Downsizing is currently associated with the recessionary times, but it is no stranger during more stable periods. It’s an unfortunate fact of life during mergers and acquisitions, and when new ways are introduced to reduce cost, such as off-shoring and technology substitution for labour. Downsizing is always a possibility in any organisation.

As a traumatic event that is feared by all, nothing can take away the angst and anger associated when it occurs (for whatever reason). That said, both employers and employees cope better with downsizing when they are prepared for the eventuality. The critical part of being prepared for downsizing is thinking through the rights of the stakeholders. Rights that apply in downsizing situations apply to the employees, the managers involved, and the employer.

What are these rights?

For employees, they include the right to be psychologically safe, to be informed, to choose how their departure is communicated, and to be heard.

For managers, they include the right to be heard, to have their decisions respected, and to be supported in executing difficult tasks.

For the organisation, the main right is to remain viable and thereby continue to meet the needs of customers, continuing employees and investors.

So, what can employers do to retain the trust of staff? Critical to preparation is an obligation to tell the truth. Consider these questions:

• Does the organisation publish a set of ‘vital signs’ that are available to interested employees? Is it clear at what point employment may become endangered? Is the possibility (not the specifics) of a pending merger or acquisition known to employees? Is a minimum notification period for termination known by all?
• Is counselling available upon notice of termination? Is on- or off-site outplacement assistance provided? Has provision been made to provide references and information that might facilitate job search?
• Was notice communicated directly and personally, by the appropriate staff member, to each affected person? Was the rationale for the layoff explained?
• Are employees encouraged to enhance their skills in an ongoing way? Does the company share the cost or pay in full for training? Ethically speaking, employability is a two-way street. The individual is ultimately responsible for ensuring the marketability of his or her personal labour. And every employer who profits from this labour shares that responsibility.

If management is sensitive to the moral issues associated with reductions, the probability that justice and compassion will accompany any downsizing decision is enhanced. The absence of ethical reflection signals danger ahead for individual dignity and institutional integrity in a corporate culture where lean all too easily translates to mean, and where management, if inattentive, can lose its moral compass.

In essence, true leadership means following one’s true north even during difficult times. The current financial crisis has tested us all. As the business community begins to recruit and replace those who were lost, it’s perhaps an ideal moment for organisations to reflect on how well they treated their employees – immediate past and present – during recent times. Let us know how you think you scored.

George Beaton is an Executive Chairman and Director who believes in business sustainability in the broadest sense, encouraging organisations to think and act for the long term, and answer the growing call for greater transparency in the corporate world.

Where do you stand?

Comments have closed  |  More by George Beaton