When economic adversity collides with a business plan, the response to the cost issues must be prompt – and it must be right. When laying off employees seems like the right move, be ready to hack through a jungle of employee relations issues.
After any layoff, there’s still business to transact. Who’ll be there to do it? And when the enterprise is ready to expand again, let’s not assume that the people who were laid off will readily return. With some limited exceptions, they won’t.
Addressing all the what-ifs and replacing annual business planning with continuous business and staffing assessments minimizes the most serious mistakes – and surprises.
Layoffs mean those laid-off employees and their families will lose their essential income. They may also fear for their survival and doubt their self-worth.
But the survivors are also victims. There’s survivor’s guilt. “Why was I spared?” They take note of how management treated their laid-off colleagues. The layoff process provides them with a new window into the caliber and character of their managers. That impression will have a lasting influence on survivors’ loyalty and productivity. In this now-uncertain environment, do they want to stay and see how they will be treated if their time comes? Survivors need to be nurtured as the long-term assets that they are. Any added employment trauma or surprise could spur them to consider the other job options that they all have.
Employees are in your company every day. They will sense emerging changes. If you don’t openly share the state of the business, they will then presume facts to fill any information gaps and to help gird themselves for whatever else may be coming. If the business is in a rough spot, they sense it.
Remember, those who have been laid off won’t be there to help fix the issues or to help a return to normalcy. Substantial layoffs may placate lenders and investors who often applaud anything that looks like cost cutting, but keep in mind that layoffs will compound any business turmoil. Layoffs actually produce some offsetting costs such as lost productivity and employee turnover. Additionally, future hiring prospects will know how staffing adjustments were managed and how employees were treated. Social media allows for the sharing of those details.
The skills of orchestrating a layoff go well beyond the writing of pink slips.
In a recession, a pandemic or some other challenge, every business owner and leader knows that the absence of prudent management of employment can cost an entire enterprise, jeopardizing all employees. Aside from extreme or timid cuts, there are courageous business leaders who carefully consider the creative options to address each risk. For example, facing the recent pandemic, Attleboro-based Morin’s Inc., doing business as Russell Morin Fine Catering, was threatened by an empty order book and phones that had stopped ringing. Owner Russell Morin elected to prioritize the long term and hold onto his loyal people. He laid off no one. His business swallowed millions in unproductive payroll dollars while it focused on the long term. When customer demand reemerged (at a clip beyond pre-pandemic levels), Morin’s operation stood ready, still supported by 147 of its 150 critical people.
Whether it’s your business, or the business of Macy’s Inc., Google LLC, Amazon.com Inc., Microsoft Corp., Meta Platforms Inc., or any others facing a staff reduction, some are bolstered by an ongoing staffing process that integrates talent attraction, deployment and retention to ready the business for whatever may be next. It enables management to address emerging cost swells with a timely scalpel rather than a desperate hatchet.
Google CEO Sundar Pachai has observed that “it seems reasonable that a better way to increase profitability is to make better bets in the first place.”
In continuous planning, we’re always at that “first place.”
Stanley H. Davis is the founder of Providence-based Standish Executive Search LLC.
