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There are so many other options to explore to position a company well with a board or to improve
efficiencies or to post solid cost to revenue ratios. That is not to say that layoffs are not a
viable strategic option that, at times, has to be executed.
Layoffs are sometimes the best route to take. But when they take place, there are definite
challenges that have to be faced.
Should Layoffs Be Your First Choice?
Other types of cost savings can offset the gains received from downsizing. There may be
opportunities that emerge to expand your market, shore up your position in your market, or move
into a new market even during a downturn. In this way, the gains can be felt without the pain;
because we shouldn’t kid ourselves - personnel cutbacks are painful. Studies show that it is the
most stressful action that managers have to take as part of their job description.
Avoid the Need for a Layoff
Determining the dollar spend that has to be cut in the organization is the first step. A re-look at
the strategy has to be the next step. Questions need to be asked, like: Have all possible future
scenarios been explored? Are the strategic goals the right ones for the envisioned future? Has the
budget been proportioned in alignment with the strategy? Where in the organization have results not
been forthcoming, and why? Are there unexplored external opportunities to analyze and pursue? Has
the current and potential customer interface been fully explored? Could there be new markets for
the business?
This is also the time to challenge the processes followed in the organization. With process flows
optimized, the organizational structure may have to change, with different work profiles emerging.
But this does not always have to entail layoffs. It may just require people being re-skilled,
multi-skilled, or reassigned. Sometimes employees would be willing to cut their hours by 10% to
allow all to keep their jobs and then you have your staff well placed when the times change for the
positive. Sometimes a perusal of the workforce profile may prove useful. One of our clients, the
largest foreign exchange earner for a country in Africa, felt they needed to trim the size of the
workforce. An action like this would have gone beyond the economic arena to have a deleterious
political and social impact on the country as a whole. A simple look at the age profiles of the
workers revealed that a large percentage of the required reduction in staff would occur anyway
through natural attrition over the following three years as the workers retired. Factoring in
losses of the workforce due to the scourge of AIDS, gave the organization their projected staff
size without having to go through the added agony of a layoff. Quality improvements and waste
reduction may sometimes be sufficient to stave off downsizing. I have even witnessed the formation
of a special task force out of “at risk of layoff” individuals or teams, to seek out opportunities
and do R&D in order to forge an economically viable place for themselves in the
organization.
Put P’s in Place
Together with an action plan for layoffs in terms of what needs to be done, there needs to be a
commensurate communication plan. This is a plan that needs to take into account the affected
individuals, all others left in the organization, and the external marketplace or customer base. It
is crucial to get the timing, as well as the content of all communications, just right. The
organization could also have a policy that provides guidelines on how to address cutbacks in
personnel. This will ensure a standardized fair way of handling the situation across the
organization and make sure it meets legal requirements. It should demarcate processes to follow and
acceptable practices to put in place.
Take a 3-Pronged Approach
Being part of a layoff has deleterious consequences for the people directly involved; not least of
which is financial. Having support during this time lessens the negative impact and can shorten the
time to be on the upswing again. The organization can provide support in the areas of financial
acumen, counseling, and career or business opportunity development. Within the financial arena, it
would mean transferring skills to effectively manage the severance package received, as well as how
to budget with less and still retain your assets. Counseling could address both the laid off
employees and their significant others. This is to ensure the transfer of coping skills to traverse
the adversity and come through the change in as positive a manner as is possible. Career
development could entail assistance with resume preparation, and action planning. It could also
encompass personal enabling skills development in terms of interviewing skills, business planning
skills for entrepreneurial ventures, and handling change skills. The extent of all this support
would be dependent on resources that the organization has available during the time of
transitioning people out of the organization. A lot of these activities do not have to be expensive
for the organization if tackled creatively.
Work with the Walking Wounded
It is a big mistake that many organizations make - ignore the people who are left working in the
organization. They are also affected by the layoffs. For one, some may feel survivors’ guilt; that
friends of theirs have been affected but they have their jobs still. From a different perspective,
many may feel they have escaped the shotgun blast this time, but live in fear that they will be hit
by the next round. Focus on the company’s vision, and the strategic goals is lost, and people
experience changes to their work situation with people missing from the value chain.
Leadership needs to be extremely visible during this period and it must be very clear to everyone
who the leaders are. There must be a strategic plan that gives the organization direction and that
links the vision, mission, goals, and action plans. There needs to be a strong focus on team
development. Team members and team structure may be changed by layoffs. Therefore, team cohesion
must be shored up, as well as the clarifying of roles and responsibilities. The alignment between
performance deliverables throughout the organization is crucial at this time.
Management and employees must still have a sense of hope for the future and a sense of belonging.
Team building will definitely help this, as would career development explorations. Support can also
come in the form of skills transfer in the area of empowering for change.
Strategically Handle Layoffs
We have definitely found that productivity drops in organizations during and after layoffs. The
morale takes a huge hit too. The organizational climate can take a period of up to three years to
recover. It is never wise to underestimate the lingering impact a layoff can have. How you lead
before, during, and after a layoff period will determine how well the organization can weather the
storm. Any actions taken by the leaders directly reflect upon the organization’s culture. It is
also what employees will notice as the leaders’ true values and intent. One organization I
encountered had one of their managers handle all the layoffs. Once completed, the leaders turned
around and gave that manager his own layoff slip.
It was no wonder that they continued to have huge problems in the organization; all trust had been
broken. Similarly, how people are handled on the day that they leave also sends a message to all
remaining staff. There is a Tswana proverb that says, “What you do secretly, we see secretly.” We
lose nothing by handling any situation, or person, with respect.
Layoffs must never be an end in themselves, but rather an unavoidable means to an end. With this in
mind, you need two separate strategies; one that focuses on your organization’s vision and mission,
and another that is a transitioning strategy plan that focuses on the way to best handle the
layoffs and all the ensuing changes.
Plan to effectively manage the pain of layoffs, and the stress of handling
layoffs.
Janine Sergay
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