Making Cuts

When cutting headcount is the only way.

When cutting headcount is the only way.What’s the hardest thing you have to do in business? If you’re like me, it is letting go of team members. I am not using “letting go” euphemistically. By distinction, I have no problem getting rid of people who are not adding value. Invariably both parties are better off after such a process.

But what we’re talking about here is when your business is not in a position to maintain the existing head count. I know that there is a lot of this happening throughout the country right now and good, noble employers are doing it tough.

The first thing you you have to remember is that the implications for your people who may lose their jobs are at least as significant for them as these changes are for you. I was just talking to a chap this morning who has lost his job and by next month he will be probably having to sell his house and get rid of his beloved dog breeding hobby/side hustle. The change this will bring to that family cannot be underestimated.

So, here you are at the point of realising that you need to either trim costs or take an axe to them, or anywhere in between. Don’t make any assumptions about how individuals will take the news that change is coming. People you may have thought would be terrified at the prospect may see it as a good time to just move on while others who you thought would be ok will be in a bad way. It will be whatever it is but you have to be prepared to work with what you’ve got.

What you’re doing here is a restructure. It sounds like some awful business speak weasel words, but the reality is, employment law is a volatile thing because it so often involves high emotion and you need to use language that is recognised and cannot be misconstrued.

A restructure is a process in which you look at the circumstances of your business now as opposed to before and make decisions on how it needs to be reshaped to be viable in the changed environment.

You can’t just choose people to dismiss in a way you could have once and that’s probably not a bad thing. This is a consultation in which you have the ultimate right to have the business how you want it but you have to be able to demonstrate that you’ve acted in good faith and considered the thoughts of your team.

So no putting up a new organisational plan with certain people’s names missing. Down that road leads disaster, personal grievances, days in court and the writing of cheques.

Think of this as a period where everyone in the business gets to participate in coming up with the best way forward. I say again, don’t make assumptions about people. Their ability to surprise is endless.

In my experience the best approach is to announce to the team that economic conditions make it necessary to look at how the business is operating and that change is going to be necessary to ensure survival. It pays to be as honest as you are able to be here. It you are permitted or feel ok about telling the team how big the hole you are in is, then do it.

You have to remember that there tends to be a default assumption in businesses by their workers that you’re making a truckload of money. This is more prevalent in businesses that have lower skilled teams, but not exclusively.

The reason you want to expose the team to the problem is that the more they see it, the more they are able to engage personally in the solution. Let’s say that you need to take $200k of expense out of the business because revenues have fallen by $1m. People will suggest non-people cuts first and you will be able to demonstrate that these don’t come close to achieving what’s required.

You will propose a new structure that includes the roles that are required for future state and you will present this side by side with the existing organisational structure. Neither will have names in the boxes. You will present this as your proposed structure and that it is a discussion document. If you are changing and amalgamating roles rather than just cutting some, you would prepare job descriptions for the new roles so team members can see what they are.

If some roles are affected and others not, you can announce that categorically and reassure the people in those roles that nothing changes for them.

What you want to achieve to the greatest degree possible is that people will self-select/self-deselect b matching their skills and capabilities against the roles offered. You might be surprised by how much of this work they will do for you.

I can’t stress enough that you should not be picking winners here. Shoulder-tapping the people you want to keep is fraught with danger. Always assume that everything you do and say is being broadcast everywhere.

Once people have had a chance to look at the new proposed structure and quietly worked out for themselves where they might fit (or not) you must actively seek feedback. People need time to think, so unless there are urgent reasons to shorten it up, you may want to propose on Monday and get feedback on Friday.

Once the feedback is in, you need to give it due consideration. Sometimes people will come up with things that you haven’t thought of that are actually really good ideas that could improve the outcome. If so, adjust the proposal and put it back out for feedback.

If you have decided that there is no benefit from the feedback, you need to announce that you have given consideration and have determined that you will proceeds with your original thinking. You had better be armed with authentic responses to why you have rejected the suggestions because this can be a minefield when people feel they are being railroaded and not listened to.

By this time, everyone knows that this is happening and you should invite people who are affected to apply for any new role that they feel qualified for. You may know who you want, but this process has to be followed scrupulously. If a team member wants to apply for a role, even if you think they aren’t suitable, allow that to emerge in the interview process. Don’t pre-empt it.

Once all interviews are complete and decisions made, you need to sit down with each of the people who have not made the cut and let them know they haven’t been successful and their role will terminate in whatever period you’ve determined is both appropriate for the business and legal. I often find it useful to offer these people the option to depart sooner and pay them out what they are entitled to. Why? Because disgruntled and disengaged people in a business are toxic and will cost you more than paying them out.

Now, how do you need to be as an employer? You need to be your authentic self. If you are a somewhat distant and formal leader, don’t try to mock up emotion. If you are like me, you will probably be feeling everyone’s pain right alongside them. What’s important is that who you are being is who they know you to be.

This not time to sympathise. It is time to empathise. What’s the difference? Empathising is recognising the fear and sadness of others and being available to support them when they need it. Sympathy is immersing yourself in their feelings and is very counter-productive. It can lead you to say things such as “this is all so unfair” or “you should try and do something about this”.

I have seen leaders completely undermine their restructure programmes by being overwhelmed by the process and becoming part of the resistance. This is cruel because what people need is certainty, not elaborate displays of sympathy.

I’ve got to say that even after all these years, I still hate doing restructures but I do them with a minimum of drama and risk because I genuinely care about the people whose lives I’m interfering in and they know they can trust me to do the very best I can for them while still doing what’s necessary.

Humility helps and recognising that it could be you and not them may help to contextualise for yourself.

If you would like to talk about a full scale restructure or just a tactical redundancy or performance management of an under-performing team member, come and see us at RegenerationHQ and you’ll get support that uses head and heart in equal measure to deliver reliable outcomes.