Downsizing Gracefully: Innovate, don’t amputate

There comes a time in the economic cycle where growth slows down and companies are forced again to take a good hard look at themselves. The joy of unprecedented growth can be short lived, and when ambitious hopes and dreams come crashing down it’s not always easy to cope. There is, literally and metaphorically, a clear ‘deflation’. In many areas of our lives individuals, not just organizations, are being forced to adapt a more conservative sense of reality.

With news of the car industry in crisis, for example, the irony is that only now are we realizing that maybe we don’t need that new car after all. The scientists have reminded us time and time again that we should be using cars less to help deal with the global warming crisis, and we are only now really heeding their warning – now that we are being forced to make the choice. And yet many will not see the writing on the wall until it’s too late. Take Generation Y, for instance, who have not experienced times of real economic hardship in their lifetime. Research is showing that they are still planning on spending as usual, as if nothing’s happened.

In a serious economic crash with international repercussions, like we are now facing, it is important that the early warning signs are heeded and that steps are taken early to ensure damage is minimalized. When the tech bubble burst not so long ago we counselled many people who had lost their jobs. While some took it gracefully, others remained bitter and scarred, and the impact on both individuals and organizations was significant. Those that remained positive despite the challenges and became proactive in their response – both individuals and organizations – ensured the impact was minimized and made the transition much more easily.

What company leaders can do

1) Don’t amputate: Innovate:
First, if your company / team needs to downsize (“take off some weight” / “cut the fat”) don’t immediately cut off major limbs – as these may hold major arteries supporting healthy organizational functioning. It’s more important to see where costs can be trimmed without having to resort to major surgical cuts or amputations. Creative thinking and innovation are no longer buzz words for the more adventurous, but are instead being recognized as essential skills and approaches that are a solid element of any proactive company strategy. Innovation can actually be the essential survival tool that enables positive progress. If you are failing to innovate or following the wrong paths of innovation your organization could be in danger of being left behind or could end up wasting costly resources. Make sure that innovation is used to make what you have left strong and effective and that this is communicated clearly.

2) If you have to cut jobs, do it considerately:
We have coached many people who have lost their jobs, and in the process we have encountered many different responses and noticed many different coping mechanisms. Many years ago a concept was coined by Tom Peters that captured the essence of the ‘ME’ generation – ‘A Brand called ME’. This referred to the need for individuals to no longer consider themselves as an integral part of an organization, but to instead to promote and protect themselves in an individualistic pursuit of achievement. The introduction of this concept signified a key turning point in employer/employee relationships, as it indicated that the employee should no longer feel obligated to their company as companies were no longer going to be loyal to their staff. Companies were portrayed as, ‘an object to make profit from’. This negative momentum has built and has become destructive for organizational performance, leading to self-focus and self-survival at the expense of the team. Failing to downsize gracefully will add weight to ’the brand called me’ philosophy for everyone who stays. Those who remain will be left wondering how long it will be until they are also disposed of, and will do whatever it takes to look after themselves first. When people are driven by fear and loss they focus on protecting themselves at the expense of high performance and teamwork. How will you manage the morale of your existing team?

Example 1: IT company After 20 years of working for an IT company, one lady decided to stay on an additional 6 months before retiring. In that 6 months her stock options plummeted and she was made redundant. The company provided personal coaching and retrained her, and although she left sad she was not angry.

Example 2: Hotel A hotel employee who had dedicated his life to a company and had given beyond the call of duty was made redundant by email with no explanation. The employee felt a great deal of anger and resentment, and he gossiped to others in the organization about how he had been treated, leaving them fearful that they would be next.

3) Be personal: There are a few simple ways to ensure individuals who are affected by the downsizing process are not left feeling bruised and battered:

  1. Give consideration to the timing and place of the notification
  2. Also consider the order in which you notify people and the time for others spent waiting. Generally the faster you can notify all of those people whose positions are no longer required the better. The waiting can be very dangerous and anxious for all.
  3. Explain the big picture
  4. Explain that the decision is not personal – it is the ‘position‘ rather than the person that is no longer required. Consider alternative roles suitable for the person’s skill set. If there are none then this is purely a business decision.
  5. Do it face to face, not by sms or email.
  6. Give reasons (although they don’t have to be too specific)
  7. Avoid getting into an argument about the company decision
  8. Be human, empathise
  9. Have a general staff meeting as soon as possible after the notifications have been made. Yes, you will be bombarded by questions and many will be not be happy with the decision, but if your decisions have been based on sound business sense then you will be able to answer most of them. As unpleasant as this can be, the remaining team needs a strong leader at this time who can emphathize but motivate and provide a vision for the way forward.

All these techniques can’t be learnt in a day. You will need to hope that you have built up enough goodwill and respect as a leader over time that people will not only follow you to the pots of gold but also, where needed, through the dark tunnels.

What affected individuals can do

According to research on the culture of downsizing by Fast Company and the University of Colorado Denver management professor, Dr. Wayne F. Cascio, there isn’t a whole lot individuals can do to avoid the unavoidable. Downsizing has simply become the de-facto quick fix to address business woes in the US, so being laid off is an unavoidable aspect of corporate life. “A young adult should expect to be laid off three to four times before he turns 50,” Dr Cascio warns. So is the path recommended by Tom Peters – who coined the concept ‘ME Inc’ – the only path now available?

Tom Peters says we now have no choice. If creating your own brand makes you more employable then this can only be a good thing for you individually. If companies have to sleep in the beds they’ve made, then maybe now it’s going to have to be up to the organization to make you feel part of a team, and create a culture that you and they can belong in. If a company invests in individuals, then individuals should remain loyal to the company. Tom Peters says that It’s time for us to take a lesson from the big brands, a lesson that’s valuable for anyone who’s interested in what it takes to stand out and prosper in the new world of work. To be in business today, he says, the most important job is to be head marketer for the brand called ‘You’. In this process individuals need to ask themselves what makes them different from the others, what is something they have to offer that is unique. It doesn’t need to be a specific task skill – today more organizations are focusing on high social and emotional intelligence, along with creative problem solving skills and the ability to get on with others.

Times of major transition such as job loss might be good opportunities to reappraise what role an individual can take in the market place, to look at how the landscape has changed, and where the competitive advantage has come from in the past and where this will come from in the future. It will also be an opportunity to assess what kinds of differentiation will be rewarded and what values and innovations will be needed. If each new generation restarts competition from a higher standard of competence than the prior generation, the young will be able to take advantage of this, and the old will be more aware of the changes that have taken place – possibly retraining to make better use of their core skills.

What’s at the heart of all this?

If you have created a mercenary company that boasts about making profit at all costs with employees that are self centred individualists, then it’s going to be a tough road ahead. Collins’ study of great companies clearly showed that profit is like oxygen – an organization needs it to survive, but it is not the reason for survival.

If your company has a story, a goal, and a culture of teamwork and support then even though the road may be tough, there is more chance of getting through it less scarred. We often end up sleeping in the beds we make and reaping what we sow, and if this recession will do anything it will start to expose those who chose short term profits and the path of greed, and those who looked ahead and developed a culture of cooperation and integrity instead.

— — —

We have put together a simple document that organizations can use either as checklist to ensure the necessary areas are being effectively covered. It can be downloaded here.

We also have a team of highly experienced and qualified coaches to assist your team with organizational transition, including redunancies and outplacements.

©2008 by Andrew Grant

Leave a Reply