A while back I was asked to speak to a group of CEOs who were clients in our executive career transition program.
We were discussing my ideas from my book, The Leadership Contract. One topic that received a lot of attention, focused on the hard work that leaders must do in their roles.
This group unanimously said that the most difficult thing they had to do as CEOs was when they were confronted with a business decision resulting in layoffs and workforce reductions. Maybe it is an organization restructuring or maybe it is about selling off a part of a company. Whatever the business decision these ones weigh heavily on the leaders in that meeting room. The reason they said was that they know that their decisions affected the livelihood of their employees. Given that all these business leaders were in transition themselves, they knew first hand what the experience was like.
In today’s world, we are all called upon at some point to make difficult, even painful decisions, like having to reduce your workforce. What has changed for leaders is that situations like these if not handled well can end up making an already difficult situation even worse. Through the process you can also damage the reputation of your company.
We are increasingly seeing signs of this as employees take to social media to vent their frustrations about workforce reductions, resulting in your company’s brand being negatively affected.
A workforce reduction is an unfortunate reality of the economic times we are living in now. Still, how organizations handle these situations is crucial not only for achieving the desired results but also for ensuring that those who are left behind are committed to the organization.
I wanted to get some insights on how leaders can lead effectively in these tough situations. So I reached out to my colleague, Greg Simpson, who is Senior Vice President of our Career Transition Practice for Lee Hecht Harrison.
Greg told me that it is important for leaders to remember that all employees are part of a psychological contract with their employer. “Employees expect a certain level of dignity and respect in their dealings with their employer, especially when tough and painful business decisions need to be made.”
He continued by saying, “If you end up violating that contract then you’ve got a big problem on your hands. Leaders that botch the contract, and violate those expectations of dignity and respect, will pay a big price indeed.”
How can we as leaders manage layoffs effectively, while ensuring the dignity and respect of employees? Simpson shared three key strategies that to me provide sound advice for all of us in leadership roles:
- Avoid as many layoffs as you can. Simpson said, “It is critical to demonstrate to employees you have done everything you possibly can to avoid actual layoffs. Vacancy management, attrition, fair and reasonable buyouts – all of these strategies show to employees that an out-and-out layoff is really the last option.”
- Support Exiting Employees. It is also essential that leaders ensure their organizations are doing all they can to support employees post exit by providing solid references, counseling services and career coaching, and help in find new job opportunities in the labor market. Simpson said, “You can’t underestimate the emotional support people need to get refocused on their next opportunity.”
- Be mindful of your corporate brand. Finally as leaders, we all know that our employees are a crucial element of our brand. If we treat those people badly, and discard them like yesterday’s trash, word spreads – especially through social media. “Organizations that ignore the word-of-mouth commentary from former employees run the risk of having their brands tarnished or destroyed. So be mindful of your corporate brand through the process.”
Overseeing a workforce reduction is a challenging moment of truth for leaders. Will you do everything you can to ensure that your employees and outside observers see your organization as fair and compassionate? Or will you end up having a horde of angry employees take to social media to smear your company’s reputation?
This week’s Gut Check asks: Do you know how to lead a workforce reduction with dignity and respect?