No one enjoys the termination process. After all, who wants to break the news to a longtime employee or team member that they no longer have a job with the organization? The highly emotional nature of the process can turn any well intended management effort from goals of improved profitability and strengthening the company for the future to “Let’s just complete the terminations and hope the cost reduction will benefit the bottom line”.

A leading HR consulting company survey of restructuring practices among 531 large companies revealed that over 50% of the companies achieved their goal of reducing cost and expense but less than half achieved goals of increased profitability and customer satisfaction.

Here are some keys to helping your organization get the short term gain in cost reduction and emerge from downsizing stronger and more competitive.

Plan

START THINKING EARLY

There may be other changes that can help you avoid a layoff. Look at what you are buying, what services you’re offering. Look at your processes for consolidation or improvement. Look at attrition or reassignment. This will force better business decisions.

EMBRACE CHANGE MANAGEMENT

Organizations need change to compete in a changing world. Once viewed as extreme, downsizing and restructuring are now normal business practice. Organizations have to adapt to compete. Change management has emerged as an important skill for managers. As the business changes, criteria for how we rank people and processes will also change. Integrate change management into your strategic plan and utilize it as a tool to stay competitive.  Employees will better understand and accept the need for change when it occurs.

DOCUMENT PROCESSES

Maintain current documentation of processes, whether through a quality management system structure or your own in-house structure. This will help protect your knowledge base and also avoid arousing suspicion of coming events.

Karen C, Human Resources Manager for a manufacturing company.

“We had done our due diligence in deciding which jobs were non-essential and who would be let go. We completed the layoff and were moving forward when we started getting calls from our customers about services that they were no longer receiving. One of the positions that we eliminated was providing service to our customers that was undocumented and that the managers knew nothing about. We had to scramble to catch up and finally re-hired the sales associate that we had let go. Fortunately our severance performance was good and we hadn’t burnt any bridges so we worked out a return to work. We didn’t lose any customers but our professional image took a big hit”.

CROSS TRAIN

During transition, processes need to function with little interruption. Cross training will lessen the stress on your remaining employees as well.

IDENTIFY ESSENTIAL TALENT

In the rush to cut staff, don’t cut essential talent. Examine your key processes and be selective to avoid losing core competencies and harming your business.  Make certain that you have the resources to recover and build for the future.

LEVERAGE EXPERTISE

Bring outplacement consulting in as soon as possible to take full advantage of their expertise. A good outplacement firm can help with planning your layoff and help avoid missteps.

Leadership

THE ROLE OF SENIOR LEADERS

Studies show that senior leaders play a vital role in downsizing. Successful downsizing resulted when senior leadership became involved early, stayed active and visible and was perceived by employees to be a source of communications concerning downsizing. It is very difficult for employees to understand why their jobs are being eliminated or work processes changed when they are doing a good job. Leadership demonstrating a consistent commitment to change as a means of strengthening the organization is key to overcoming “this is just another management initiative” attitude.

MANAGEMENT INVOLVEMENT AT ALL LEVELS

Managers at all levels need to be committed to managing their employees during downsizing in a human and objective manner. Managers need to have compassion for the fear and disruption that people feel, yet they need to display a sense of optimism, a sense of direction and future vision and how the employees fit into the vision.

Respect For All Employees

RESPECT THOSE LEAVING

EXITING EMPLOYEES CAN DO DAMAGE

Downsizing is a personal and emotional experience to those being let go. They have to cope with shock and fear of the future. When people feel lost or hopeless some want to strike back. They can do a lot of damage to current client relationships and retention and a company image that took time and money to build. Litigation is a possibility and disgruntled feedback to survivors can dramatically affect productivity and retention. A preventive investment in external outplacement help will have a much higher return than dealing with the negative options of an insensitive layoff.

RETAIN HELP FOR THOSE EXITING

Many of those being let go had no idea they would be leaving. They felt secure and safe, now they’re stunned. Some haven’t been in the job market for years. They feel abandoned and helpless. A good job coach that can step in and provide guidance and support and plenty of availability is what they need right now. Choose outplacement that fits your budget, your corporate culture and your employee needs. Large outplacement firms may be better at serving large numbers of employees; small firms can deliver more personalized and compassionate service for a smaller investment.

DON’T BE HEAVY HANDED

Allen Smith, age 61, was a loyal employee who had spent his entire career in management for a heavy manufacturer.  “I had heard the rumors of an impending management layoff, so I wasn’t totally shocked when I was called into a termination meeting. What was shocking though was what happened after the meeting. I was immediately escorted from the premises by plant security and told that my personal items would be boxed for later pickup. I was humiliated and made to feel like a criminal. I still have nothing good to say about the company and my co-workers didn’t like it either”. Organizations are concerned about maintaining security during times of layoff but still need to respect exiting employees. Offer the employee options as to how they would feel most comfortable in exiting.  The company can still maintain security and handle the employee with respect and compassion.

RESPECT THOSE STAYING

REMEMBER YOUR CURRENT EMPLOYEEES

Recognize that downsizing will be met with an emotional response by survivors too. Routine and familiarity have been taken away. There is a predictable decrease in productivity, morale declines, quality decreases and mistakes increase. Your employees are looking for what to do next. Offer a vision of the future and where the survivors fit. Employees need to have a clear and understandable picture of the business goals and their role in moving the company forward.

“NO NEWS IS GOOD NEWS” DOESN’T APPLY

During downsizing, normal communication links have been disrupted. Some news is better than no news. People with no news imagine the worst and fill the void with rumor. Productivity slows and unproductive communication flourishes. Keep honest and current communications flowing.

EMPOWER EMPLOYEES

In the wake of the downsizing, do something positive for your survivors. Bringing positive elements back into the work environment doesn’t have to be intense or expensive. Offer group workshops, individual coaching or skills improvement training that value and support your employees. These individual offerings will give your employees confidence that they are part of the future and valued by their organization and begins to inject momentum in moving forward.

SUCCESSFUL DOWNSIZING DEPENDS ON THE SURVIVORS

Business needs change. Product lines change, processes need improved, competitors gain ground and the economy fluctuates. Help your employees embrace change and recognize that successful downsizing secures more future jobs than are currently lost. A well planned and managed downsizing process, which your remaining employees perceive as having been fairly and humanly managed promotes trust and loyalty in management  and in the future of the organization. The organization not only gains cost reduction from the downsizing process but the bigger future benefits of improved productivity and quality from a loyal and empowered workforce.

The bottom line is that downsizing can bring cost in control in the present but taking a broader perspective for downsizing can make your organization stronger and more competitive into the future.