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Downsides of Downsizing

Posted: November 3, 2013 2:00 a.m.
Updated: November 3, 2013 2:00 a.m.

I have been in companies going through periods of “rightsizing” - also known as “layoffs,” “terminations” or “firings.”

The second time these events occurred over a period of about 15 months. My department shrunk from twenty employees to three. Some employees resigned, taking positions elsewhere. Some employees were let go; given final checks and a handshake.

Those remaining were expected to continue on. Several things happen when you are a survivor of these events.

The first thing, even before you have a moment to consider what just took place, is that an incredible amount of work is thrown at you, full-force. The work comes like a flash flood.

There will always be a certain amount of work required for the business to continue on. There were only three employees left in my department; yet we had to do the work of 20.

This flood of work can take months to address. If the people who left did not use standardized processes and procedures, the work can take months to learn, understand and assimilate.

Important things fall through the cracks and deadlines are missed. Picture a hospital in the hours and days following a major natural disaster.

The second thing to happen is service levels to internal and external customers deteriorate.

I liken this to going to work while you are sick, running at about 75 percent of capability. When you show up, everyone expects you to work at 100 percent regardless of how you really feel.

Now, I cannot speak for all owners running companies and managing through these events. I can speak to the people in charge when I was in the middle of the downsizing events and the floods that followed, having lived through it twice.

Not only did the leaders not understand what had been cut out of the organization, they did not care. They were alarmed that service suffered but did not dig deeper into finding solutions. Their attitude was clear and simply: fix it and fix it now. The caveat was: don’t spend any money and don’t add to payroll to fix it.

So, while dealing with all this, two more things happen to the survivors. First, you start looking back for the clues preceding the headcount reductions. You dwell on this because reductions are seldom one-time events; there will be future events and you don’t want to be surprised when it happens.

The second is you wonder if staying where you are is worth it. Yes, it is a job, providing a steady paycheck and may have a nice benefit package. But the flood of work never ends, and daylight appears a long way off. I picture George Clooney on the bridge of his little fishing boat at the end of the movie “The Perfect Storm” saying, “We’re never going to get out of here.”

Letting people go is not pleasant and is very difficult. But once the cuts are made, it is necessary to address the survivors. These are the individuals that remain on the payroll to serve create and keep customers; they are the future of your company.

I recommend a three-prong approach to communicating to your employees.

The first is to be authentic. Speak honestly, tell the truth about what brought the organization to the point where people had to let go to find jobs elsewhere.

The second is to share the plan for turning things around. People must believe in their leaders and the plan if there is any hope of things getting better.

The third thing is to lead. As such, teach, encourage, motivate; learn from and listen to employees. Do what is possible to address concerns and be authentic when doing so.

Never forget, employees want the organization to succeed too. Everyone is in the lifeboat together. You are all depending on one another.

Ken Keller is CEO of STAR Business Consulting Inc., a company that works with small and midsize business owners to grow top line revenue. He can be reached at Keller’s column reflects his own views and not necessarily those of The Signal.


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