This was originally published as a part of my monthly newsletter in February.

Today, many organizations find it necessary to reduce staff counts. In the last month’s newsletter I pointed out that these efforts are often a misguided knee-jerk reaction. Then, I received two emails from the readers saying, in essence, “OK, we got your point, but how do we do it right if we really have to let some people go?”
 
These points should be helpful.
 
Vertical or horizontal?

Under adverse economic conditions, organizations most commonly implement “horizontal” layoffs:  every department is asked to shed a few per cent of its workforce. This is fine if you have people wandering around and looking for something to do, but on behalf of your organization’s shareholders, I hope this is not the case. The proverbial “tightening of the belt” is harmful, in my opinion, because it slows down and jeopardizes outcomes of, strategically important projects.

The much better way is to assess the organizational portfolio of projects and do one of the following:

  • Speed up, strengthen strategically important work (yes, add staff, add executive support, allocate extra funds if necessary).
  • Mothball projects that are not essential at this time – meaning that project can be picked up at a later time. Release or reassign project staff, but try to retain people who have deep knowledge of the project and will be instrumental in re-starting it in the future.
  • Cancel projects that are no longer valuable. Release or reassign project staff.

Cutting vertically, along project lines, helps the organization to re-focus on projects that are truly strategically important, that propel the company forward and position it as the leader among peers. Horizontal cuts simply strangle, leading to a curious state of organizational coma, when a company, while technically solvent, barely manages to keep its head over the water, unable to move, progress, prosper. It takes years to recover, if at all.

Vertical cuts require strong leadership, strategic thinking, sense of responsibility and an effort. Horizontal cuts are effortless – this is why they are so much more common, unfortunately.
 
One time or many?

Do it once in one fell swoop. When done, always communicate to the remaining staff that it is over. Nothing impedes people’s performance more than uncertainty over their jobs. Have an open honest discussion about what has happened, encourage opinions and answer any questions that arise. Then, as a group, put it behind and concentrate on new challenges.

A colleague of mine once hired a guy who had been through a year of weekly announcements over the PA system containing names of employees required to assemble in the cafeteria, on each Friday afternoon. There was no communication from the top,  people merely disappeared. The morale of employees was in the pits and so was their productivity.  I doubt that the company is still around today.

Equitableness

Ensure that those who leave are treated equitably. Here is what I mean:

  • Check into the packages offered and other conditions of release. DO NOT simply rely on the HR people to take care of it. The package should never be a bare minimum required by the law.
  • Offer references, suggest job search strategies and resources, and show empathy.
  • If possible, take the person out for a nice lunch.
  • Be genial at all times.

Why am I saying this? Regrettably, it’s a common occurrence that one’s former colleagues are treated worse than war criminals, escorted from premises, prohibited from collecting personal effects, made to sign all sorts of “I-promise-to-never-come-here” forms. This is abhorrent.

Remaining staff

Have a plan – what happens when those who have to go are gone? How are their responsibilities going to be divided and absorbed by those left behind? Too often, people are merely told that they have to take on new duties and left to their own devices to figure out what to do.

As a manager, you have to create the sense of direction and certainty, and support your people in doing more with less. Simply dumping new duties on them is nothing short of abdication of managerial responsibilities. Arrange for training and coaching; communicate changes to the rest of the organization; foresee and timely clear roadblocks.

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There is nothing pleasant in laying people off. The reality is, each manager will likely have to do it one day.

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