Beat the downsizing blues Featured

7:00pm EDT February 24, 2008

It seems as if every day brings more bad news about the economy. As you watch the approaching clouds of recession, you may wonder if an economic downturn would mean having to downsize your work force.

“Laying off employees is probably the worst task a CEO or business owner must face,” says Ryan Matusik, Business Consultant from the Employco Group, a human resource outsourcing company in Westmont, Ill. “It’s never easy to let employees go, but the pain can be lessened by following what I refer to as the four ‘Cs’ of downsizing: confidentiality, compliance, consistency and compassion.”

Smart Business spoke with Matusik about how these four Cs can help you prepare for the worst-case scenario.

What is the first thing you need to do to prepare your company for layoffs?

The first ‘C,’ confidentiality, is important in order to prevent rumors of an impeding layoff leading to speculation as to who will be laid off. If employees learn of an impending layoff before it is official, employees that you want to retain may leave to pursue other options. It is important to perform due diligence and assess the entire situation among appropriate parties before making an official announcement to staff. It is crucial that all parties involved in the decision-making process respect the confidentiality of the matter.

Be mindful of compliance issues — the second ‘C’ of downsizing. Meet with your lawyer, human resource professional and other trusted advisers to make sure that you are in compliance with all federal and state labor laws. It is important not to single out a particular group of workers and risk violating equal opportunity laws.

Consistency, the third ‘C,’ comes into play when deciding which employees will be terminated. Do not let emotions play a role in the decision-making process. This decision should be based on past performance and skill set of each employee. This should not be a difficult process as long as your firm has kept up-to-date performance evaluations for all employees.

How should you position the layoffs to your employees?

The fourth ‘C,’ compassion, is important when addressing staff with the unfortunate news of a layoff. The way you treat employees who have just lost their jobs reflects not only on your company but also on you as a business owner.

Losing a job is an emotional experience for workers and their families. You, as a CEO or the business owner, need to be empathetic to your workers’ situations and offer support — however limited that may be.

And what ways should be considered?

There are actually many things that even a cash-strapped company can do to lessen the pain of a layoff.

Provide a severance package. This may not be possible depending upon the financial state of the company. However, even the smallest severance package shows your appreciation for the worker’s service to the company.

Provide a useful information package. Include pertinent information about the layoff, including any monies due to the employee, such as vacation or personal time not used; benefits, such as how long the employee is eligible and where to apply for COBRA coverage; and unemployment information.

Provide help in job seeking. Be proactive in directing former employees to local job fairs, resume-writing organizations or outplacement services.

What can you do to minimize low morale among employees after the downsizing?

You need to give your workers an open and honest assessment — through verbal and written communication —about why the layoffs took place. After discussing the reasons for the layoffs, outline steps you are taking to remedy the financial situation. You also need to outline positive steps the company will take to increase revenue, such as landing new accounts or launching new products.

Explain the business plan to the staff and set a goal to reassess the new plan in six months or a year’s time. Keep open lines of communication with your current employees on a weekly or even daily basis regarding the status of the company. The key is to be honest and consistent in your message.

RYAN MATUSIK is a Business Consultant with the Employco Group (www.employco.com), a division of The Wilson Companies. Employco handles human resource outsourcing for 400 small and medium-sized Midwest companies. Reach him at (630) 286-7356 or rmatusik@employco.com.