Your team is a critical asset and value-add that can help your business navigate the toughest terrain.Getty Images
No leader ever wants to contemplate laying off employees – but in today’s challenging economic climate, for some it can seem like an inevitability.
After all, in just the first few months of this year alone, thousands of Canadian workers have lost their jobs as companies across industries – The Body Shop Canada, Wayfair, Canada Goose, Staples Canada and even tech giant Google – shed salary costs in an effort to improve the health of their bottom lines.
And while slashing payroll can seem like an obvious way to get the books back in the black, or at least stem the tide of red ink on the balance sheet, layoffs aren’t always the best solution to a company’s woes.
In fact, cutting your employees in the tough times may be the worst thing you can do, and something you’ll regret when things are good again.
“Layoffs are a part of business. Every company will go through periods where they must right-size to meet the financial needs of the markets,” says Jeffrey Doucet, founder and chief executive officer at Thrive Career Wellness, which specializes in transition support for laid-off workers. “However, far too often organizations when going through layoffs do not retain professional support to assist departing people. Even more often, organizations do not consider the impact that layoffs have on remaining employees which can drastically impact morale and productivity.”
There are also the other knock-on effects that layoffs can have on a business, Doucet points out, like damage to the company brand, and the way that unhappy employees – perhaps worried about their own job, or saddled with their fired colleagues’ work in addition to their own – can hinder future growth.
One way of counteracting these negative effects that Doucet is observing right now is redeployment, a twist on restructuring where employees keep their jobs but move into new positions in other parts of the business.
“We are seeing more and more organizations, when going through a period of right-sizing their organization financially, first turn to redeployment,” he says. “Lots of large organizations who may be shutting down or reducing business units focus on redeploying talent into other roles within the organization.”
For Ryan Lauris, CEO and co-founder of marketing automation platform Omnisend, the key to avoiding layoffs has been constant financial vigilance.
“Every quarter, we ask ourselves which products and services we’re using that aren’t necessary or effective any more, or which contracts can and should be renegotiated,” he says. “We’ve done this for years, and it’s allowed us to avoid having to do any mass layoffs. Beyond that, we do a good amount of financial stewardship. We don’t spend excessively. We plan appropriately.”
According to Lauris, this has enabled the company to avoid the layoffs that are hitting many of their competitors, hiring and growing their work force instead.
“It’s not important to retain employees – it’s important to retain amazing employees,” he explains. “Amazing employees are the types of people who can adapt to an overwhelming amount of changes – both internal and external forces – and help the company not only survive these changes but thrive in them. They are also crucial for the culture and motivational element of the company, helping to build loyalty and maintain positive energy.”
Lauris suggests other strategies, based on his experience leading Omnisend. “One option is to move someone to a part-time position instead of laying them off completely. This could be for positions that require only part-time help but are too much for someone else to take on in addition to their existing workload,” he says. “Beyond that, the next step should be salary freezes to band together and try to weather the storm, while looking at innovative ways to solve the problems you’re having.”
Weathering the storm alongside his team is something that Henry Lukenge, CEO and president of Nexim Healthcare Consultants, recently experienced first-hand.
“Like everyone else in our world, we face a push to cut costs, especially when revenue is not picking up as expected to match overheads,” says Lukenge of the health-care staffing firm. “We faced that last year as our revenue flat lined for the first time in three years.”
At Nexim, the philosophy is that employees are “partners,” and, as Lukenge says, “one does not walk away from their partners unless it’s absolutely unavoidable.”
This is why they made a commitment to not laying anyone off unless this person couldn’t be re-trained for a new, merged role, or whose skills just fundamentally couldn’t be adapted to the long-term strategy. This enabled them to retain 90 per cent of their staff at affected locations. They were also able to add a new location, meaning the overall net-change to their work force was actually zero.
For Lukenge, this has translated to a stronger relationship between leadership and the company’s employees. “They believe in us and we believe in them,” he says, adding that their efforts to retain as many jobs as possible have helped demonstrate the company’s long-term commitment to its team.
Ultimately, it’s a very human approach to a problem that can sometimes feel like it’s all about reducing people to numbers on a balance sheet.
“I would ask every business to find ways to treat their workers as partners with whom they share their dreams, fears, hopes and goals, while demonstrating to them how they too can achieve their goals while working with you on your dream,” Lukenge says.
It can also help combat the inevitable swing of the pendulum that often follows tight times, when companies find themselves competing to hire the best talent as the economy booms once again. “If you have laid off someone but explain to them the whole picture, they will want to stay in touch and come back when things change.”
He adds: “It has happened to us many times.”