Friday
Oct022009
A quick thought on "downsizing" strategies
Friday, October 2, 2009 at 11:20AM Sometimes companies realize that they need to reduce their staffing costs, and typically they do this by getting rid of employees.
Two common approaches to this are:
- A layoff
- Freeze wages and hiring, and wait for people to leave
Option #2 is braindead. With a layoff, you get rid of your worst people, but with a wage and hiring freeze, you'll typically lose your best people.
Reader Comments (6)
Option 2 was my scenario. As a project manager, I gathered up frozen wages of nearly $20,000 until ultimately I left my boss to his sinking ship after 6 months of no-pay. Thankfully, kind folks with the State of TX workforce commission are helping me recover some of that.
Thad, your situation is unusual. Usually freezing wages just means no increases etc. Non-payment of wages is usually illegal.
Ian, I have found that Option #1 is usually braindead too. The moment you talk about, much less execute a layoff your best people are looking for a more stable job. You end up laying off your c-grade employees and losing your a-grade employees. The resulting mix seldom has the dedication, motivation, etc. to get a company out of the mire they are in.
I have worked in companies where you had to do something physically threatening or publicly sexual to get fired. Otherwise you were just marked for the next round of layoffs.
What is the most successful way of managing staffing costs in that kind of situation?
Jeffrey, downsizing is always painful but sometimes necessary unless you have a crystal ball. I'd say the best way to mitigate the negative effects of a layoff is to do it all at once, and then make it clear that that is it, there will be no more.
The worst way to execute a layoff is to do it piecemeal.
Being slightly pedantic I know but only somebody in possession of the aforementioned crystal ball could say there won't be more layoffs therefore any employee with any sense knows that the best management can promise is there is no intention of further layoffs. Any manager who promises there won't be more should probably be included in the layoffs. ;)
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