Company Downsizing…Keep a Cool Head and a Warm Heart

Jennifer L'Estrange
March 27, 2020
Employee layoffs  are the hardest thing we will ever do as managers and business owners, especially in the current climate. It’s gut wrenching and I can tell you, even after managing my first site closure almost 20 years ago, company downsizing does NOT get easier with time.  We are living in unprecedented times and many, many of us, even those with healthy financials and growth plans, are currently faced with the blunt force trauma that comes with rapid change in economic reality and a shift in how we do business. We talked about identifying essential personnel in our last blog post, in case you missed it. 

What Is Your Organizational Goal?

Is the goal to preserve most, if not all, of the current team or organization, or do you need to retain employees with specific skills in key job roles? You should ask and answer this question for each department or function.  If the goal is to preserve the integrity of the team, you might consider a reduction in working hours. For hourly employees, this is a change in work schedule, for salaried, exempt employees, you will need to either reclassify or furlough.

What Are Your Profit Requirements?

Knowing that your profitability will go down with flat headcount (no layoffs) and a reduction in work time, does this cost outweigh the cost of going back to market to recruit and onboard new employees later? The answer to this question may vary based on job type, especially if there is substantial training involved in the job role.  Also, all businesses are not created equal here…Some small businesses can afford a substantial drop in profit or even lost money in the short term in order to protect critical skills or prepare for an influx of work that will come shortly after the period of disruption. Others will need to identify the few key roles that are needed to manage efficiently and re-allocate work to those employees who are part of the retained organization.

What Can You Afford To Do?

I always encourage business owners to take a hard look at their own situation before making a decision to cut the workforce. Recognize that cutting jobs, especially in the current environment, creates substantial hardship for the employees who lose their livelihood.  If you can afford to keep people on in the short term, and take the personal hit to do so, then do it.  This may mean owners making the decision to not take a draw. Cost-saving measures should apply equally, where possible. Evaluate week by week and adjust accordingly.

Consistent Communication

This is the single most important thing you can do in these changing times. Your people are worried. They’re worried about their jobs, their families, and their future. You may not have all the answers, but you do have an obligation as a leader to give them consistent and clear communication on what you know and what you don’t. Be honest and clear with information, providing updates as possible and being sure the messaging is consistent. We recommend establishing a communication plan to support this. Be mindful of the tone of your message, especially in written communication. It is more easily misinterpreted.  If your organization has well-established core values, frame your communication plans within the context of those values.   The messages you are delivering may be difficult, but employees will recognize if you are communicating genuinely and in line with what your company believes.  Operating with integrity and engaging in value-based communication will go a long way with your people, even if the immediate information is news they may not want to hear.   Make sure that you are scheduling regular updates on what’s happening with the business, your teams and checking in with your people. If you can’t tell them exactly what is going to happen, tell them when you will be providing more information. Also, keep telling them “the when” until you know “the what”. Transparency is key – especially in times of uncertainty.   Additionally, if possible, the company’s messaging should come from one person.  In a time when employees may be speculating about the future of the company, having a consistent, reliable voice to cut through the noise allows for effective and accurate message delivery.  Providing a trusted company stalwart that your people can rely on for factual information is essential in a time of uncertainty.   Maintain regular meeting rhythms for efficiency, culture, and employee wellbeing. If you typically do a daily huddle with your team, keep doing it over a conference call. If you meet weekly, do that – and consider increasing frequency while working remotely. 

Stay The Course

Change projects are hard. They also deserve to be done well, both for the people who are impacted and the organizations that they serve. We don’t recommend doing this on your own. Engage with a specialist firm who can create a communications plan that is tightly aligned with your decision points, strategic planning and financial business case to ensure that you achieve the financial benefits that you have set as the long-term goal. Learn more about us and how we work.

Written by Jen L’Estrange.

Learn more about Jen on LinkedIn.  

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