If you must Downsize – Do it Right: A perspective on how to face the daunting task of adjusting your workforce in lean economic times

By: Elizabeth Stahl - Founder and President, E.J. Stahl & Associates

Category: Economy

In this current economic climate, many businesses are forced to consider downsizing staff for the first time in many years or for the first time ever. No one likes to execute a downsizing. It is always the last choice in a difficult business environment and is generally fraught with emotion. The very emotion that makes this a difficult process is often the emotion that keeps the downsizing from netting the correct outcome. The goal in a downsizing is to leave the organization with the right talent to not only keep the organization going, but to implement a probable restructuring or refocusing of the business.

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Considering an individual’s skills and talent rather than their relationship to the leader or the organization is pivotal in making the correct move for the organization. Most leaders have a personal interest in the success of their staff so often these leaders know more about the staff than just work performance. This fact is especially true in small business where there is often a personal relationship outside of the office through a family or friendship connection. If you are going to make the right decisions regarding staff, you must keep emotions off the table. I know easier said than done, but a fundamental requirement. If you can’t separate your emotions, be honest and seek outside help.

Before starting to execute a downsizing, make certain you have a clear understanding of the work that will need to be done and the changes you will need to execute. Then begin to review each and every staff position in the organization and determine if that individual’s skill set will work in the new business model. Do not at this point consider relationships or “other” issues related to each employee. You must stay clear on what value each person brings to the organization. Once you are certain of the new business model and the skills of the staff, then you can begin to formulate your plan.

The quickest and easiest decision to make is simply to look at staff based on salary. You need to trim payroll and starting with the higher dollar individuals seems to make the most sense. I will challenge you to consider what you need to get done. If you must implement a great deal of change to survive, then jettisoning your leaders is not necessarily the smart move. Someone has to help lead the charge to the new business model. Additionally, if you have been paying your staff based on performance, then your top performers may be at the top of the payroll.

I am not suggesting that pay is not a factor, but it is the relationship of pay, to employee value and the work to be done that makes the decision tree in a downsizing environment.

Another final factor to consider is the employee’s ability to embrace change and handle a diverse workload. The outcome of a downsizing is that the remaining team will have to do more work with less and often with a different focus. A good performer who cannot handle this type of change will be of little help to you going forward. Better to let this person go than spend time trying to “win them over” to a work environment that has drastically changed.

Your goal in all of this activity is to leave the organization with the best team to move forward. Employees understand when a downsizing is needed, they don’t like it but they understand. If you feel comfortable that you have put together the best plan for the organization then you can approach each discussion understanding the outcome will offset the current emotion and pain of terminating staff.

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