The three-year plan could be a very a bad one. Here's why.
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December 16, 2008
Layoffs are painful for any staff. Drag them out over the course of several years, and the workforce runs the risk of paralysis.
Someone should tell that to Bank of America. The company announced last week that it would eliminate between 30,000 and 35,000 jobs over the next three years. The cause: the merger with Merrill Lynch, which created redundancies in jobs, and the recession.
Many if not most employers are facing layoffs these days. But usually they'll go for a quicker execution, like less than a year.
Bank of America officials direct inquires to a press release on the topic and decline to comment. The release says that an analysis of the situation will be completed by early 2009 and that "as many reductions as possible will be made through attrition."
Perhaps that's one reason the downsizing will last so long. No matter the reason, it will inevitably cast a pall over the workforce for years.
Anxiety runs high when layoffs are announced. Managers are distracted from running the company by having to focus on figuring out who stays and who goes. Then they dread delivering the bad news. Meanwhile, employees are terrified of receiving the pink slip. Rumors abound, and every closed-door meeting incites gossip. Production suffers.
"The company is guaranteeing that for the next three years employees will be focused on something other than work," says Manny Avramidis, senior vice president for global human resources at the American Management Association.
Many employees will start looking for a new job. "No one likes to stay on a sinking ship," says Susan Lill, a human resources consultant at Align HR. The problem is that the company's best performers--the staffers they want to keep--will be the first to leave. And since they're so good at their jobs, the competition will rush to bring them aboard.
However, Jim R. Sowers, head of human resources effectiveness at the HR consulting firm Mercer, sees opportunity in Bank of America's approach--if it's handled just right. He says the bank's decision to take three years can give managers time to analyze their businesses to see which they should continue to grow and which they should divest. That can be more constructive than "flipping a switch and making 30% of the company go away."
But taking time won't ensure a successful restructuring. It will only stand a chance if managers give employees as much information up front as possible. The C-suite can't say often enough that the company is restructuring rather than just "pulling the trigger and letting thousands go," Sowers says. The salient message needs to be: We have a plan.
To avoid losing its most valuable people, Sowers says, Bank of America must select its top performers right away and let them know that they're in for the long haul. Managers must take no more than a few months to decide who they want to keep long-term, who they want to stay on during the transition and who will be let go immediately. Those asked to stay on should be given a retention bonus. Letting the staff know its fate as soon as possible will keep anxiety to a minimum.
When a company undergoes layoffs over a long period, the survivors are likely to get too little attention. Their career paths will have been thrown off, and they'll likely end up doing more work for the same salary. Susan Lill says that Bank of America will only succeed in the future if it treats its survivors better than ever.
In short, she says, "Love and nurture them. Make sure people know they're valuable."
Otherwise they too will flee once the market turns around.
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