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Minimize RiskStrengthen your Organizations in the Process
As a professional who has designed “reduction in force” (RIF) programs, laid off thousands of people, and closed plants around the world, I’ve experienced plenty of downsizing. While it is almost always painful and uncomfortable, there are ways to manage the process to derive maximum benefit.
When faced with the possibility of reducing multiple positions, perhaps over the course of several weeks and months, try to complete all the layoffs at one time. Each episode of layoffs is time consuming and traumatic - for employees, management, and support staff (e.g. HR). Productivity declines as organizational survivors are distracted and negatively impacted by the loss of co-workers. Moreover, successive rounds of layoffs keep the organization on edge and unfocused. Employees worry they could be next and the specter of the pink slip looms large. Try to manage all the reductions at once and refocus everyone on the business.
Layoffs are an opportune time to prune the slackers and weak performers from your workforce. If you’ve been avoiding the difficult confrontations, now is the time to deal with the performance issues you may have neglected. Unless you are bound by a union contract, a seniority system, or existing policy, reducing headcount based on job performance is defensible and usually advisable. Carefully go through each job category and rank order your employees based on performance. If your judgment is based on documented performance reviews or objective data, even better. Check your final layoff list against protected classes (e.g. age, gender, national origin) to ensure you have minimized the risk of discrimination claims.
Although it’s been said before, the way layoffs are conducted does matter. Everyone is watching, and watching closely. The community, the ‘surviving’ employees, family members, as well as departing employees all make judgments about the experience. Are employees treated like family when business is good? How are they treated when they must leave? Even though the experience is gut wrenching and unnerving, a firm can actually reinforce the positive aspects of its culture if the process is managed consistently with the organization’s principles and values.
There are many tactical issues to consider, too, and understanding your organization’s policies, contracts, and obligations is the first step in managing a smooth, legal process. Unless detailed procedures are in place, the following questions may still need to be answered:
- What is appropriate severance?
- Should we notify people in groups or as individuals?
- How do we prepare managers who will notify the employees?
- What materials and documents will be required?
- How quickly do people need to leave the premises?
- How do we help people say good-bye to their co-workers?
Finally, in addition to compliance with state and federal laws, organizations must pay attention to the human dimensions of the experience, which is typically loaded with a multitude of reactions and feelings. I have personally witnessed tears, threats, violent eruptions, and stone-cold silence from different employees hearing the same message. Companies that manage the transition well and have prepared their managers for the emotional charge can greatly reduce their risks of subsequent litigation while sending a strong signal of support to the departing employees.
The transition period immediately following layoffs is often challenging. Employees and managers may experience feelings of doubt, anxiety, guilt, anger, and confusion. The tendency is to avoid confronting these emotions, but during this time leaders must strike a balance between guiding the healing process and helping the workforce vigorously rebound. Leaders must spend more time interacting, asking about reactions, listening, and supporting unique responses to change. At the same time, employees also need to feel hopeful so leaders should share plans, organizational goals, and a hopeful vision of the future. Although many organizations undercommunicate by a factor of ten during this period, it is an ideal time to create a clear and powerful context for the enterprise.
Time after time, I’ve seen successful, well-managed companies layoff employees and then resume operations as though nothing has happened. But removing people from their jobs dramatically impacts the work system. For example, do we expect output to remain the same? How will certain tasks be completed? How should authority and responsibility be redistributed? What work processes will be impacted? Every RIF is an opportunity to review organizational and individual goals, redesign processes, and clarify new responsibilities. Besides being the sensible thing to do, these actions are important steps to take advantage of potential efficiencies as well as position the organization for future success.
Downsizing is never easy, but by paying attention to these critical factors, we can minimize risk and strengthen our organizations in the process.
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Gary Hochman is a principal at The HR Matrix, a full spectrum organization development and human resources firm. He is the former VP of Human Resources at JDSU/OCLI and senior organization development consultant at Hewlett-Packard.
The HR Matrix, 707.526.0877 (www.thehrmatrix.com)
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