Downsizing is often seen as the big, bad wolf of all staffing practices. Labor costs account for a
major chunk of an organization’s expenses and companies stand to gain a lot if they keep a
tighter, more streamlined and multitasking workforce, often known as “trimming the fat”. But
truth be told, not many organizations can go through this process without breaking a lot of hearts
and ruining a lot of career paths. And as they say, an empire built on broken dreams does not last
long.
It is imperative, therefore, to explore all other options by which downsizing may be avoided. In
fact, downsizing carried out gradually may not be as jolting at all. Done progressively by
imposing an external hiring freeze and investing in training and development for existing
employees to make them more flexible with their job roles can make cutting future labor costs
that much smoother.
If this measure cannot be prevented, know this- done properly and empathetically, downsizing
need not be the ugly monster of staffing problems. In fact, it can help the organization move in
the direction of their strategy.
If an organization must layoff workers promptly, they may decide to go for a softer approach by
offering golden handshakes, outplacement opportunities, a hefty severance package, etc. to
sweeten the deal instead of simply handing out termination letters to employees. Of course, nothing
replaces a job but most of these measures provide a welcome buffer. As a result, healthy
relationships with employees may bud, businesses may come back on track and even outgoing
employees may benefit from outplacement opportunities or hefty severance pay packages.
It is important to calculate how many people an organization needs to get rid of to reach its cost
goals. Many companies, in their greed, to make cost reductions and subsequent gains due it, end
up facing a severe shortage of workers. Side by side, it is important to know who is to be let off
and based on what criteria, e.g. performance, seniority, etc. This ensures fairness and reduces the
risk of lawsuits.
So, is termination the end of downsizing?
A harsh measure such as downsizing should not be taken without proper planning and
forethought and often, the mere act of termination is not the end of it. The process needs to
continue far beyond it if a company is to survive the repercussions of the measure.
These repercussions sometimes come in the form of a demotivated and scared workforce,
suffering simultaneously from survivor’s guilt and a lingering fear of losing their own job.
Workers may also find themselves doing the work of laid-off employees for which they may not
be adequately trained. They may suffer from team productivity imbalances when their coworkers
leave. The most dangerous of all impacts of downsizing is the loss of trust employees have in the
organization – a situation where a voluntary outflux of employees becomes imminent as they
look for job security elsewhere.
Of course, even the organization takes a hit in these situations. The loss of credibility to
competitors and other stakeholders, often fueled by the badmouthing of angry terminated
employees can add up to dire circumstances for a company.
Communications- the Unsung Hero
Implementing the decision takes an extraordinary level of communication skills. It is necessary,
at this time to assure both the outgoing and the surviving employees that all possible steps were
taken to avoid this decision and to convey to outgoing employees, all the steps taken to ensure
their smooth exit and the sort of benefits they can expect to receive in compensation.
It is equally important to let survivors know that they need not worry about their future. In fact,
being open about why downsizing had to occur, why they survived and articulating its direct
benefits to surviving workers may motivate them. It may also help to give them a vision for the
future- the training and development opportunities they are likely to receive, the gains that may
be shared among them that happened as a result of the cost-cutting, and even, a say in how their
future job roles should be designed. A good communicator tries to assuage fear and confusion in
employees and replace these negative feelings with those of sympathy and loyalty towards the
organization.
Is it all uphill from there?
Even when companies survey employees to know their feelings and fears, give them growth
opportunities, enrich or enlarge their jobs, or offer better benefits, some employees cannot or will
not get over their apprehensions and for them, this decision, even after surviving the cut, will
mean the end of a working relationship. Companies that anticipate this will end up having the last
word.
