You’re running your business. You’re paying attention to the big issues and the details. You’re on your targets, making your numbers and living within your budgets. Life is pretty good. Then at one of your boss’s staff meetings you are told that there is a headcount reduction scheduled and you are told what your participation in this activity will be. It turns out that other functions are not performing as well to their targets as you are, and now all are going to have to participate in the unpleasant task at hand.

It is the dreaded “peanut butter” effect.

The peanut butter effect occurs when it is easier to take an overall general action than it is to take a focused and specific targeted action. It can be 10% reduction across the board instead of a greater number in the offending groups, or a travel or a hiring freeze for all instead of just for those declining functions. I think we have all seen it.

Peanut butter provides a disincentive to good business performance. If a function that is performing must participate in a down side activity to the same level that a non-performing function does, you are mitigating the cost of poor performance to the underperforming function.

Fast forward to now, and you are now the leader. If your business is not performing to its overall requirements, and you are looking to take actions early on to try and bring its bottom line back on track, make the effort to understand where both your good performance and your problems lie. Take specific, focused business actions based on the businesses performance. Don’t spread peanut butter.