“In the second quarter of 2008, 1,534 extended mass layoff events resulted in the separation of 299,886 workers,” according to the U.S. Department of Labor, Bureau of Statistics, Mass Layoff Statistics.
I know how it feels to be involved in a “downsizing.” I know based on two perspectives: (1) as a human resources professional, I provide guidance for downsizing initiatives; and (2) as an employee, I have also lost my job due to a downsizing.
It was personal: Downsizing affected my life, my livelihood and my family. Like most employees going through a trying downsizing experience, my emotions ranged from feeling a sense of betrayal to anger and resentment. Because of my personal experience, I am even more committed to helping business owners and leaders plan for and manage downsizing initiatives in a sensitive, empathetic and professional manner.
Facing Business and Economic Realities
Generally, mass layoffs are attributed to a number of “movement of work” reasons such as off-shoring outsourcing or economic reasons such as bankruptcy and financial difficulties.
A term related to mass layoffs is downsizing. Downsizing is also known by other terms: smart sizing, work force reduction, reductions in force (RIFs), layoffs, restructuring, etc. These are all commonly used terms that refer to a reduction in the overall size and operating costs of an organization. In order to reduce its operating costs, and during periods of economic slowdowns, a company may reduce the total number of employees. It is a business decision; in order to stay profitable, they look for ways to pare down their operating costs.
Sometimes due to poor business practices or—in many cases—circumstances beyond their control, a company is forced to consider the benefits of downsizing. Obviously downsizing is disruptive, so the challenges for employers and human resource professionals are: how to anticipate and plan for disruptions in ways that benefit the company while minimizing the levels of emotional stress for the affected employees.
Benefits of Downsizing Don’t Always Apply to the Employees
From the employees’ perspective, downsizing offers few benefits to them. A loss of job represents many changes and losses: a loss in security, more work for the “survivors” left behind, lost knowledge and lost relationships.
Three Tips for Maximizing the Benefits of Downsizing
When considering the benefits of downsizing, employers want to keep three objectives in mind:
- Make the best decisions for the company’s benefit.
- Make sure decisions are made within legal boundaries
- Treat employees fairly and with dignity
In order to maximize the benefits of downsizing, here are a few suggestions that have helped me and other organizations:
- Maintain candid, open and ongoing communication: As soon as possible, inform employees of your intentions. Give the rationale for downsizing and address rumors. Keep all employees in the loop and informed every step of the way.
- Be sensitive to people’s feelings: Remember, everyone is watching how you treat their co-workers. Your reputation and image are at stake. When your business picks up or the economy rebounds, you may need these people again. People don’t have to be treated like pariahs. If you have proprietary information to strictly protect, you can accomplish that objective while maintaining employees’ dignity.
- Seek counsel for legally related issues: While you want to keep top talent and remain competitive, it is wise to seek counsel when selecting employees for termination. You want to avoid potential costly lawsuits or class action filings by terminating certain individuals who can later file, for instance, a discrimination suit.
Again to maximize the benefits of downsizing, sharpen your company’s competitive edge and its image, employers will want to plan responsibly and carefully. When times are tough, it is more important than ever to respect people’s feelings and their dignity.