a unique skill.
If someone is a no-no-yes, then that means he or she is needed in terms of capacity. The person may be one of many in our organization who does the same job, but without that individual, we wouldn’t have enough staff to perform a certain function of our business.
Note that a team member’s result can include more than one yes, and thus more than one of the above descriptions. There are six possible combinations.
If we determine that the answer is yes to any or all of the three questions (yes-no-no, no-yes-no, etc.), the person passes the Brazil Test, and we don’t want to eliminate him or her.
If the answers are all no’s, then the person fails the test, and he or she is a candidate for removal from the organization. If there are any no-no-no’s in our organization, then we have too much labor.
I always remind people that letting team members go is not a reflection of how we feel about them as individuals. Just because someone comes up as all no’s in the Brazil Test doesn’t mean that he or she isn’t a good worker or a good person, or even that we can’t use his or her skills. It just concretely shows that we have too much labor in the organization. Without that person, we would not lose revenue, we would still be able to deliver what we promised to our clients, and we would still meet all the demand for our products and services. The fact of the matter is that oftentimes businesses can’t meet their expenses because they have too much labor. This is especially common with any firm for which labor is a major component of the cost structure.
Even though the Brazil Test tells us that we have too much labor, we still need a performance system to tell us which specific team members to remove.
With this in mind, we immediately turn our attention to the camp that failed and determine which of those team members are producing the least based on performance data. At ITX, we use the values performance matrix (Rating Your Team Based on What Really Matters: Values and Critical Behaviors), but, of course, you can use any system. Begin by eliminating those individuals first. Only the lowest performers of the no-no-no’s ought to be let go until we start getting some yeses in the mix. We will hurt the company if we let go of someone with a yes because we would be giving up revenue, client satisfaction, and/or the ability to meet demand. As it stands, if any no-no-no were to leave, other team members would just fill in. Think of it in terms of displacement. If we take a stone out of a pool, water will rush in to take its place. The stone in the pool is the equivalent of a no-no-no team member in an organization—If we take the no-no-no out, other people in the company will fill in the gaps. As we employ the Brazil Test, we will find that certain people will be like taking the stone out of the water, because we can’t even tell that the stone is missing. Then there will be other people who are the actual plug; if we pull them out, the water would drain from the pool.
Even if half of the company is comprised of no-no-no’s, it doesn’t mean that half of our team members can be let go; it just means we have too much labor.
As we start pulling out the no-no-no’s one at a time, eventually all of the remaining team members will turn to no-no-yes’s or no-yes-yes’s, because at some point we’re going to eliminate our ability to deliver on our promises. So, we pull out the worst performer of the no-no-no’s and we’re down to nine, and we do it again, and if we still have no-no-no’s, then we repeat the analysis until we start hitting yeses from our formerly no-no-no team members. That would indicate that these team members would have to be replaced if they were eliminated. When we get to the point where we have no more no-no-no’s, that’s when we are really optimizing the company.
Putting the Brazil Test to Work
These are the specific steps you can take to put the Brazil Test to work:
1) Go through the entire organization and ask the three Brazil Test questions about each person.
2) For the no-no-no’s, determine where there is too much labor. Then begin eliminating team members where it will have no impact on the organization.
3) Repeat the process until there are no more no-no-no’s.
4) Next, attempt to turn all remaining team members into no-no-no’s. This is done by eliminating your reliance on any particular person using cross-training and other strategies.
5) Repeat the process every so often to maintain a streamlined labor environment.
If we are unsure if we have too many team members, it generally won’t help us to look around for people with nothing to do. The Brazil Test is essentially a litmus test that will tell us if we have too much labor and if any particular team member has a substantial cost associated with letting him or her go. It is a time-saving alternative to performing cost-benefit analyses, which would only be necessary to the extent that we can’t turn team members into no-no-no’s and judge them purely on performance data.
© 2012 Ralph Dandrea. All rights reserved.
I love the Brazil test. Simple and effective.