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Global executives reveal Top 10 dos and don'ts of downsizing

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Layoffs are never pleasant, but they can be done well and they can be done poorly. To explore this and other leadership questions, a recent survey asked hundreds of global corporate executives and talent management leaders for their opinions on the most effective ways to manage staff during an economic downturn.

Recessionary Management: The Top Do’s and Don’ts for Managing Talent in the Current Downturn, conducted by The Human Capital Institute and Taleo Corporation, surveyed 345 global executives about on the best and worst practices in managing staff through lean economic times. Workforce expenses usually account for upwards of 70 percent of a business’s expenses so it is obviously the first area to come under cost-cutting scrutiny in lean times.

The survey found the following:

Best Practices in Downsizing

  1. Identify the work that is core to retaining business (not just the work that is being done well). Fifty-six percent of companies look at core and critical positions first to prioritise where staff can be cut, if necessary.
  2. Identify competencies needed to meet business goals. Use scenario-based workforce planning and performance management to make better decisions.
  3. Protect your bottom line and your brand. When making downsizing decisions, poor execution and planning can have long-term brand effects. Beware of internet scrutiny.
  4. Communicate constantly. Let staff know what you know, when you know it and provide them the dignity they deserve.
  5. Pay attention to survivors. Let them know why they were kept or bear the consequences, ranging from low engagement and productivity to leaving of their own volition. Voluntary turnover of key performers has gone from 10% to 25% in the past 12 months, according to Herman Trends.

What Not to Do:

  1. Don’t cut with a hatchet, use a scalpel. Or you may find yourself understaffed for the recovery.
  2. Don’t commit “death by a thousand cuts”. Plan it well and do it all at once.
  3. Don’t plan a layoff on a Friday or right before a holiday. Primarily for the survivors: they need reaffirmation and connection.
  4. Don’t shoot from the hip. Have solid justifications and consider legal ramifications in your plans.
  5. Don’t keep employees guessing. Be forthright, honest and as detailed as possible.

Photo: Gary Denness (Flickr)

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