As American automobile makers contemplate whether to comply with the U.S. Congress’s requirements for a bailout package, we can be fairly certain that downsizing and layoffs throughout the car industry will continue. The ripple effect as well as the depressed global economy will cause many businesses to resort to layoffs as a way to balance revenue and costs. Hopefully, execs will consider all other alternatives first, but if more layoffs are absolutely necessary, then they should know that there is a right way and a wrong way to do it.
Guy Kawasaki offers some excellent suggestions to CEOs who are in this situation. These are his headings. Each deserves a closer look.
- Take responsibility.
- Cut deep and cut once.
- Move fast.
- Clean house.
- Whack Teddy.
- Share the pain.
- Show consistency.
- Don’t ask for pity.
- Provide support.
- Don’t let people self-select.
- Show people the door.
- Move forward.
A few comments about this list. Kawasaki implies a #13: “Don’t hide.” He wrote that the worst thing a CEO can do after a layoff is avoid employees. The surviving employees need confidence that their leader is in control and that, together, they will survive the downturn.
I disagree with what Kawasaki says about Number 3, “Move fast.” He said that within an hour after a meeting to discuss possible layoffs, the word will have spread around the company. Actually, the word will spread within minutes after the meeting, given the iPhone/Blackberry age in which we work. And in the time between that meeting and any general announcement, employees will spread rumors that make the situation sound worse than it is.
“Clean house” means using layoffs as an opportunity to move out employees who are not doing a good job or won’t help you going forward. This is being strategic about layoffs and not simply making across-the-board cuts where you risk eliminating valuable, knowledgeable talent and keeping low performers.
“Whack Teddy” is about including in the layoffs employees who were hired because of who they know, not what they can do. If these employees are not included in layoffs, everyone else will assume that competence doesn’t count in the company and that will affect their engagement and performance.