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How to Practice Downsizing Without the Negative Effects
by Adrianna Noton
When there is a downturn in the economy and sales start to plummet, one of the first things many businesses start to do is downsize in an effort to curb costs. Since the early 1980’s, this has become a common practice for many businesses. The negative effect on employees is one of devastation. Those who survive downsizing tend to lose morale and trust in management. The psychological effect results in anxiety, paranoia that they are next on the list to be laid off, and an overall unhappy work environment. However, there are measures a business can take to reduce the number of layoffs during bad economic times.
The following are a number of tips a business can implement that can reduce the negative effects of large scale downsizing:
1. Companies can use job recruiting services to hire employees who have the skills to meet the company’s long term vision and goals. This will lessen the chances of having employees who are expendable, and then, a less chance that there will be massive layoffs.
2. If the business has a number of different departments, cross-train your staff so that during difficult economic times, they can be moved around to other departments instead of being laid off.
3. When positions within the company open up, hire from within the company. This will ensure that employees get a chance to stay employed, and if there is a concern about near-future economic instability, management does not have to fill the position that the employee left in order to take the new job. As well, managers should periodically assess their career development skill requirements to identify skills that their employees will need to acquire positions that become available. This will allow employees to acquire skills and education to fill positions that become available.
4. Management can work with human resources to identify which employees are ready to move into management positions. When the employee moves up the corporate ladder, management can leave their previous position vacant.
5. Management can offer employees special incentives to come up with new and innovative products and services to market and sell in order to generate more revenue.
6. Management can implement cost saving strategies. This can include: reducing hours during difficult economic times, working a four day week, and laying off employees for a few weeks to save money, but then bring them back to work. As well, when an employee retires, do not fill the position, ask employees to work a few extra hours volunteering, and offer a leave of absence to some employees until the economy starts to recover.
7. Offer employees shares and stocks in the company in return for taking a pay cut.
8. Offer the employees the opportunity to buy into the company and become part owners.
Although downsizing has shown to be an effective way of cutting costs, most companies prefer not to layoff a large number of employees. Fortunately, with a little creativity and good business management plan, a company can take measures to reduce the negative effects of downsizing on employees, the business, and the staff that survive downsizing.
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