How to Downsize Right

How to Downsize Right

As companies downsize, executives must choose who stays and who goes. Done correctly, a layoff can produce a team of people who move further and faster than before. Layoffs create a time to reevaluate, reinvent, and reposition the company for renewed growth. How can you design a layoff to remove the not-so-great people and keep the best, and thereby reignite growth?

First, create a clear vision of what the company will be like after the layoff when you have a tight, cohesive, talented team of people. The more specific you are in describing what will be new, different, and better after the change, the more obvious the strategies will be for getting there.

Also, clarify the core values—the ways in which people will work to achieve success. Set guidelines that describe how people act when they behave according to that value. Describe the behaviors that embody core values. These guidelines will help you to evaluate people, guide your downsizing, and ensure the process is fair, compassionate, and respectful.

Those who fulfill the values should stay; those who don’t should be first out the door. This includes senior team members. You can’t afford to have a dysfunctional top team. Look for both outstanding performance and adherence to core values in leaders.

What to Look For

The people who stay should have four characteristics:

  1. They are self-motivated. They have a personal mission, want to make a difference, and set personal goals. They are committed to the company’s mission and vision and see the need to be customer focused. Their values are consistent with the company’s values. They take responsibility for doing whatever it takes to get the job done.
  2. They are respected and admired, and, in turn, they are respectful of others. They ask other people for advice and ideas and respect others’ opinions. They work well in teams, enjoy the process, and inspire others.
  3. They are creative thinkers and proactive problem solvers. They challenge the status quo and conceive and articulate new possibilities. They take risks and learn from successes and failures. Their great ideas help the company innovate, grow, and make profits.
  4. They are learners who also help others learn. They stay ahead of the curve, match or exceed the company’s growth, learn from their experiences, share knowledge with others, adapt quickly, and are not afraid of change. Try to keep the people who fit this profile. Remove people whose performance and adherence to values are less than stellar. Move some people elsewhere. Better to retrain great people to fill a new role than to lose them. With a clear vision, defined values, and strong leadership, the people you retain will excel at their jobs, even if those jobs are new to them. They will focus on the right things, pursue the best options, and create ways to do more with less.

Bottom Line: Ensure a layoff is not just an exercise in reducing costs but a way to power growth.

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