How to Handle Workforce Downsizing in a Tough Economy

downsizing the business

Organizational downsizing is always a difficult task to undertake, but there comes a time in the life of every business where it occurs for one reason or another. Even highly successful companies like Microsoft and Apple have had to take this uncomfortable step. Sometimes it’s planned to improve efficiencies, other times it’s an unwelcome surprise like the GFC event of 2007 – 2008. That bought a lot of businesses to their knees and the downsizing was more about survival. There were lots of company fatalities too and that meant lots of workers competing suddenly for new jobs.

There doesn’t need to be a big event to force your hand into downsizing. Changes in the market, including ongoing innovation, and technology advancements like use of artificial intelligence results in products and services no longer in demand and that can mean a huge dent in sales revenue unless of course it’s your business that’s doing the innovation!

Startups can also expand too fast or their expansion doesn’t go to plan so the business needs to scale back in order to move forward again. From a career viewpoint, there is a line of thought, that working in a redundancy or two is a good thing. It can lead to a better role or change in direction altogether.

Organizational downsizing has been around for many years so there’s a lot of intellectual capital in the public domain for businesses to use. Breaking the news to the staff affected will take diplomacy so here are some suggested ways to deal with a workforce downsizing.

Consult with Experts

From a legal perspective, there are certain considerations for companies worried about proprietary technology and other company secrets. Depending on the sensitive nature of the position held, some employees may need to be managed differently through the downsizing process than others.

A consultant that regularly deals with company layoffs is best positioned to advise on what the standard procedure is for companies to protect themselves. Certainly, the company can choose to have one of their senior managers deal with the layoffs, or the individual department heads. However, if they choose to perform the layoffs internally, then those staff should undergo training so that the whole process is performed in a consistent, fair and reasonable manner.

Provide Useful Services to Help Departing Employees Find Employment

Depending on the length of time that the employee has been with the company, their resume may have become dated and needs updating. Trends in resume design also wax and wane. A new resume format is not a bad idea to give their resume a fresh look. Providing the resources to departing employees for how they can update their resume to apply for a new position at another company is one of the most helpful things a company can do.

When they have industry contacts, calling around other companies to find out what positions are available may open the doors to employment opportunities. A referral to call a contact at another company in the same industry is not a bad idea if all parties open to it. Some employees will be sufficiently upset to not want to accept any direct help from the company, seeing the layoff as a form of betrayal. In this situation, the company should not push on the issue. These people will have to find their own way but may get back in contact later to ask about the referral once they’ve had time to calm down and analyze their options carefully.

Layoffs Don’t Happen in Isolation

While it’s easy to think about the layoffs from the necessity of them to the company, the reality is that it will affect employees’ lives in a very real way. The staff getting the axe will feel it emotionally and financially, and the remaining employees will feel continual uncertainty with the fear that they’re next on the chopping block.

The rumor mill being what it is, that the company has been considering layoffs for a while won’t have gone unnoticed by clued-in employees. For the ones who either aren’t busy enough day-to-day or who know that they’re not vital to the continued operation of their department, they already typically have some idea that the day could come. That doesn’t make it much easier for them emotionally though because depending on their history with the company, they have a lot emotionally invested there.

A Departing Employee’s Needs Are Important

For the departing employee, they will have several worries about what happens now. If they have many possessions on their desk and in their desk drawer, how will they carry these all out of the building? For employees with considerable personal items and no form of transport, then the company should pay for a taxi to bring them home rather have them use the metro with a box in their arms heightening their embarrassment.

It will depend on the employee, their role in the company and the policy of the business whether they will be working out the month, leaving at the end of the week or right after they’ve been formally notified that they’re being laid off.

In terms of offering a settlement, employees losing their position are often not sitting on considerable cash savings even if they have investments in the form of a 401(k). They won’t want to access the 401(k) and take the tax penalty to get back some of the money there. Many Americans have less than one month’s salary in savings that they can access due to living from paycheck-to-paycheck. Given this reality, a satisfactory settlement offer that allows them to financially survive long enough to find a replacement position is a priority once they have taken in the news that their position is going away.

What’s most important is to handle any downsizing with professionalism. Former employees need to feel some sensitivity to the situation they’re being put in, even if the company is not able to offer much in compensation.

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