One of the dumbest things consultants and HR dreamed up a few decades ago was using pretty words and euphemisms in place of the real ones—fired and terminated.

I’ve written about Guy Kawasaki, read his books and enjoyed hearing him speak since I met him at a talk in 1999—very smart and very funny. He knows that laughter opens minds to new ideas.

But Guy can also be serious when called for, as he is in The Art of Laying People Off.

Most managers hate laying people off, although I’ve known of a few who take sadistic glee in it.

Layoffs damage everybody—those doing it, those to whom it’s done and those left standing afterwards.

Guy lists 12 actions to keep the layoff from crippling your company—

1. Take responsibility. Cut deep and cut once. Management usually believes that things will get better soon, so it cuts the smallest number of people in anticipation of a miracle. Most of the time, the miracle doesn’t materialize, and the company ends up making multiple cuts. Given the choice, you should cut too deeply and risk the high-quality problem of having to rehire. Multiple cuts are terrible for the morale of the employees who have not been laid off.

2. Move fast. One hour after your management team discusses the need to lay off employees, the entire company will know that something is happening. Once people “know” a layoff is coming, productivity drops like a rock. You’re either laying people off or you’re not—you should avoid the state of “considering” a layoff.

3. Show Consistency. I cannot understand how companies can claim that they have to cut costs and then provide severance packages of six months to a year of salary. You would think that if they wanted to conserve cash, they’d give tiny severance packages. Typically, there are three lines of reasoning for generous severance packages:

   • Cutting head count, even with severance packages, is cheaper than keeping the employee around indefinitely, and we don’t want any lawsuits.
   • We have lots of cash, so our balance sheet is strong, but we need to cut heads to make our profit-and-loss statement look better.
   • Wall Street (or your investors) is expecting dramatic actions, so we need to do this to show the analysts that we’ve got what it takes to be a leader.

   None of these reasons makes sense. If you need to do a layoff to cut costs (and conserve cash), then provide minimal severance packages, cut costs as much as you can, conserve as much cash as you can, and deal with your guilt in other ways. If nothing else, it’s a consistent story.

   1. Clean house.

   2. Whack Teddy.

   3. Share the pain.

   4. Show consistency.

   5. Don’t ask for pity.

   6. Provide support.

   7. Don’t let people self-select.

   8. Show people the door.

   9. Move forward.

I included full text on the three I think are most critical, but they’re all important, so take the time to not only read them, but also understand the reasoning behind them, because if they don’t resonate with your MAP you won’t be able to implement them should the need arise.

Guy’s subtler than I, but we agree that immediately after your announcement the dumbest (my adjective) thing you can do is go to your office—no matter how much you want to hide.

Your people need you now more than ever, both the folks leaving and the ones staying. The minutes and first hours after the announcement all your managers need to be with their people—no exceptions, no excuses.

No matter how sick a company is people often manage to convince themselves that somehow it will all go away. I’m watching that happen now with a woman I know and it’s sad; sadder because she knows she’s kidding herself, but still does it and puts off any effort to find another position.

Shift happens and the world has shifted.

So if you have to do it, do it right.

Image credit: flickr

There was an interesting, if cynical, article in the Kansas City Star on teams.

“That’s how some corporations have come to think of themselves. As teams up against a lot of other teams in a never-ending season of profit and loss.

And those on the payroll, why, they’re members of the team.

Remember when the worker bees were simply referred to as employees, whereas everyone else was in management?

The relationships haven’t changed. Only the terminology.”

And in far too many cases it is only words.

University of Missouri-Kansas City sociology professor Deborah Smith says, “Workers aren’t stupid. They know this is a gloss.”

Also true, people aren’t stupid.

In large companies each person is a member of multiple, distinct teams. The teams nest, much like the dolls you see.

The smallest team is composed of the immediate people who work together, several similar teams form a group, several groups form the department and multiple departments form the company.

No matter the corporate culture, each team is a product of the manager’s MAP (mindset, attitude, philosophy™)—the source of it strength or its hypocrisy.

The article presents the idea of teams as a management sop to the masses; a sop that shows its true colors when things go bad and there are layoffs.

I disagree. I’ve known too many people who’ve been laid off and still have strong, positive feelings for the various teams they were on, but it was totally dependent on each manager.

So the next time you’re thinking about how to improve your team building, start by looking in the mirror and asking yourself this question, “If my manager treated me as I treat my people would I want to be on his team?”

Image credit: scx.hu

Recession of not, you still have an organization that needs to be productive.

