Downsizing with Care

In the early ‘90s I was involved in a massive downsizing exercise in a recently nationalised utility. It made complete financial sense and if we hadn’t made the tough calls we might not have survived. I am not proud that we did it, but I am proud of how we did it – with a sense of care for those who were leaving, generous financial settlements, and proper outplacement. Luckily we weren’t in such deep trouble so we could afford to do it the right way. I hope in HR we will always look for ways to downsize that let people retain their self-respect. 

But what I learnt that I hadn’t expected was about the impact on those who kept their jobs. I learnt an important lesson about survivor syndrome that is still relevant to this day. As many companies have been forced by the crisis to revisit headcount and as businesses still struggle to find their way out of the downturn, we should remember that the best people will still have a choice about who they work for. This might be a moment for people to hunker down in their current roles but if we treat them – and as importantly their friends and colleagues who through no fault of their own find themselves out of a job – without due care, they will remember. 

 

Back in the ’90s I was heavily influenced by David Noer and his book Healing the Wounds. In it he tells a powerful story that goes something like this:

Imagine you are a family of four children, a mother and a father. One morning two of the children come down to breakfast to find all physical evidence of their brother and sister gone. The mother sits them down over the breakfast table.

“Well you know your father has been made redundant and I’m afraid with our turnover down we are going to have to downsize the family. But we have arranged outplacement for Jane and James. Aunt Ethel has taken them away to a new life.”

The next morning, she calls them together again.

“Well although we’d reduced headcount by a third we still have 100% of the tasks around the house to be done so we expect you both to step up to the challenge but we are confident you will learn valuable life lessons through the experience which will make you better people… and never forget we still love you both.”

 

The first question is how do Jane and James feel? Well probably let down and betrayed, but they at least know where they stand and are off to a better life (it turns out Auntie Ethel is very wealthy and lives in an amazing house with a live-in housekeeper, so their life is actually better). But how do the parents feel? Pretty horrible I’d imagine. Finally, and most importantly, how do the remaining children feel? Guilty? Sad? Worried they might be next? But not happy! 

So, what can we learn from this that we can apply in the current crisis? 

Firstly, we must be willing to take the tough decisions. I have spoken in the past about McKinsey’s study ‘Strategy Beyond the Hockey Stick’. 

Looking at lessons from the recession in 2008 they found that companies, that they dubbed ‘resilients’, who went on to outperform the stock market over the next decade, took the tough decisions on headcount quickly. Secondly, we have to reset and continue to invest. The ‘resilients’ also invested in new capabilities at the same time that they were cutting the old. Therefore, there will be key survivors who we will depend on to thrive in the future. We have to do everything we can to downsize with care, so they want to stay. What does this mean? 

  1. How we communicate this. We have to be honest and up front. We have to be transparent about why we are doing it and we have to be really careful how we do it. In an article I wrote about trust back in May, I talked about the way Bird made people redundant in a ten-minute Zoom call compared with the message the CEO of Airbnb sent to his employees when announcing 1,900 redundancies. I can only imagine how the survivors felt in each company. 
  2. Fairness and equity. As well as clear and honest communication, people need to feel the decisions have been based on an objective process – not on the personal likes and dislikes of managers and leaders. I read one example where a fire alarm was called. As people left the building, they were directed to one of two car parks. Those in car park A went back to their desks. Those in car park B were told they were being made redundant. No one bothered to tell the people in car park A what had happened, or how decisions had been made. They just never saw the people in car park B again! 
  3. Emotional support for survivors. HR needs to coach managers to hold conversations with those remaining that goes beyond the facts and figures to listen to their feelings. The last few months have been tough as people have had to cope with new ways of working, homeschooling, dealing with potential personal bereavementand so on. They will not necessarily be in the best place to deal with bad news. The danger is managers will take the ‘they’re lucky to be keeping their jobs’ approach and avoid any deeper conversations. The point is not to turn managers into counsellors but to help people share their feelings. HR should be supporting their managers and their teams and listening at a meta-level to the overall climate, taking actions to address any organisationwide issues. 
  4. Follow through on the psychological contract.  In my last post I talked about the changing nature of careers. We cannot offer jobs for life or a defined career ladder. We have to offer employability, so it is important that even during tough periods we continue to invest in our people to make them higher performers in their current roles, but also make them employable beyond that. This is the new deal – I will commit to my current role if you help me get my next one 

HR must be willing to take tough decisions but then execute them with care. It’s the right thing to do which is good enough for me, but we also have to ensure the organisation does it with a view to the future. 

If you missed it, please read our post meeting notes from our recent webinar, Strategies for Downsizing with Compassion and Care. Or catch up on the webinar here.

 

References

Noer, David., (1993) Healing the Wounds, Jossey Bass, San Francisco 

https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/strategy-beyond-the-hockey-stick

https://www.dailymail.co.uk/news/article-8181859/Scooter-rental-company-Bird-fires-406-people-two-minutes-Zoom-webinar.html

https://news.airbnb.com/a-message-from-co-founder-and-ceo-brian-chesky/

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