Leader Strategy: Downsizing Done Right


Everyone is talking about the “new” normal.  We don’t call it down-sizing anymore, or even right-sizing, even though hundreds and thousands of employees have been laid-off.  Will they be called back, maybe, maybe not.  It’s just the new way companies will manage cashflow and do business when COVID-19 finally passes.  I want to specifically address two of the most challenging parts of the new operating plan you need to address: Layoffs and culture.

Carpenters use the aphorism “Measure twice, cut once.” The same applies to layoffs. In every downturn, there are CEOs who handled layoffs as “a death by a thousand cuts.” For example, in a company with 1000 employees, they’d layoff a 100 people the first month, another 100 the next month, then a 100 the third month to downsize to 700 people over several months. 

Rather than being productive, the constant layoffs were demoralizing and paralyzed the remaining workforce in fear of the “next” round. Employees see this layoff strategy as creating a downward spiral with no end in sight. And everyone worries: “Am I next?” 

We’ve all heard about CEOs who have immediately laid off 400 people and have 600 left. If/when it is determined the layoff was an overshot, they could rehire 100 people including some of the same people who had been laid off. While the mass layoffs creates an immediate shock, people quickly adjusted, especially when the CEO communicated honestly to the workforce. Employees will naturally worry, but began to feel more secure. When hiring began again, everyone was relieved: “The worst is over. Things are getting better.”

To begin adjusting the culture to this new reality, communicate these business model and operating plan changes to your employees. Offer relentless optimism for survival, but ruthless cost-cutting starting with the executive salaries. 

Let employees know that as CEO you are going to be micromanaging for survival and expect each of them to do the same. You’re going to be relentless, direct and clear that once decisions are made, there are no disagreements.  And remind employees that together you are all working to save the company and their own jobs.

At some point this crisis will run its course. Layoffs are the toughest part of any CEO’s responsibilities.  However, being open, honest and forthright in you actions will help your business survive so when the recovery does come, you’ll emerge stronger and ready to hire and grow again.

Popular posts from this blog

The Essence of Leadership: Humility & Empathy

Image
Article by Steven K. Haught, MBA If you know everything there is to know, then you can take a pass on this article and move on to something more to your liking. Or… maybe your curiosity will get the best of you and you will stick around and read.  After that, who knows what might happen to you. Let's talk about the underlying attributes of genuine effective leadership. What causes a company to experience success?  Is it the leader's brilliance, or the leader's impact on the people that surround him or her?  Impact can of course be interrupted many ways. Quite often startup cultures, particularly tech companies, gets caught up in the bravado of “crushing”, “disrupting”, “paradigm-shifting”, or “becoming the next unicorn.”  Success is a heady business.  Anyone who has experienced this kind of adrenaline knows what I am talking about.   Very quickly and almost without awareness on the part of the leaders, especially the founder, the compan...
Read more

STRATEGIC PLANNING: Develop a Scenario Planning culture

Image
Scenario planning is a must-use process for functional leaders to drive immediate actions, decisions and longer-term strategic planning.  The COVID-19 pandemic has triggered a wide range of strategic planning activities. As the focus turns largely to recovery and renewal, functional leaders are increasingly pulled into enterprise conversations about likely outcomes when the way forward is neither clear nor certain. They also have to plan for a range of potential outcomes for their own functions. Scenarios are compelling descriptions of possible futures — not necessarily the most probable ones, but plausible, coherent and substantially different ones driven by the unavoidable barriers facing the business. Business models are evolving frequently, particularly as executives consider which pandemic-related trends will become permanent. This requires a prompt shift in the strategy that defines how the enterprise will play and win — and requires all functional leaders to ...
Read more

Executive Mental Health: Defeating Worry, Stress and Anxiety

Image
By Steven K. Haught, MBA Worrying is a huge distraction. It may pretend to be helpful in organizing, prioritizing and getting things done, but in truth it distracts us from helping others.  Worry saps our joy and does nothing to fix a situation – we can solve problems more energetically and effectively with a light mind of patience.  After months of fear, isolation, soaring unemployment and uncertainty brought on by the COVID-19 pandemic, it shouldn’t come as a surprise that the U.S. Census Bureau estimates one-third of Americans are anxious about the future. Worry produces stress and uncertainty about things beyond our vision, and together they overwhelm us with anxiety. COVID-19 has produced not only a health epidemic, but also an anxiety epidemic: Once we thought we were invincible; now we feel fatigue as we ponder our own future Once we sprang out of bed because we had things that needed to be done; now we crawl to our home office with a sense of r...
Read more