smart talk
Back |  Print  |  Bookmark

   Handling Layoffs

   Layoffs are a strategy of last resort.

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


Back to Top