Be mindful of the revolving door

By Byrona J. Maule | Phillips Murrah P.C. | Paycom Report

[ AUGUST, 2009 - OKLAHOMA CITY, OK ] - If your company is anything like my clients', it is facing harsh economic realities and being forced to make some difficult choices. Companies that have never experienced a layoff are now taking drastic measures to stay afloat. Some clients have pulled through without downsizing by reducing expenses, benefits and salaries; others have gone further, deciding to review all positions and make eliminations.

Whichever course of action is taken, effective implementation and communication of the plan are keys to its success. Because this is typically the unenvied domain of Human Resources, I'm giving you a few things to consider when making those hard choices and communicating them to employees.

5 Ways to Make the Hard Decisions Easier:

1. Define the objective clearly. If the company must save $1,000,000 in the current fiscal year to stay viable, make sure employees understand that.

2. Don't make contradictory statements—of word or deed. One of my clients learned this the hard way when the company placed an advertisement seeking an employee with special skills and licenses while implementing a reduction in force. If your company is in the same situation, recognize the delicate balancing act that exists, and communicate clearly to employees why the ad is running. Better yet, consider posting the position internally, so current employees know they have had an opportunity to apply for and fill the vacant position.

3. Determine the time frame. Will the cutbacks will occur incrementally, over a period of months, or will the company make one swift employee reduction to carry it through the fiscal year? Factors to consider are: Accuracy of income and expense projections; impact of several small reductions on employee morale; and likelihood that a single, swift reduction (if that's the plan) will carry the company through the fiscal year.

When conveying to employees the time frame and details of the plan, don’t make promises. Honesty, while difficult under these circumstances, is always best. Consider a statement along these lines: "This is what we need to do today to ensure the company stays in business through 2010. These projections are based on current expectations of income and expenses. We will continue monitoring the company's actual income and expenses as we move forward and make appropriate adjustments as necessary." Statements such as, "No further cuts will be necessary," can be misleading and do more damage to morale than taking a direct and honest approach.

4. Show compassion for discharged employees. Remember that those let go in a reduction in force are not being terminated for cause. Treat them with the utmost respect. Consider a severance package; it will help discharged employees through the tough times. One company I represent reached out to its clients and vendors, advising them that valued employees were being laid off and recommending them for any open positions at their companies. This not only helped the affected employees find new jobs but made them feel valued—even in the worst of circumstances. While you need to remain cognizant of security issues (facility access, computer passwords, keys, confidential information and the like), don't treat them with suspicion.

5. Plan for a reversal of fortune. As the economy strengthens, the employees you were forced to lay off may be the same ones you need six months from now. They know the company, culture, coworkers and job duties, and they have little down-time upon rehire. Because of this revolving door—and the fact that former employees who are rehired save significant training and education expenses—smart companies go the extra mile to maintain good relationships throughout the reduction process.

Consider stating in the reduction notice that laid-off employees will get first priority if a position becomes available. Check your benefit plans; many anticipate furloughs and, if within the specified time, allow reinstated employees to resume participation in the benefits plan immediately—without a mandatory waiting period. In the reduction paperwork, be sure to point out the positives, so that in the event of a recall, employees are eager to return to work, knowing they retain their benefits and seniority.

Currently faced with tough decisions and vast areas of unknown? Be assured of one thing: If you invest the time to effectively (and compassionately) develop, implement and communicate your company's economic survival plan, the hard decisions—and hard times—are made easier.