Managing Headcount Cuts
Every manager will have to do this at one time in their career - particularly during these hard times. Noone wants to make colleagues redundant, but this is a natural consequence of downsizing and/or recession.Whatever happens, three aspects need to be managed: the individual(s) being made redundant, operations going forward and customers. I recently wrote a piece on the pitfalls of cutting headcount, and this posting covers more of the managing of those pitfalls. Get it wrong, and you are in a world of hurt and potentially face going out of business.
I commented that when you cut staff, you would also be cutting: knowledge and experience, networks, morale and customer service. These need to be managed carefully for the sake of the company, the staff left and customers. Injudicious cuts may actually make matters worse if the wrong people are cut.
When being asked/told to cut headcount, the focus will usually be first on the non-performers, then on the more "expensive" staff - those in senior positions or who have been around a long time. The first category are understandable - if they aren't delivering, they shouldn't be there.
The second category are much more dificult as they are likely to be the quietly competent performers who are the backbone of the organisation. You will need to have a good grasp of their knowledge and networks - and this may only be achievable by a properly-organised handover of duties and introduction of contacts. The individual concerned may not cooperate (understandable if they are being dismissed), and so a degree of sensitivity is needed. You may even have to offer a longer "notice" period or assist with relocation to ensure that you obtain the necessary information. You are, after all, talking long-term survival of the company here! Identify who will take over their duties and plan the handover in detail. Job descriptions can help enormously here. Check progress regularly and again, be sensitive. If the individual won't cooperate, then you are looking at "damage control" and will need to plan as much as you can.
On the morale side, communication is the key. Explain to everyone what is happening, why, and what you need from them. Explain that there will be a period of disruption and hard work, but that it will not last. Talk to staff regularly during and after the redundancies. You may not be able to reduce their workloads (although if you can lead by example, that helps!), but if they see that you are there for them, they will be there for you!
On the customer side, consider resource allocation (particularly for "key" customers) to avoid disruption. You may need to explain what is going on, why and what the short-term (and I stress short-term) impact will be so that they can prepare themselves. Introduce the new contact to them as soon as possible, rather than letting them find out "the hard way" (I have had a number of situations where I have had to introduce myself as the "new" contact and have had to start from scratch in rebuilding trust). They may be going through the same process, and will understand your predicament. In general, they should appreciate that you have reached out to them and will work with you to make sure that things go as smoothly as possible. They may even be in a position to assist your displaced employees with roles or referrals (and you should be ready to do the same). Alternatively, they may consider this a "danger signal" and remove business, so take care on whom you tell and how you put the message across.
You will need good legal and tax advice on your redundancies, as it is all-too easy for someone to claim discrimination and seek a higher settlement. Also, think of how you can help people to re-skill or retrain; could they be used elsewhere in the organisation? Do you know someone outside who could use them? Are you prepared to write a reference, pay for an outplacement consultant, put them in touch with a good "head-hunter"? One day, they may be in a position to decide whether you get business and will remember how you treated them!
Labels: Strategy
posted by William Martin @ 18:07
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