Tuesday, June 23, 2009

Dealing with the Aftermath of Layoffs

If you've been following my blog for the past couple of weeks, you know I've pointed to a few potential employment opportunities based on the latest Chapman Economic Forecast Update and my conversation with a local Orange County, California entrepreneur. In both of those entries I mentioned that anyone with restructuring experience could market that experience to land a new management (or consulting?) position. Restructuring in this market translates to layoffs and the flattening of an organization, while increasing overall productivity.

What may get lost in this process, especially with the focus on cost reduction, is the human element and the long-term consequences of layoffs. This is the sticking point that may delay or stall a company's competitiveness. Ask yourself, how would you insure high productivity after a demoralizing act of layoffs? This is an especially important question to think about if you're eliminating key mid to high-profile roles, or reducing the staff by a large percentage.

My first suggestion is: don't layoff anyone, if you can. The Wall Street Journal had a good article on this yesterday. If you have to do it, there are some steps you want to take during layoffs to reduce the impact on the organization. I won't get into that here either, but I suggest another recent WSJ article on how to layoff.

So, let's say you've laid off whom you had to. Now what? How do you insure people are still excited about coming to work? The Harvard Business Review in its recent June 2009 issue had an excerpt about this. The suggestions there are quite interesting. The authors write about the loss of creativity, employees propensity to think they've been kept out of the company communication, increased levels of stress, burnouts and turnover, especially in the "Stars" rank of employees.

Their suggestions point to two general concepts:
  1. Transparency
    At times when layoffs are necessary, it's important that everyone understands the process by which senior executives arrived at the decision. Any evidence showing how other cost cutting measures didn't suffice would go a long ways in insuring the survivors accept the decision as just or fair. The evidence could be many things, such as an explanation on how a reduction in travel and entertainment expenses, office supplies, off site management meetings were first employed, but that the market conditions still required a trimming of the team to its core.

    Part of this conversation should include a reassurance that there will be a moratorium on layoffs, even if there's a period defined for it. This is critical to insure that the survivors focus their efforts on the business, rather than worry each day about their future survival. Failure to deliver this message, or to deliver it with a lack of sincerity, leads to a nervous workforce with ears to the proverbial ground, waiting to bolt out of the company.

    As a way of reassurance on the company's health, senior executives should continue to regularly update the employees on key metrics, such as revenue-to-date and forecasted sales. A great example of this was on the Fortune List of 100 Best Companies to Work For. The number 17 company is Principal Financial Group. Under the explanation of why this company's great, you learn that the "CEO Larry Zimpleman got a thumbs-up for weekly e-mails he sent during height of the financial upheaval to keep employees up-to-date and reassure them the company was healthy."
  2. Human Element
    The method of delivery is just as important as what's delivered. At times, management forgets there's a human being on the other end of emails, portals and blogs. In times like these when executives need to deliver bad news, it's best to deliver it in small groups, if possible, and in a setting where people can ask and get answers to questions. None of the mediums I mentioned provide this live interaction. Treating your employees and coworkers with dignity and insuring their voice is heard and addressed, sets the right tone with the company for the coming months. With this step, there's no need to say the company has an "open door" policy since you're demonstrating it in your actions.

    What's more, people will feel they were dealt with as a human being, rather than an objectified number or resource. In the long term, once the economy turns and your employees are presented with opportunities to leave the company, they're less likely to do so. Their tendency, just as with you and I, will be to remain with a company that's open with its decision making process, gathers input from its core, and treats its employees with the dignity.

Aside from helping deal with the layoff aftermath, these recommendations are but just two of a dozen that if not followed, leads to being labeled a "Bad Leader" as well. I'll leave that topic for another blog and another day.

Until then, remember to be transparent with your decisions and treat your employees with dignity, as human beings, providing them with every opportunity to voice their concerns and have them addressed.