Tuesday, February 24, 2009
Downsizing the Right Way
I know of two Fortune 500 companies who, because of slumping sales were forced to lay-off a number of their sales team. They told those who remained they were expected to service not only their original clients but a portion of the clients previously serviced by those who were let go. No expectations were changed with regard to the quality of work, number of sales calls or internal reporting, and no pay adjustments were given to these remaining salespeople. Does this sound familiar? It is by far the most common approach taken my most CEO’s and, in my opinion, one of the worst.
Let’s analyze this.
I start with the assumption that prior to the downturn each and every salesperson was gainfully employed with challenging goals defined, clear written expectations set, qualifications identified and fair compensation for their services agreed upon. That is afterall how successful companies operate. There was no slack in the workforce, no dead wood, no one not pulling his or her weight; because if there were, you, as the CEO, would have dealt with it immediately.
Then the economy slows. As a result, demands on your sales force increases exponentially as it takes that much more creative effort to reach deal closure. These increased demands likely include internal reporting, more frequent status meetings, miscellaneous administrative duties (expense reports, etc...) and the need for more frequent customer calls. If anything, under these conditions, a well managed sales force is working harder than ever. Their plate is full.
Then the lay-off occurs. And, without any change in expectations or compensation you pile the workload from those laid-off onto those few who remain. Sounds kind of silly when you read it in print doesn’t it? How well do you think your clients will be served under these conditions? What impact will this approach have on your remaining talented workforce?
Here is how some owners/CEO’s explain away this action.
“Hey, you don’t understand, the work still has to get done.”
Or, “you don’t understand, they should be grateful they still have a job.”
Or, “you don’t understand, everyone has to make sacrifices.”
Though I fully understand things still must get done in tough times, I challenge whether sufficient effort was made to examine all tasks and determine which fall into the “critical must” category versus the “not as important”. Secondly, I will never agree with the notion of being “grateful for a job” - as if a job is some sort of charity. This is demeaning and insulting. A job is a business contract between an employer and employee trading compensation and benefits for an agreed upon service and performance expectation. Which leads me to the matter of “sacrifice”. Yes, sacrifice is and should be reasonably expected from everyone equally for an agreed upon period of time. It is when this “sacrifice” becomes the expected norm that the term exploitation comes to mind.
So what is the “right way”?
Have a plan and communicate it. Be honest with your workforce. Let them know the real story and share with them your plan for survival and recovery. Your employees are more perceptive than you think and are more likely to embrace your request for sacrifice if they know you have a plan. By doing this you instill confidence as their leader but more importantly you set the finish line or timetable for when things return to “normal”. Like distance runners who understand the importance of pacing and the timing of their “kick” to the finish line, your remaining employee’s can and will increase their pace as long as they know where that finish line is.
Be respectful and realistic. It is neither respectful nor realistic to tell someone he must fulfill his 40-hour assignment and that of the laid-off employee(s) with no adjustments to expectations or duties. Prior to any lay-off, take the time to analyze work expectations and decide what tasks are “must have” versus “nice to have”. Eliminate those you can so the remaining employees will concentrate on the important duties. Better yet is to bring the employee into the discussion. By doing so you may discover tasks you have imposed that have a much larger impact on their time than anticipated.
Finally, acknowledge their “sacrifice”. Let them know how much you appreciate them stepping up to the plate to take on the additional work (typically with no additional pay or benefits). Encourage them (and be sincere about this) to come to you if the burden gets to difficult. This will assure you have the opportunity to move work assignments around or take other measures to adjust workload before your customers or the internal operation is under-serviced.
About the author: Mike Gomez is the President of Allegro Consulting, an Atlanta-based business growth specialty firm. Allegro provides operating advice to businesses and organizations on a wide range of management issues that effect growth, such as strategic and organizational planning, marketing, sales and business process improvement. www.AllegroConsultant.com