If you have to lay people off, think like a crisis leader. Beware self-serving bias: take ownership of the situation and the decision because management miscalculation led to some of the bloat. Poor forecasting, flawed strategy, and imprudent investments can be as much to blame as the oft-blamed market conditions. Yet the pain is most often felt by those who were carrying on, not those who made the decisions.
Organizations must contract periodically just as they expand. However, there is a more humane way to handle the reductions than asking people to wait for an email that will reveal their fate. Follow this straightforward advice that I shared with CNBC:
– Be clear: Explain the what and the why to give people context. Detail the alternatives considered. Share the voluntary compensation cuts taken by senior executives, if any, to mitigate the situation. And steer clear of corporate double-speak. This is leader sense-making and meaning-making.
– Be careful: Large-scale cuts have unintended consequences for institutional knowledge (ask Elon), the connective tissue of culture, and organizational resilience. It’s better to use pruning shears than a machete. This is leader place-making.
– Be compassionate: For the benefit of those leaving as well as those staying, treat people well. Don’t dehumanize them as they are experiencing the loss of the security and identity of employment. Even as you think the decision makes sense rationally, everyone is dealing with emotional disruption. This is leader space-making.
Situations like this are defining moments for organizations that will resonate internally and externally for years. Even as you cut, be a maker. The short- and long-term benefits are substantial.