The turbulent financial markets are leaving business owners with some tough
choices to make, one of which may include the need to reduce their work force.
Bob Holden, senior vice president with
Employco Group, points out that employers have a responsibility to display compassion during the process to those let go while
remaining decisive and optimistic for the
remaining employees.
“How and what you communicate to
your employees during a layoff is very
important. You need to be honest and
explain what’s going on in the company, in
each department and how individuals may
be affected. It may also be beneficial to
clarify how outside factors are impacting
the company during these tough economic
times,” he says.
Smart Business learned more from
Holden about how businesses can best navigate the process of layoffs.
How are layoffs different in this economic
environment?
Oftentimes, reductions or layoffs are
planned decisions made by the management team as a part of its strategic planning. What we’re finding in today’s environment is that many companies are forced to
reduce their staff due to outside influences
that can’t be controlled by the company
itself. For example, if capital is not as available as it used to be via credit, it can affect
a company’s ability to pay its accounts
payables and, in turn, affect its vendors’
accounts receivables, which can further
affect that company’s ability to make its
payroll. It’s a cash flow issue since companies cannot rely on credit for capital at this
current time.
Does this environment affect the decision of
who stays and who goes?
In this particular case the kinds of things
that confront the small business owner are
economies of scale. You have to do an
inventory of skill sets and job knowledge.
Conduct a thorough assessment of how
individuals perform on the team, determine
where they excel and identify the persons
who are cross-trained who can take on more responsibility. You’re trying to keep
your highest performer while at the same
time trying to keep your most multifaceted
performer — the utility player. The utility
player can be more valuable in this environment than an individual who is highly specialized in only one area. The utility player
may already have some basic knowledge
about the specialty — it may not be a lot, but
enough to get by — and you can mix and
match the kind of skill levels you require
with the people you need to keep.
How should business owners approach these
choices?
Develop a matrix and go through a position-by-position or a function-by-function
needs analysis. If you decide on using a
skill-based matrix and you narrow it down
to two similar employees, then the next
step is to take a hard look at their level of
performance, skill and knowledge.
For example, can a credit manager now
do the credit analyst work, or can one of the
managers take over the duties of a credit
manager? What is the difference in compensation? You may have multiple employees in the same position with comparable skill levels but they might not necessarily
be the same type of performer. If you have
a sound, accurate method in place for evaluating your employees, you’re in a better
position to evaluate who truly are your best
performers.
Lastly, in this day and age, depending on
the size of your company, you also have to
adhere to certain federal and state laws
with respect to the various discriminatory
issues, such as age, race, sex, etc. Be mindful of favoritism and learn how to balance
all the different factors when looking at
whom to let go.
How do you best manage the people remaining?
It’s never easy letting people go. Many
times employees that get left behind are initially thankful and gratified that they were
not let go. But there is a little bit of a guilt
factor involved, as well as anger and resentment. And then there’s fear they may be
chosen in the next round. After a set of layoffs, the management team needs to come
together with the remaining employees to
discuss the rationale behind the layoff, how
the decisions were made and a plan for
how the company is going to move forward. It’s a time to say: ‘Here’s where we
see the company going, here’s how we’re
going to affect change for the future and
here’s what we need everybody to do to
help us get there.’ If employees will be taking on extra work, communicate the new
responsibilities, explain the possible longer
work hours and be sensitive of how this
may affect their personal lives. Make sure
to address all questions and concerns from
the remaining staff so everyone can get on
the same page to move forward.
If you leave a cloud of suspicion and indecision where remaining employees are
unsure of where the future leads, that could
cause good people to look elsewhere or
could create an unproductive work environment. Ultimately, you want to end up
with your best, most knowledgeable and
effective people in order to make it through
the tough times.
BOB HOLDEN is the senior vice president of the Employco Group (www.employco.com), a division of The Wilson Companies
(www.thewilsoncompanies.com). Reach him at (630) 286-7399 or [email protected].
