Rebuilding The Work Force

Companies will be shocked and shaken by cost cutting and reductions in force, but there are steps to take to regain momentum and rebuild. After conducting cost-cutting measures, here are the ways to take control of the situation and turn the corner to recovery.

1. Do not Forget the Needs of the Survivors. There is a need to address the anxieties of those who survive a layoff, especially if there is more than one round of cost cutting. Those left behind are typically ambivalent. There is postlayoff guilt. They think, “Why me? Why did someone who was here 20 years get laid off and I’ve only been here 5 years and get to stay?” They are relieved to have a job but upset because those they worked with are gone and may resent them. Furthermore, they may have to assume other tasks. And they might be uncomfortable with the fact that they could be the next to get fired. They may have the feeling of needing to look over their shoulders or await their pink slips, which makes their daily hard work almost impossible.

   Companies should work with the survivors and offer them an outlet to express their feelings, whether that involves giving them access to a counselor or supervisors to validate that their anxiety is perfectly normal.

   Most important, the company should not make any guarantees. Do not say, “This won’t happen to you.” Rather, be honest with staff about the company finances and status and the reason the layoffs had to be done in the first place. Management should convey to the survivors this message: “We’re glad you are still with the company. We hope we can all do what needs to be done to get the company back on strong financial ground.” Make employees feel like partners in that goal. Also make clear to survivors the value of their contribution to the company’s financial success. Assure them that the company will do its best to avoid additional layoffs.

2. Concentrate on Rebuilding Employee Loyalty and Morale and Rewarding Employee Performance. Companies that follow the Headcount Solution—even if all options are exhausted and employees must eventually be laid off—have far improved employee morale in the short term during troubled times. Companies taking this path have found that as conditions improve, their people are more loyal, feel better protected, and will spread a good word to others about the firm.

   Consider the following example of a company that has a guaranteed employment policy for those who have been with the company for 3 years on a full-time basis. This policy at Lincoln Electric in Cleveland, Ohio, a corporation of 7000 employees worldwide, does not preclude the fact that an employee might be reassigned to a different job or that the pay scale for the job might change. But the employee will not be terminated. In fact, in the U.S. operation, there has not been a single layoff since 1948. In the early to mid-1980s, when production dropped, instead of cutting the work force, it took those on the shop floor, put suits and ties on them, and placed them in sales positions. By doing so these “salespeople” developed a new customer base. When work picked up and people went back to their former jobs, some opted to stay in sales. Employees were allowed to demonstrate new, perhaps unknown, skill sets and interests. Additionally, these employees needed no training because they were already familiar with the company, its mission, goals, and values.

   But what about companies that conduct layoffs? Building morale is more difficult, but following are a few simple guidelines that will make it easier:

   • Continue to communicate. Just because the crisis is over, managers should not stop the process that has been put into place. Once employees are “in the loop,” it makes sense to keep the information flowing as well as employee involvement and suggestions. Employees can help out in good times as well as bad.

   • Put the next round of incentives in place. Often companies return to a more discretionary bonus and incentive program after the crisis has been resolved. The type of turnaround bonus described in Chapter 3 works for taking performance to new levels as well as in a turnaround situation.

   • Reward the best performers. When the merit budget is tight, there is a concentrated effort to reward key top performers. When conditions improve, the best performers should not be forgotten. Room should be made to provide merit compensation and recognition for them.

3. Be Creative with Employee Work Assignments. Emphasize new opportunities that have the potential for long-term profitable growth. Focus on the company’s strengths and build them up with human capital. Use creativity and energy to look to the future in the following ways:

   • Take the opportunity to cross-train employees. Allow employees new opportunities to learn and test their skills. Train them and the company will gain an employee with existing intellectual knowledge of the company that does not exist in a new hire. It’s tough to lose certain employees, and it is important to retain the knowledge and experience base. (See Chapter 5.) To do so might mean taking those who were underemployed and putting them in another department. For example, put accounting people in engineering or out on the road in jobs not too far afield from their original skills. This enables them to see a different perspective of the business. Cross-training also builds bridges; it develops relationships and those relationships tend to remain intact.

   • Shift the focus to results. Alternative work arrangements shift from paying people for their time at a desk to paying for what is produced. One East Coast company cut back on hours and instituted telecommuting. It created a void in how the company usually managed people. The issue became trusting what wasn’t in the field of vision of the manager. But leadership learned that employees don’t have to be visible or work a traditional 40-hour work week to accomplish what needs to be done. They can do so on their own if properly motivated.

   • Jump-start projects. Put creative people in teams to tackle a product or new service that the company could develop or improve. Too often a company focuses only on what it has done in the past in its market segment. Assign staff to look for new opportunities to generate income. It could prove valuable. In the best case scenario, if just one project catches on, it could be the next margin opportunity for the company.

   • Lead with optimism. Senior leadership should balance current problems against the future for the company and anticipate a successful turnaround.

4. Create Ways to Keep Laid-off Employees Connected to the Company. Try to bring back those laid off as soon as possible. When the firm turns around financially, it will have an improved, full staff of people with new skill sets to choose from instead of a skeleton staff.

Massive layoffs may translate to a loss of future sales if demand ramps up quickly and the firm cannot find sufficient personnel fast enough to meet demand. Using layoffs as a first resort when the economy dips may diminish the firm’s market position and status as a market leader as well as its competitive position in the future.

It’s up to senior leadership to keep the environment positive after a layoff. They need to remain upbeat for those who are leaving and those who are left. A positive or negative attitude can quickly become contagious, so they must set the right mood. Business and life go on, even in tough times.