According to an Academy of Management Journal study of 200 enterprises even a modest downsizing encouraged their most valuable “keepers” to start looking and move on. Check out these numbers; a 0.5% layoff increased turnover 2.6% (13% vs. 10.4%) over companies that had no layoffs. Add to that research by Frederick Reichheld, author of The Loyalty Factor (1996) and Loyalty Rules! (2001), that proved that a 5% improvement in employee retention translated to a 25%-100% gain in earnings!

So why do companies turn so quickly to layoffs? Mainly for these two reasons

1. Wall Street loves them because they have the fastest impact on the bottom line—and all the Street cares about is the next quarter. It will applaud you now and crucify you when the economy turns around and you have a demoralized staff and nothing in the pipeline.
2. They’re lazy. They require the least energy, managerial skill, leadership and creative effort, whereas keeping your people and juicing innovation and productivity when times are difficult takes energy, skill, leadership, creativity and work—lots of it.

Ever thought about what does it really costs to hire? Caliper has a nifty calculator. Try it, then multiply the answer by the increased 2.6% who walked when you laid off their colleagues. (Info hat tip to The Engage Sage.)

Smart companies, and even some governments, are getting creative, not for altruistic reasons, but because they don’t want to be crippled when the economy turns around. One of the primary actions that they’re using is to cut hours instead of staff—using with four-day work weeks, X% reduction in hours or closing extra days during the holidays and maybe beyond. Employees know that in an economy such as the current one a reduced job is far better than no job and companies finally figured out that staying prepared for the turn around is as important as cutting costs.

Finally, this WSJ article offers insights on attracting top people to a company in trouble, even one close to bankruptcy. Obviously, if these approaches work in those circumstances think how well they’ll work for healthy companies.

Image credit: flickr

How smart are layoffs—that is the question.

Based on statistics they’re pretty dumb. And not just for those directly affected, but for the repercussions that will echo through your company long after the actual firings.

According to Think Before You Fire in Business Week,

“For companies, layoffs are a quick, albeit unpleasant, way to trim costs, right? Not necessarily. A recent study of 200 enterprises found that even a modest downsizing can unleash an exodus of valuable employees. For instance, companies that laid off 0.5% of their staff experienced, on average, a turnover rate of 13%—compared with an average turnover rate of 10.4% at companies that didn’t do layoffs. (Academy of Management Journal)”

Not only is that additional 2.6% of turnover expensive, it usually includes the people you least want to lose.

Beyond the effect on your people is the fact that the smartest companies use a downturn as a time to grab market share, acquire companies, and push innovation so they have new products ready when things turn around—and the always do.

This is just as true for small business as it is for large multinationals.

Way back in 2001, when thousands were being laid off, Frederick Reichheld, author of The Loyalty Factor (1996) and Loyalty Rules! (2001), showed in carefully researched studies that a 5% improvement in employee retention translates to a 25%-100% gain in earnings.

So why are companies so quick to cut staff?

Because layoffs take the least creative effort from management and Wall Street approves.

Keeping your people and juicing innovation and productivity when times are difficult takes work—lots of it.

Image credit: webSlave05 CC license

Post from Leadership Turn Image credit: dannystock

No matter what you call it, eliminating people isn’t the smartest thing to do as statistics show and any employee will tell you—including the ones who aren’t directly affected.

According to Think Before You Fire in Business Week,

“For companies, layoffs are a quick, albeit unpleasant, way to trim costs, right? Not necessarily. A recent study of 200 enterprises found that even a modest downsizing can unleash an exodus of valuable employees. For instance, companies that laid off 0.5% of their staff experienced, on average, a turnover rate of 13%—compared with an average turnover rate of 10.4% at companies that didn’t do layoffs. (Academy of Management Journal)”

And that additional 2.6% of turnover are rarely the folks you’d choose to lose.

Way back in 2001, when thousands were being laid off, Frederick Reichheld, author of The Loyalty Factor (1996) and Loyalty Rules! (2001), showed in carefully researched studies that a 5% improvement in employee retention translates to a 25%-100% gain in earnings.

The two biggest advantages in cutting people are that layoffs take the least creative effort from management and Wall Street approves.

Keeping your people and juicing innovation and productivity when times are difficult takes work—lots of it.

What do you plan to do?

Your comments—priceless

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Yesterday you learned 5 things that a leader should do in a layoff, but what about after? Whether you think of yourself as a leader or a manager you need to deal not just with the casualties, but with the survivors—many of whom are walking wounded.

Morale and productivity go hand in hand and both usually go south when layoffs happen and the resulting empty offices are a constant reminder of the friends and colleagues lost in the storm. Even if they didn’t always pull their weight or weren’t that well-liked, being laid off erases all the bad leaving only positive memories uppermost in their minds.

