Wise Managers Treat Layoffs as Last ResortBy: Jim Clemmer
Despite all the trendy rhetoric about the importance of people, leadership, and values, far too many managers treat people in their organizations with about as much care and concern as so many numbers on a financial statement. They are just one more set of assets to be managed. These just happen to have skin wrapped around them. Phrases like "head count" dehumanize and objectify people. That's how we talked about cattle on the farm where I grew up. And that's exactly how too many managers view "their people."
This thinly disguised contempt most clearly shows up when managers jump into layoffs and downsizing as a first, rather than last step, when facing the need to cut costs. The airline industry provides a revealing study in contrasts – and leadership. Following the steep drop in air travel after September 11, more than 100,000 people in the industry were laid off in North America. But in keeping with their no-layoffs pledge, Dallas-based Southwest Airlines didn't downsize anyone. To help the company weather the tough times, employees, on their own, initiated a program they called "Pledge to LUV" (the company's stock symbol). They voluntarily gave up hours and days of paid time to help the company reduce costs and avoid layoffs.
Over the last decade numerous studies have shown that "dumbsizing" sometimes provides short-term relief – and protects shortsighted manager's bonuses – while hurting companies in the long-term:
Since tenure rather than performance usually determines who goes and who stays, the worst supervisors and managers stay behind and add to the misery index. The high performers who weren't downsized jump ship and further weaken the organization. This growing leadership vacuum accelerates feeling of hopelessness.
Mass layoffs are always a very last, desperate step for organizations with strong leaders who truly care about people. At the center of this rare leadership are core values around partnership and participation. Organizational members aren't "heads," "warm bodies," or "human resources" to be acquired and disposed of like assets on a balance sheet.
High performing organizations manage things and lead people. That means working together when the financial heat is on to reduce costs through initiatives such as cross-the-board salary reductions, with the deepest percentage cuts going to senior management. (They made most of the decisions that created this problem.)
Other initiatives include reduced workweeks or hours or offering leaves of absences, either unpaid or at a fraction of salary. Voluntary sabbaticals can also save a company money, as do the reduction of executive perks.
Other efforts include:
All of these approaches require courageous, visible, face-to-face leadership. Successfully leading in tough times calls for openness, clearly outlining the difficult situation, expressing your own pain, and providing cost reduction guidelines. Through surveys, meetings, e-mail polling, "town halls," and the like, managers facilitate brainstorming, get input, set priorities, and make joint decisions and action plans. Then communicate - you can't tell people too much about what's going on and why.
Sam Walton built Bentonville, Ark.-based Wal-Mart into the world's largest retailer through treating staff as respected partners. One of his legacies to "treat them as partners and they will treat you as a partner and together you will all perform beyond your wildest expectations."
Forming respectful partnerships that let staff participate is not the cowardly acts of managers in closed meetings who hide behind press releases and get external consultants or the HR department to the dirty work of firing people. If this sounds like a lot of hard, agonizing work, it is. Management can be tough, but leadership takes real courage. The research clearly shows you can pay the price now or pay a much bigger price later.
© Copyright 2002 The CLEMMER Group
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