When companies struggle financially, they downsize. Whether your reduce space or staffing, it’s a common and often effective business strategy. Best Buy, the U.S. Postal Service, and Blackberry maker RIM (our neighbours!) have all recently announced downsizing measures.
Unfortunately, an unprofitable business is still an unprofitable business. Simply reducing payroll obligations won’t turn around struggling operations.
After more than 20 years of interviews, research, and consulting, researchers at Michigan State University have found four key priorities for any downsizing initiative:
Develop greater flexibility.
Use the opportunity to cross-train staff. Get management focusing on more than one domain (human, financial, technological) of organizational resources. Reach out to your suppliers, competitors, and customers, to find new efficiencies and make new relationships.
Foster innovation and creativity.
Innovation and creativity require trust and empowerment. The way you implement layoffs affects both the departed and the surviving staff. Recovery will be difficult or impossible if your surviving staff do not respond with hope for the future.
Improve communications with stakeholders.
Honesty, transparency, reciprocity, and consistency in communications are always important. They become even more so when relationships are strained by layoffs. Rumours must be managed effectively, and responses to feedback should be prompt and thorough.
Empower managers as organizational linking pins.
Front-line managers and supervisors are important communication relays between workers and executives. Open communication efforts should not cause them to feel useless or threatened. Help your managers become better.
If When you have to downsize, it shouldn’t be a simple cost-cutting measure. Use it as an opportunity to look at your organization as a whole, and find ways to better use the resources that are left. Increases to training, engagement, trust, and communications will make the process smoother for everyone involved.
Have you ever had to downsize? How did you cope?
Sources Mishra, A., Mishra, K, & Spreitzer, G. (2009). “Downsizing the Company Without Downsizing Morale.” MIT Sloan Management Review 50(3). 38-44.