Many large companies are more concerned with subletting empty space than with the effect of empty offices and shifting employees, which is very shortsighted. The more forward thinking ones bring in professionals to help with space reorganization—but the money spent on that can backfire if the company isn’t careful.

The problem is even more critical for smaller businesses where the loss of one or two people often creates a hole as big as hundreds do in a larger organization.

But it’s not hard to follow the lead of the designers in the article without spending the bucks.

1. Don’t leave the spaces, whether offices or cubicles, empty. If you do, they become a constant reminder of friends who are gone.
2. Reusing the spaces, equipment, furniture or stuff is fine, but not on a first come, first serve basis. Assign it based on real need, not seniority, and don’t play favorites.
3. To use the space in the most productive way bring your people together and brainstorm ideas.
4. Changes, such as a lounge or brainstorming area, can be done without expensive goodies.
5. Use imagination instead of money in changing/redecorating the company and reinventing extra spaces.
6. There is amazing art to be had in thrift stores and garage sales and you may have employees who love that kind of shopping.

Finally, this kind of creativity is fun and exciting; it not only saves money, but unites people in a common goal.

Like the alchemists of old, you can’t really turn a layoff into a positive event, but you can, with effort, convert it to an opportunity to move forward.

What would you do with extra space?

Your comments—priceless

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Leadership isn’t always fun, but leaders need to lead.

There are ominous rustlings in the media these days about layoffs and they’ll probably happen—some real and some self-fulfilling prophesy. As the boss you not only have to decide whether, but how.

‘Whether’ is decision only you can make, but ‘how’ is another matter, so here are 5 things to do if layoffs are here or in your future.

• This is not the time that you want rumors flying, so if you have to lay off people do it with honesty. If you haven’t been honest before now is the time to start; if you have been now is not the time to stop.
• Be candid with employees about the bad news and don’t hide behind your lawyers. Explain it simply and be sure that management takes its share of responsibility—your people aren’t stupid, they already know.
• Do everything you can to help those being laid off. Before you call a formal outplacement company consider if that’s the best use of your money. Unfortunately, outplacement staff often spend more time assuaging the executive team’s guilt than in helping the workers. If you do go this route, you need to check the company’s references carefully, not just with managers, but with people who were actually laid off to see what kind of assistance they received.
• Layoffs aren’t about nice words, they’re about real help and you should lead the action.
  • Get your entire management team, including you, on the phones.
  • Activate your networks.
  • Use LinkedIn and other social networking sites.
  • Host a job fair on site.
• Through all of this, be sure to invite workers who weren’t laid off to help. Remember that these are their friends and they’ll want to actively help, plus helping will go a long way to offsetting the guilt they’re feeling at staying.

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As we all know, the course of business isn’t smooth and even the most successful enterprises have hiccups along the way. Employees not only know this, they often foresee trouble more clearly than management would like and are quick to act—whether their information is accurate or not. The upshot is that, as boss, you need to communicate bad news effectively and completely if you expect to retain employees’ confidence, or, for that matter, the employees themselves.

Sadly, the tendency of many bosses, from Fortune 100 companies to mom and pop-owned small businesses is to clamp down, say nothing, run scared, freeze, bluster, or some combination of these.

So what/how do you handle it? Here are basic guidelines to follow—although they might not be totally comfortable!

• Bad news must be communicated—just like good news.
• Employees aren’t dumb—they know something bad is happening—and if they’re not explicitly told what it is, rumors will make any difficulty a catastrophe and a catastrophe a death knell.
• Management must be explicit about the ultimate potential consequences.
• Everyone hates uncertainty. The worst case outcome of any problem must be anticipated and addressed.
• Employees must be told of management’s plans for the outcome, whatever they may be—layoffs, plant closures, project cancellations, etc.
• Successful turn around plans are, in part, dependent on how well they are communicated to achieve employee buy-in.

Any solution to a crisis must be seen as fair, reasonable, and businesslike. If management’s reaction is illogical, petty, slipshod, unrealistic, draconian or any combination of these, then it’s likely that employees will conclude the ship is about to sink and leap off.

People understand that difficult situations demand difficult remedies, and they appreciate that management must at times step up to harsh challenges. But if solutions are irrationally or whimsically applied, they become a demoralizing factor, increasing the difficulties that people encounter in trying to do their jobs.

Lastly, management should attempt to find a positive note to leave with employees. Everyone already knows that things are bad, and its management’s job to find a potentially favorable course of action. However, don’t carry this to absurd lengths. Employees will easily spot propaganda masquerading as a solution. Predicting an impossibly favorable outcome will not only demean management, it may also bring a lawsuit.