News of layoffs - in the US and abroad - continues to headline in most geographic areas. Most layoffs are cited as critical to helping the organization to compete more effectively (via reduced operating costs) amid tight credit markets and low consumer demand. However, we're hearing among our clients and on the street that organizations have cut 'too deeply' or 'not cut the right folks'. True or not, these kinds of comments beg the question: How do we ensure that the outcomes of our layoffs support the future picture versus providing just a short term fix?

We suggest three key ingredients to balance your short term needs against insuring your future success.

1.       Determine your future organization structure - look 18-24 months ahead. Set your layoff targets versus that future need, NOT on today's structure and current issues or demands. Even when lay-offs are required, it's critical to retain those team and individual skills that will accelerate your organization through the upturn. Cut too deeply (or not in the right places) and you risk not being ready to capture emerging opportunities. And for small business, that agility is critical to beating the competition.

2.       Calculate the cost of rehiring. It's tempting to take out cost quickly through layoffs but there is a cost associated with choosing wrongly. Reviewing your current situation in the context of your future structure before layoffs can help to avoid the future cost of rehiring. It can also provide the backdrop for other decisions, such as the cost-benefit of redeploying and re-skilling employees.

3.       Survive and thrive in the meantime. How do you do this? Think and act differently, counter to intuition and without the 'doom and gloom'. Consider these actions to decrease the likelihood of layoffs and to increase productivity.

·      Think 'innovation'. Jeff Immelt, GE's CEO says: "Technological innovation is going to be more important then ever."[2] While so many organizations are contracting, it's a great time to really be creative. Tap into your top talent. Focus their ingenuity on the key success factors you'll need post-recession. Follow Intel's lead: It will 'invest $7billion in innovation, upgrading manufacturing technologies, redeploying assets and people, and accelerating product launches as part of its 'investing in the downturn' strategy'.[3]

·      Tackle the recurring issues. Again, it may not feel like the right time to start a new initiative, but in fact, it's potentially a great opportunity to use your talent differently, including those experienced 'old hands' whom you may otherwise be tempted to retire early.

·      Rethink how and where 'work' is done. Consider different operating models to amortize fixed costs and retain key talent. Appeal to different generations of employees who have new ideas of how, where, and in what way they want to work. Small business has a real advantage in this area, as many already work flexibly. Still, take another look at the way you work and where; what new opportunities do you have to reduce infrastructure costs and retain people?  

·      Deal with average performance as part of a mitigation strategy to counter the need for future layoffs. We assume you've already addressed poor and substandard performance as part of the initial strategies. Place the range of C and B- performers who remain on very specific, performance improvement / capabilities expansion programs - and follow through! Meanwhile, it will send crucial signals about your willingness to help employees, while also enforcing accountability.

Layoffs have become a fixed strategy in North America to respond to unfavourable economic cycles as an acceptable strategy to restructuring current costs; gradually, they've also become more common across the globe. Nevertheless, like other tools, layoffs must be used judiciously and always with an eye to your desired future since layoffs can also reduce core competencies or disable emerging competencies. In turn, that can inhibit future growth potential, attract additional cost and time just when you need to be fast-tracking emerging opportunities. We encourage you to continue to take the long view and resolve your current challenges utilizing an array of options in addition to lay-offs. Doing so can not only help you to survive this recession, but also can position you to truly accelerate up the curve at the first signs of recovery. 

Excerpted from a larger article. For the full article or more information, contact the authors:

Tara J. Rethore, President

M. Beacon Enterprises, LLC

TRethore@MBeaconEnterprises.com

703.625.9124

Marian Bradshaw-Knapton, President

Avocet Organizational Performance Inc.

avocet@sympatico.ca

416.436.4782