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March 1, 2009
Every morning, I retrieve my Wall Street Journal off the driveway and glance over the headlines noting the next company to report major layoffs. It’s becoming a habit, albeit a dismal one.
Across the country, companies driven either by necessity or nerves are slashing payrolls, looking for the fastest means to cut big-ticket costs. Unfortunately, payroll and benefits top the expense budget charts, making layoffs and their accompanying human toll seem inevitable. In times as rough as these, companies do what they must to survive. And many are doing it too quickly to consider the future. If history has shown us anything, it’s that speed isn’t the only criteria for salvation—companies that survive and prosper also move with thought.
This, then, is the moment for companies to step forward and advocate a grander vision, one that speaks of humanity, dignity and brand integrity. Companies are understandably focused on the short-term nature of the financial crisis. CFOs may be tempted to take a slash-and-burn approach to save cash. HR and Legal may be consumed with the nuts and bolts of getting it done. But who’s worrying about the receiving end? Be careful not to throw the brand out with the bathwater.
We’ve all heard the statement: “Your people are the most important asset in a company.” In the service industry, it goes a step further: “The truth is, your people are your brand.” But time and again the way employees are treated when a company moves into survival mode takes on a “Dr. Jekyll and Mr. Hyde” approach—a cost cutting policy run amuck.
I’ll put this into perspective with a recent example. Heading home from the city one evening on the train, I struck up a conversation with a fellow passenger. At some length, the woman told me about how her company (a Fortune 100) and how it just underwent substantial layoffs. In her opinion, it had been a best-practice example of how not to lay off workers.
“Even though we knew bad news was inevitable and that business was slowing and adjustments had to be made,” she said, “no warnings were given; no communications received; nothing but stone silence. We were paralyzed: my staff, workers around me, and me. No work got done for weeks.”
Poorly handled employee cuts can negatively impact an organization’s ability to attract and retain talent needed for the future. And employers can simply forget productivity if a drawn-out layoff process is underway. Nothing stops an organization in its tracks like a rumor mill stoked with pink slip news.
In a recent profile for National Public Radio, reporter Brian Mann looked into the American Management Association’s recent layoffs, wondering how a world-famous training organization and advocate of management practices handled such a task.
AMA senior vp for Global Human Resources, Manny Avramidis advised that the company’s performance during closed-door employee separation meetings should be theoretically viewable by the rest of the organization. “Everyone seems to find out how those meetings were handled,” he acknowledged. “You want to be fair. You want to be equitable. You want to be fast.” We should all be so careful.
Not only is it the Golden Rule in terms of treating others the way we’d like to be treated, but also there are practical implications. Downturns don’t last forever. Another day, your company will need talented employees, and that door will swing open only to find few, if any, waiting in line to enter. Bitter memories are long, and unhappy people tell far more people about their experiences than happy ones do.
So the last thing you’d want to do is send people out the door with a bad taste for your enterprise. Even if they or others can be persuaded to return when the situation improves, how long do you think they’ll want to stay? And customers and investors hear stories too—don’t think for a moment that the word about your company’s behavior doesn’t hit the street and have an impact.
Finally, one last cautionary thought: The employee you lay off today could be your client tomorrow. The people you recycle into the workplace may start businesses or wind up with a leadership role in another organization. What impression would you want them to have of you and your brand?
So pay attention to the lessons we all know by heart. Don’t cover up. Talk to employees. Think about what your brand stands for and strive every day to live by it internally as well as externally. Consider doing what many companies are actively undertaking: Open communication with employees to gain buy-in for sacrifices needed to avoid layoffs. You might be surprised at the ideas employees generate if they feel they’ve been honestly treated and sincerely asked to participate.
Those who get it right are likely to gain brand loyalty beyond anything they had anticipated. And isn’t that what every company wants to achieve? Think about what you’d rather have: embittered ex-employees ready to tell your sordid tale to every stranger on a train, or a cadre of rabid brand evangelists, ready to help the company succeed in good times and bad? Time to choose...and behave accordingly.
James Kelly is U.S. brand leader at PricewaterhouseCoopers.
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