8 Tips for Effective Leadership During Downsizing

Every year millions of employees are laid off amid downsizing efforts. In fact, in 2017 the top 12 employers to conduct layoffs reduced the workforce by more than 47,000 individuals. While some industries bear a larger proportion of the downsizing burden, no industry is exempt. Additionally, private companies are just as likely to downsize as public companies, making employee layoffs an inevitable reality in business.  

Layoffs affect every area of an organization, from executive leadership to entry-level positions. While downsizing is clearly difficult for the employees that are laid off, retained employees are also affected in ways that many organizations fail to plan for effectively.

Managers are particularly sensitive to the effects of downsizing because they are responsible for leading the organization through these changes to achieve business goals. However, to execute strategic plans, managers must triumph over the deleterious effects of downsizing such as reduced productivity, wounded morale, and increased employee turnover.

1.  Stay Informed

You cannot tell your employees what you do not know. Informing and preparing your employees for the coming changes hinges on being informed yourself. Sometimes information is limited but always try to find out as much as you can from the top. Ask questions and speak up on behalf of your team to get the information that matters to them. Do not just focus on the present changes at hand, try to get intelligence that is forward-looking as well. Once you have been informed, understand what you are and are not allowed to share with employees.

2.  Be Transparent

Authenticity is crucial during periods of downsizing to reassure employees. Keep employees doing their best work by sharing information as soon as it is received. Timely communications are more important than complete information. It is fine to let employees know that you do not have all the answers yet but that you will keep them updated as more information becomes available. Doing so helps to bind the team together during a time when fractures are more likely to occur. Without transparency employees may assume that you are withholding information, and fear for the worst.  

3.  Avoid Rumors

Rumors are more likely to occur during layoffs than any other time in a company’s operations. Ignoring rumors from above is crucial to doing your job effectively and quelling rumors among your employees is paramount to be an effective leader. Disseminate information to everyone at once to avoid starting up the rumor mill or allowing bad information to circulate when it passes from person to person.  

4.  Build Trust

​Downsizing is stressful for employees even if their jobs are considered safe. Exhibit empathy and make yourself available to listen when employees want to talk. Allow them to ask questions and try to answer them as candidly as possible. Be open to meeting one-on-one, where appropriate, to support employees throughout the process. 

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5.  Maintain Normalcy

Layoffs are disruptive, which is why it is important to maintain as much normalcy as possible. Keep scheduled meetings and planned events to avoid doing further damage to team morale. Continue to facilitate employee growth through educational and developmental opportunities. These gestures demonstrate to employees that you are still interested in their future and provide them with a sense of value.

6.  Focus on the Job

Employees do not want to worry about job security, they just want to do their jobs. Help team members focus on the mission to enable them to do their best work. Unify employees around a strategic vision to keep them engaged and have a plan for how day-to-day work will be handled. Concern over how layoffs will affect their workload is at the heart of employee anxiety during downsizing. Allay these worries with a plan that fills in the gaps created by layoffs and reassigns duties fairly.

7.  Emphasize Opportunities

Take employees out of crisis mode by reminding them that downsizing is not necessarily a result of financial trouble. Emphasize that layoffs can also be part of a strategic plan to streamline operations or move toward a leaner structure to fuel future growth. Empower your team to reinvent itself by challenging the status quo and breaking out of the “way we have always done it before” mentality.

Focus on key decisions that can be made to move the team and the company forward together, even if that means hiring externally. For instance, outsourcing accounting or bookkeeping functions can reduce costs while providing the kind of financial analysis and planning needed to foster corporate growth.   

8.  Support the Company

​Many managers are torn between allegiance to their employees and allegiance to the company. It is easy to take the side of employees because many teams are very close (in some companies they are even akin to family); however, the company pays your salary. Tie layoff decisions back to long-term strategic plans to rally employees around corporate decisions.

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