Give as Little Notice as Possible
Out of fear and guilt many executives choose to give employees as little forewarning as possible about an upcoming layoff or downsizing. Managers fear that if employees know their fate ahead of time, they might become demoralized and unproductive -- they may even sabotage the business. However, there is no documented evidence that advance notice of a layoff increases the incidence of employee sabotage.
The lack of advance notice about downsizing, however, does dramatically increase mistrust of management among surviving workers. Trust is based on mutual respect. When employees discover what has been brewing without their knowledge or input (and they will when the first person is let go), they see a blatant disrespect for their integrity, destroying trust. By not giving employees information that could be enormously helpful to them in planning their own lives, management initiates a cycle of mistrust and helplessness that can be very destructive and require years to correct.
Afterward Act as if Nothing Happened
Many managers believe that after a layoff, the less said about it the better. With luck, everyone will just forget and move on. Why keep the past alive? The reality is, surviving employees will talk about what's happened whether the management team does or doesn't. The more the company tries to suppress these discussions and act as if nothing has happened, the more subversive the discussion becomes. Remaining employees will act as a consequence of what has happened regardless of whether the management does.
Recovery from a layoff is greatly hastened if managers and employees are allowed to speak their minds freely about what's happened. In fact, it can be a great opportunity for the team of surviving employees to pull together and renew ties. When management refuses to acknowledge what has really taken place, it appears emphatically heartless, feeding the employees' sense of helplessness. If management won't talk about it even after the fact, what else is it hiding?
"To downsize effectively you have to have empathy with the people who are losing their jobs. " (Percy Barnevik)
Downsizing Effectively
When faced with an organization that isn't functioning at optimal efficiency and thinking that a layoff is needed, there are a few key principles to keep in mind. Observing these principles won't completely eliminate the dangers of downsizing, but they will help to avoid the common pitfalls of a poorly planned layoff.
Is the Problem too Many People or too Little Profit?
The critical first question to ask before any layoff is: Is the need for this layoff driven by having too many employees or too little profit? If it's too little profit, this is the first warning sign that your company isn't ready for a layoff. Using a layoff solely as a cost cutting measure is utterly foolish: throwing away valuable talent and organizational learning by dumping employees only makes a bad situation worse. When your business lacks revenue, annihilating intellectual capital and thus reducing the efficiency of remaining resources as well as the potential for future growth is not the solution.
If the answer is too many employees, then you've begun the process of a well-thought-out strategy for change. To legitimately determine if you have too many employees, look at the organization's business plan, not its head count. What product and services will you be offering? Which of these products and services is likely to be profitable? What talent will you need to run the new organization? These questions will help you plan for the post-layoff future. These issues will enable a quick turnaround from the inevitably negative effects of downsizing to positive growth in value and efficiency.
