Think Differently About Downsizing Your Organization: Consider These 10 Steps
Before embarking on a downsizing initiative for your organization, there may be some alternate solutions to save money and mitigate reputational damage. Some may call it “responsible restructuring”. The bottom line is to explore salary or benefit reductions, hiring freezes, early retirements, or purchasing constraints. Only after all other avenues have been explored, should people resources be let go.
Having led three employee downsizing initiatives in my career, each time I reflected on how the entire process went so if I was presented with a similar scenario in the future, I would improve my approach. My most recent experience, although still unpleasant, resulted in a congenial departure of all 20+ employees. Recognizing that taking employment from people is never enjoyable or easy, I have also learned that there are key steps that can make the experience less stressful for both those leading the layoffs, and those being laid off. Here are a few key recommendations for how to conduct the downsizing process from my own experience.
1. Trust and Relationship
Before you proceed, do you have trust and a strong relationship with your employees? Do you care about them? If you don’t, then who on your leadership team has the best relationship with the team? This person will be essential in ensuring the next steps go smoothly.
2. Be Transparent about the Financial Situation (6-9 months in advance)
Some companies believe that the financials should be confidential. However, providing employees a high level summary of the state of the business shows that you trust them with this sensitive information. Plus, it shows transparency and respect. When people leave the organization, they will remember that they were treated well instead of disparaging the company to others, which could result in reputational damage.
3. Engage Employees in Discussions – Encourage Suggestions (6-9 months in advance)
Encouraging team members to be part of the discussion is a sign of respect. Quite often, employees will offer a perspective that leaders overlook. There may be creative solutions offered which might keep some team members employed for longer. Be open. Be honest. If you have a trusting relationship with your team, these discussions should not lead to mass panic and exodus. Some employees may start looking for other employment and depart early, but that should be expected.
4. Once Decisions Are Made, Don’t Wait; Communicate! (at 6 months)
As a leader, it is your job to communicate information to employees as early as possible. Don’t wait for the gossip mill to take hold, which inevitably leads to misinformation and employees drawing their own conclusions when information is not forthcoming. Once decisions are finalized on how many positions will be lost, that information needs to be passed along. My recommendation is to have one on one discussions, then a full team meeting should follow. This will allow for questions to be asked and for all information to be communicated consistently. Make sure detailed meeting minutes are captured and distributed in case employees are absent or missed some key details.
5. Conduct Expressions of Interest (EOI) Process (4 to 5 months in advance)
In some cases, your organization may be keeping a percentage of employees who share the same position. In this case, if there is no “seniority” requirement in place, conduct an EOI process. This will provide information on how many employees are not interested in remaining. Sometimes employees see downsizing as an opportunity to pursue other options, which will leave fewer employees vying for the positions that are left. Important note: if you have never conducted an EOI process, make sure you do your research on how to conduct this method fairly. In my experience, using a scoring and ranking system will minimize the risk of employees challenging selection decisions.
6. Announce EOI Decisions (3-4 months in advance)
After interviews and job performance has been assessed through the EOI process, announce the decisions immediately. Make sure you inform each individual who took part in the process through a one on one conversation. Inform all those who were selected first, then deliver the news to each unsuccessful candidate. Reassure these employees that you will be offering them resume, interview, networking, and emotional support in the following months, if needed.
7. Give Official Working Notices (at 3 months)
Out of respect, give official working notices to the departing employees. Reinforce that the upcoming months will require them to stay focused on their job, but you will accommodate interviews with other organizations. It is good practice to remind the employee that you will give them a great recommendation provided they continue to perform well. Emphasize that how an employee leaves an organization reveals a lot about their character.
8. Offer Emotional Support to ALL Employees
Remind employees regularly that staff transitions can be difficult for everyone. The team dynamic changes. Some experience grief. Some seem unaffected. Those staying with the organization may feel “survivor guilt”, whereas some may start distancing themselves from those departing. Whatever the case, your job is to keep your finger on the pulse of the culture. Provide access to both career and personal counselling services if possible. Incorporate some fun events into the office, such as pot luck lunches, team-building days, or other fun activities. This will keep the team connected and reduce any resentment that may build.
9. Offer Skills & Development Support
Supporting your employees during transitions is essential. There are many creative ways that leaders can prepare departing employees. Here are a few examples:
Resume & Cover Letter Writing
How to Use Your Network (LinkedIn, Facebook, etc)
Send Links to Job Postings
Facilitate Introductions Between Employees and Your Own Network
10. Be Available for Conversations, Advice, References
There is nothing more pressing during staff transitions than making yourself available for team members. Many employees will lean on you for answers, emotional support, and advice. Make this a priority both before and after employee departures.
Organizational downsizing can rarely happen without stress, anxiety, fear, and sadness, but there are some creative ways that leaders can re-think how to engage their teams through the process. It’s time to do away with delivering immediate lay-off notices to employees. As leaders, we can do better than that. Employees deserve some consideration after investing their time and energy into our organizations.
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Melissa Ketler (BA, MAL) is an Organizational Leadership Consulting at Fox & Owl Consulting. For more information on creative solutions to organizational downsizing, or to work with Melissa on your downsizing initiative, please visit our website at www.foxandowl.ca or send an email directly to firstname.lastname@example.org.