You must have all heard or read about it by now: The Coca-Cola company has announced it will “reduce” its payroll by 7,000 employees. Profits were not as good as expected, and it is time to tighten the belt. This makes investors happy: Fear that a company is losing profits are instantly vanquished by such an announcement. Management is responding to its ultimate responsibility: the stockholders. Well, that’s fine and dandy if you are a stockholder, but it is probably the worst situation imaginable for a manager.
In my almost 20 years of consulting experience both in the United States and Mexico, I have found that when my clients are going through a “downsizing” process, (sometimes called “rightsizing,” a weak euphemism that smacks of Orwellian Newspeak), it is probably the most painful experience they can have as managers.
There are two basic ways in which companies choose to handle layoffs, but neither method makes it any easier on the manager, who, on top of worrying about how to break it to the unlucky, must also worry about his or her own job. The layoff process always becomes more complicated when managers suspect that they might be on the list of potential downsizers. Now it is not just an ethical dilemma on if and how to let people go, because their own jobs are at risk.
Some companies try to be open and direct about the whole ugly process. In the ’80s – a decade that became known for “downsizing” – I worked with a division of Ameritech. The company was truly fat across the board and announced that over the next few years it would lay off more people than the average audience (both live and TV) of a Wimbledon final. It sounded rational and fair: The company was not sneaky or inclined to surprise people with the pink slip. They had announced it, right? Here were those mid-level managers, forced into training sessions with me, and do you think they were paying attention? Forget it! And I don’t blame them. They spent most of their time either looking for a job or “politicking” so they would not fall onto the fired list. But for that entire time, their productivity for the company was very low.
The other (much more common) company strategy is denial.
“We will fight to the end to save every one of your jobs!” shout the bosses.
Sure. Managers, being the suspicious characters they are, rarely fall for that one. In fact, they know it is a sign of bad times to come.
Managers in this kind of scenario have to deal with daily inquiries from their justifiably nervous subordinates: “Am I among the downsized?”
Between you and me, when managers tell you they don’t know, it’s probably because they don’t know how to tell you.
No matter the method a company employs-up front, honest information, or denial and secrecy-the result is a body of employees and managers with low morale, who are unproductive and nervous. Downsizing is a difficult and, at some point in a company’s history, inevitable occurrence, but there are ways to make the process as painless as possible. First of all, company heads should execute layoffs as quickly as possible. The longer they draw out the whole business, the more painful it is for the employees, and the lower their morale and productivity will be.
Huge layoffs of thousands of employees cannot, however, be pulled off overnight. In the case of a long and drawn out layoff period, managers should offer help and support in finding new jobs for those who get laid off, which will help to keep productivity and morale as high as possible.