IABFM Articles

IABFM Articles > > General > Making Downsizing a Win-Win!

Making Downsizing a Win-Win!

By Dr. E. Ted Prince

12 January, 2009

This is a difficult time for just about every company and organization in the world. Almost all companies are seeing less business. Almost all organizations, whether profit-seeking or not, are under budget pressure. Almost all are cutting costs. And in most cases that means cutting people. That means the crisis is also difficult for employees and individuals the world over.

Cutting people - what in the US is called downsizing or separation - is a difficult experience for almost everyone. It is difficult for the person who loses their job. It is also difficult for the manager who has to communicate the news to the person who is leaving.

In fact, laying off or firing employees is probably about the hardest job that any manager ever carries out. It is often harder personally than other job in a company or organization, being harder than developing strategy, organizing projects, conducting performance reviews or even disciplining employees. It is difficult because it causes pain and most people, including most managers, no matter how efficient and conscientious, do not like to cause pain to anyone, let alone to their employees.

Yet there are no business courses that tell you how to manage firing or laying off an employee, except for those that show you how to do it from a technical perspective - how to organize the process, how to avoid legal risk, what to do about remaining compensation and severance and so on. The most difficult aspect of the downsizing process is the emotional angle. Yet is precisely this aspect that is assiduously avoided by just about everyone because no-open likes to have to deal with the pain it causes both for the individual leaving and for the manager who carries it out.

In approaching a separation process, a manager must adopt a new and different perspective. That perspective is how to make the dismissal process a constructive process, one that both sides regard as a win-win. An experience that, indeed, both sides can look back on as having been a moment of success and a valuable and life-changing productive experience.

There is a basic principle in separation that should usually be followed. That principle is to treat the separated employee as if it is never their fault, unless there is a clear cause for dismissal (such a gross incompetence, violence or dishonesty or fraud). The reasons for this are:

• If an employee is not performing it is quite likely that management did not put them in the right position where their talents could best be utilized
• If they keep them in this position even after their performance was seen as being unsatisfactory it was managements fault that they never informed the employee and moved them to another position where they could perform better
• By telling such an employee that there is, at the least shared fault, or that management is at fault or at least acted inadequately, it opens up an opportunity for a dialog where the employee feels that the employer is being fair in their assessment.

There is a second basic principle in separation that must be adopted. That is, the aim of the separation is to find a solution where both sides win. That is, the aim of a separation is not to get rid of a person whose existence in the company is uncomfortable, inconvenient or unwanted, but instead the aim is to discover how a situation which neither side wanted can be changed into an opportunity for both sides instead of a problem. If the employee sees this occurring, the dynamic of the situation changes dramatically from being negative to positive.

With these aims in mind here is a list of principles which every manager should follow in carrying out a separation process, whether or not the separation is a layoff or it is for performance reasons.

1. Aim to make every separation a win-win for both the employee and the company.
2. Make the employee leaving see that it is an opportunity for them to pursue new goals or to achieve goals that otherwise they would not have achieved.
3. Do not attempt to prove that it is the employee's fault and where possible or appropriate acknowledge management's inadequacies that helped to lead to the current situation.
4. Conduct the dialog in such a way as to keep up communication after the separation.
5. Explore the persons life goals and aspirations to see how you can help them move forward to achieve them when they leave
6. See how their leaving can benefit your own company at the same time - e.g. taking them on as a part-time consultant

Explore what they like to do in their spare time or what they are passionate about to see how u can work together to help them get more job satisfaction in their next position.

About the Authors

Dr. E. Ted Prince, the founder of the Perth Leadership Institute, has had a distinguished record in both running companies as CEO and as a thought leader in the area of management and leadership. His book entitled “The Three Financial Styles of Very Successful Leaders” was published in the US by McGraw Hill in 2005 and in China in Simplified Chinese in 2006.  He is a frequent speaker at industry conferences. His work has been published in and reviewed by prestigious publication such as Harvard Business School, MIT Sloan Management Review, CFO Magazine and numerous others. He can be contacted at [email protected]