4 Fatal Mistakes Companies Make When Downsizing

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Even though reported unemployment rates are shrinking, companies across the globe continue to lay off and shed jobs. Many times, we see companies make critical mistakes when reducing headcount. These kinds of mistakes can be damaging, severely hurting relationships with retained employees, potential employees and even customers. Ultimately, downsizing mistakes can hurt a company’s brand.

downsizing-3Avoid the four most common fatal mistakes:

  1. Assuming Management Knows How to Manage Through a Downsizing
    Companies should use this as a training opportunity. Provide managers training on how to deliver an effective notification meeting (Notification Training), what typically happens during a layoff including common emotions and reactions, and finally, how these factors may impact the surviving workforce.
  2. Not Treating the Departing Employees with Dignity and Respect
    We repeatedly hear the horror stories of layoffs occurring via email or the simple lack of respect shown to those who are let go. People in positions of authority are called into an office, told they no longer have a job and escorted by security or HR to remove their personal items and monitored to protect against vandalism or theft.
    Morale can plummet if you don’t treat the employee with respect and dignity that they deserve after working long and hard for you and the company. Go out of your way to demonstrate that you care about the employees being laid off by creating the best possible exit program you can. This will make this entire process much less painful and easier for all concerned. Also, your remaining employees are watching and assessing how you handle this matter. If you do it with great care and concern, they know you will be kind to them as well.
  3. Reducing Communication to the Surviving Population
    Many times managers will decrease their visibility and communication simply because it’s easier than dealing with emotions or because they don’t have the answers to employee questions. While the employees who survive layoffs may feel fortunate to still have a job, they also feel demoralized. They are filled with anxiety and fear that they may be next and feel guilt for surviving the layoff. All of this is followed by feelings of cynicism, suspicion, and reduced allegiance you, the manager, and the organization.
    The time after a layoff requires more communication, even if it is the simplest statement, “I don’t know.” Allow employees to express their concerns and reassure them with communication to increase loyalty, and enhance trust.
  4. Eliminating Severance and Outplacement
    Federal law mandates that employees affected by large layoffs receive some type of assistance from their employers, typically severance and continued health benefits. However, many employers should do more than what is required by law because they recognize the value of “compassionate outplacement.” Providing additional benefits such as a Career Transition program can help organizations avoid long-term hidden costs of layoffs including a tarnished reputation, diminished customer loyalty and potential legal action, all of which can outweigh the usual cost-savings predicated from a layoff.

What other mistakes have you witnessed during a lay off? We’d love to hear your insights! Please share them below.

If your organization needs corporate downsizing help through compassionate outplacement, please contact OI Partners today. We’ve been there, and we can help!

Shawna Simcik, M.S., CMP, Managing Partner, OI Global Partners – Innovative Career Consulting

Working in partnership with clients, Shawna designs custom career transition and leadership development for individuals, teams and corporations to address and attain sustainable, business results. Shawna is an active member and Board Director with the Colorado Human Resources Association and a 2011 and 2012 “40 Under 40” Nominee. Shawna holds a BA in psychology from the University of Colorado at Denver and a Master’s degree in Industrial-Organizational Psychology from the University of Nebraska at Omaha. She is certified as a Career Management Practitioner through the Institute of Career Certification International. She can be contacted at ssimcik@oipartners.net.

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