From Economic Planning To Action

The way should now be clear to plan for the three rounds of cost cutting that comprise the headcount solution: (1) making across-the-board compensation cuts that can be accomplished without layoffs; (2) instituting alternatives to traditional full-time employment that will cut employment costs while retaining human capital; and (3) conducting layoffs only as a last ditch effort. This chapter focuses on one last difficult decision that needs to be made to translate this economic plan into action: deciding whom to cut and whom to keep.

At this point in a company’s schedule, time is critical. Managers won’t have a lot of time to reflect and gather facts. The steps that follow don’t take long—perhaps one-half to one day of a department manager’s attention. But the decision must be made methodically and acted upon swiftly. The worst thing to do at this juncture is to act scared and helpless like a deer caught in the headlights of a car. The key, instead, is to focus and spend time now rather than put off the hard choices for later.

A large amount of data and analysis is not necessary to make effective decisions about cutting and keeping people. Here’s a blueprint of how to approach this task. Most information will be in employee files. Make sure the human resources staff can secure the following data for each employee, preferably in electronic form:

1. Name

2. Job assignment

3. Last three performance reviews if available

4. Current salary

5. Years with the department

6. Years with the company

Department managers should conduct this analysis of their departments. Why? Because it is necessary to act quickly, without a lot of time spent on lengthy group meetings and involvement. Second, confidentiality is critical. Tough decisions must be made about who will have the opportunity to move with the company into its new stage and who will have to find employment elsewhere.

Keep in mind the goal is to get the costs out while holding onto the talent needed to make the company thrive again. The choices made will translate cost-cutting economics into an action plan that identifies whom to cut and keep. The decision is best made in three steps:

Step 1:	Establish human capital priorities. List the skills and competencies that are most critical to a department’s mission and core operations.
Step 2:	Determine the appropriate combination of alternative work arrangements and layoffs. This will help to identify the options such as job/skill sharing and temporary assignments that are feasible and can be quickly implemented.
Step 3:	Match people with employment choices. Make the final choices of who will be retained in full employment, who will be offered alternative work arrangements, and who will be asked to leave.