In anticipation of a recession in 2023, executives may consider downsizing their team to weather the storm. Already, at the end of 2022, big tech and media companies including Meta and The Washington Post announced layoffs — a trend that could continue as high inflation persists.
“When you’re profitable, you can run an inefficient organization and nobody pays attention to it,” says David Belden, a retired consultant who reorganized corporate offices in Europe and Asia.
But when companies are not achieving profitability, executives are forced to determine who is superfluous to the organization, reevaluate the company’s priorities, and decide who can contribute to achieving them.
If your company must conduct layoffs, here are three things to consider as you’re planning your approach.
Clarify Objectives and Reorganize Duties
Downsizing places a tremendous amount of responsibility and stress on the employees that remain, and the executive team must share the increased workload, stresses Belden.
Executive coach Joel Garfinkle, who has worked with leaders at Microsoft, Deloitte, and Bank of America, suggests every level of management proactively consider how the work will be completed after a round of layoffs, versus reacting as shortcomings appear.
“It is key to reevaluate your responsibilities and then delegate to the appropriate people so you’re not just taking on all of this responsibility without being strategic and clear about how you’re going to complete it,” Garfinkle says.
Distributing the work across levels encourages employee trust in leadership and their shared value in the company.
Still, even with additional effort from each remaining employee, there is a limit, and projects will be placed on hold, says Belden. The transitional period — and the added stress that comes with it — must be temporary.
“When you’re asking people to put in an incredible effort, it’s important you put a timeline on it,” says Belden, suggesting three months, for example, to achieve short-term goals. “People can take on an enormous amount of stress if they know there’s a time limit.”
Managers should also meet frequently with employees as they may not agree on what’s important, particularly when stress and overwhelming feelings can disrupt the ability to tackle tasks, says Garfinkle. Frequent one-on-ones can help you evaluate how employees are handling the intensity of work and when tasks should be reprioritized or delegated to someone else.
Some companies may benefit from the model of self-organizing teams to redistribute the tasks, as Belden implemented within large corporations. Among a group of eight employees, one is selected to be a team leader who assists with determining how to execute tasks and by what deadline, but otherwise team members are given freedom to accomplish them as they see fit.
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Openly Communicate the Company’s Financial Situation and Outlook
Explaining why the company is making a significant transition, whether it be layoffs or a shift in operations, helps employees understand executives’ strategy and feel more comfortable with their role in the transition.
“The more you communicate with them, the more impact it has,” says Garfinkle, noting that the added communication can help ensure employees feel valued and that their jobs are secure.
But the devil is in the details. Consider the extent to which you’re comfortable sharing confidential financial figures and forecasting with your workforce. A concise presentation with graphics indicating which products or services are profitable, what is underperforming compared to prior fiscal years, and how the company will redirect to resolve shortfalls ensures shared trust and a team effort among employees.
“Show employees why the layoffs will actually make the company more productive and profitable,” says Garfinkle.
Conversely, “the lip service that everything’s fine, nothing’s going to happen — it’s not authentic. You lack credibility,” he says.
In an interview with Senior Executive Media, Travel Bank CEO Duke Chung highlighted the importance of open communication with his staff, after the COVID-19 pandemic forced the company to conduct layoffs and temporarily cut remaining staff salaries.
“Once the pivot started to work. It was interesting, nobody left during that time. Because we were very transparent,” says Chung. “Typically, we would have a town hall every month and share numbers. But we were doing this on a weekly basis.”
Listen to Employees’ Concerns and Validate Their Contributions
Emotions are high during a season of layoffs. Of course, those directly affected can be devastated by the unexpected prospect of lost income and a career setback. There’s also a ripple effect on everyone around them.
Managers can be overwhelmed with the stress and intensity of telling employees they value that they’re being let go. Then they have to manage people and objectives through the transition.
Remaining employees might also be concerned about laid off colleagues and friends, as well as what the future holds for their own job security and the stress of taking on more because of the downsizing.
“The solution is to make yourself available to your employees,” says Garfinkle. “Ask them how they’re doing. Listen to what they’re going through. Be empathetic. Let them express their concerns. I think a lot of leaders as managers feel like they have to solve the situation when sometimes listening can be enough.”
Setting aside the time for frequent one-on-ones or public forums can seem challenging when there’s pressure to produce, “but you can’t be so focused on the results that you forget the human nature of your employees,” says Garfinkle. “It’s incredibly important during this time, because if you don’t, they feel you don’t care. ‘I’m just a commodity in this company. I don’t matter.’ There’s no human connection and it causes even more negative impact on morale.”
Garfinkle suggests managers focus on the future of the company and how each employee fits into the company’s success, so they feel more valued and the fear of being laid off is tempered.
“When people can feel some sense of security in that, they’re less panicky and they’re more grounded in caring about the company and feeling good about their position in the company.”