Winning Work Teams: Strategic Downsizing

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As Orlando Human Resources and business consultants, we are often asked for our thoughts with respect to staffing cuts in today’s challenging economy.  We find there is no single approach that fits all industry sectors, all companies at various stages of growth and maturity. However, sound management practice calls for a highly strategic approach to this most difficult of Human Resources decisions which directly impacts the team, the bottom line , customer/community  relations and even future growth opportunities.

Cut too deeply and the culture may be severely damaged. Cut too lightly and financial viability may be at risk.    

Pro-active Human Resources executives engage in ongoing workforce planning so that if labor savings become a business consideration, the action will have been well thought out in advance with top level buy-in and as much open communication on the subject as practicable with the workforce at large. No one likes surprises, least of all those who may be cut from the team. Thus, a published approach to staffing reductions  may go a long way to resolving issues and questions well in advance of any actual downsizing activity.

As noted in the May 5, 2010 issue of  The Wall Street Journal, “Recalculating the Cost of Big Layoffs,” some U.S. companies are now questioning whether recent cuts went too deep and have hurt long term growth prospects.  

We recommend that the workforce strategic planning process consider various factors in making difficult staffing decisions: retaining key talent,  impact upon culture, impact upon customer base and community relations, financial impact of projected savings vs. recruiting and training new talent when business recovers.

Some business adopt a “no layoff” strategy by reducing hours, job sharing and voluntary use of vacation time and unpaid leaves of absence to keep the entire team together during challenging economic times.  These no layoff policies win employee loyality as the team knows the company will “stand by them” in good times and bad.

Whatever the approach, as Orlando Human  Resources and business  consultants, we recommend a well-designed strategic approach that can be readily explained to the team and leaves everyone feeling valued and respected.


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