Downsize / Rightsize?

Philip Wood of Lee Hecht Harrison NZ talks about the key things to think about, if you need to cut your cloth and your team to a new world.

In the marketplace we find ourselves in today, business owners are struggling with some very difficult decisions on how to effectively manage their employee costs whilst, ‘maintaining employee morale’.

What to Consider:

When it comes to reducing headcount, and there seems to be a lot of that going around, it is so important to remember that the people leaving your organisation were colleagues and friends to those who remain.

How you treat the ones who have to leave will have a significant impact on the ones who stay, and will either lead to continued success and productivity, or it may lead to disillusionment, resentment and the withdrawal of discretional effort.
In organisational behaviour, there is something known as a psychological contract between the employee and employer. That contract is the ongoing trust between Employer and Employee. When either side perceives a break in this contract, the resulting lack of trust and build up of resentment is hard to repair and will, in most cases, lead to employees becoming de-motivated and expending less discretionary effort at work than before. They may even act in a counter-productive manner.
The organisations that live up to their values and think through the people issues of making someone redundant will be ahead of their competition. Their top performers and solid citizens will be watching very closely how their fellow workers are being treated and will, or not, respond in kind to the organisation and its management.
Senior management should be wary of falling into the trap of thinking, "The market has changed, it will be easy to replace people later so right now we can do what we want”. This mentality of how to treat your employees went out with the manufacturing age. There just isn't a place for it in today's workplace – ‘if’ you want your employees to get fired up and do everything they can to make your organisation a success.
No matter what, you still need some employees to keep your organisation going and those employees will become even more critical to your success when they have additional workloads and responsibilities due to you having made some of their co-workers redundant. Do you really think they will do their best for you if they feel that you; a) did not treat their colleagues well and that; b) they could be next on the chopping block?

The 7 Key elements of a ‘good’ redundancy process:

Consult with those who may be affected. As far as possible, try to as soon as possible to allow them time to prepare their ideas and alternatives. You may be pleasantly surprised with some of the ingenuity of your employees when it comes to meeting this challenge.
Review your organisation's needs, thoroughly. In the short to medium-term ensure that you are not going to cut it to the bone on a very short time scale. This will only de-motivate the remaining workforce and then you may have to re-hire more employees when business improves again.
When a decision has been made, move quickly - One of the worst things to do when something like this has to occur in your organisation is to drag it out. It means communicating with employees each step of the way so they know where they stand. This includes communication with those who are going to remain with the organisation.
Maintain dignity - It is so critical to ensure that those who you are making redundant are treated with respect and dignity. The situation should never be made to be more unpleasant than it already is. Organisations should offer a number of services to their employees in order to assist them with the transition. These should include CV preparation, interview coaching and job search techniques, financial planning and counselling through employee assistance programs.
Provide change management training - For the employees and managers who will remain with your organisation. This need not be a costly exercise for either large or small organisations, it may be worth getting in some external help to deliver short workshops to employees on how to cope with the changes and keep their stress levels under control and for managers, on how to cope with employee reactions and increased workloads.
Review your employment contracts and legal obligations - It is obviously critical to ensure that you are providing the correct notice periods and severance payments to your employees. There are standards provided for within the NZ employment contracts.
Restructure and review position descriptions and KPIs - With the change to work flows and workloads, it will be very important to ensure that each employee who remains with the organisation is focused and productive. Review all position descriptions ensuring that all tasks are included in the existing employee's position description and their goals and key performance indicators may need to be reviewed to ensure they remain realistic and achievable.

A key ingredient to any such process is to ensure that motivation levels in the organisation do not drop significantly. It is to be expected that there will be some fallout and you may have some of your best employees moving on.

“Your challenge is to minimise this reaction.”

Other issues to think through are whether your competitors are going to be snapping up your best performers if you decide to let them go, as well as how much time and money you have already invested in some of your people.

The current environment will require some innovative and out of the box thinking from everyone. Make sure that whatever you do is handled with sensitivity and concern for the other person . . . who knows, one day it could be you.

Just before Christmas!