Cutbacks: Don't Neglect the Survivors

Restructurings, consolidation, salary freezes, a shifting health-care cost burden, furloughs, 401(k) match eliminations...this list, as you know, goes on and on. Did your company cancel this year's Christmas party?

These are common responses to our changing corporate landscape. And they can be necessary. Businesses that don't step up and react to reality are unlikely to survive over the long term.

My concern is that, cumulatively, these negative actions are tugging at and fraying the delicate bonds of loyalty that tie employees to their employers. I believe it will be the companies that manage to deftly balance the necessary tough competitive actions with genuine compassion for their employees that will win big in the future.

People have long memories. What they don't have right now are a whole lot of career options. And they will judge their employer by how equitably they feel they were treated during the down market. So how exactly do you steer your company through this in a way that won't drive your people into the arms of the first headhunter who calls? (Trust me, they will start dialing again.) Just as vital: How to take the tough steps while energizing your workforce instead of paralyzing them?

As counterintuitive as it may sound, consider going deeper than you might on staff reductions, rather than nibbling around the edges hoping for a quick market turnaround. Some companies believe in "share the pain" scenarios, where everyone gets to sacrifice equally at the corporate altar. I'm not a fan of such strategies unless they address a short-term crisis in which a company expects to be reducing forces and hiring within the same year. In my view, these practices ensure that 100% of your workforce is demoralized, vs. the 10% to 20% whom you really can't afford in the current climate.

When you're ready to make those cuts, deal compassionately with the casualties, financially and emotionally, to provide them as soft a landing as possible. Career transition centers, training opportunities, and a sincere interest in helping those who are moving on become more marketable will genuinely help.

Many companies don't need to be told that. Instead, managers often spend a disproportionate amount of time managing the layoff process and not enough attention on the surviving talent. Those survivors need to be recognized and rewarded. Yes, they'll pay close attention to how humanely layoffs are carried out, but they're also aware that their own workload and stress level has just been stepped up. You want this group to play offense, not to fret over when the next shoe will drop or feel that they're being overburdened.

With financial rewards temporarily off the screen, an astonishingly powerful form of recognition is a genuine pat on the back, along with words along these lines: "I think you're doing a great job under tough circumstances, and you're an essential part of my team." It doesn't take long to say or cost a penny, but how many of us have ever heard those words?

There's a strong tendency for executives in tight spots to simply clam up, fearing they don't have the answers people want to hear. To avoid appearing inadequate, they'll issue the occasional all-employee e-mail or canned Webcast. But you'll find that you don't need to have all the answers. You'll discover that the rumor mill has painted the most pessimistic picture imaginable, and you will quickly be able to dispel numerous falsehoods and present a clearer and more optimistic view. These times call for a personal touch. Employees who get to see and hear their leaders are far more likely to buy into a future beyond the crisis.

Now back to the subject of holiday parties: It's a mistake to legislate fun out of the workplace. You need to continue to celebrate, especially in tough times. Employees shouldn't feel that it's wrong to appear to be having fun at the risk of their superiors thinking they're not serious enough. We need to dial down how we celebrate, yes, but it's not natural to have to continuously wear a deadly serious game face. Life's too short to have to feel that way, let alone act that way.

As the clouds blow away, I'll be placing my bets on companies that are the most open, ethically compliant, and compassionate with their people. They'll be the ones that succeed in retaining—and therefore attracting—world-class talent.

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