Downsizing is difficult for any organization. What should you do if you’re faced with having to downsize? The best plan of action is to fully assess your current situation, formulate several possible scenarios to achieve your financial goals, and do a thorough analysis of the expected impact each will have.

Analysis
Frequently, but not always, downsizing includes layoffs. However, employee layoffs can actually be quite costly. Possible costs include severance pay, outplacement services, extension of certain benefits, and reimbursement of unused paid time off for employees who are let go. In addition, you may have expenses for legal counsel. And there will most likely be some cost involved in reorganizing positions, reassigning job responsibilities, and providing training.

A word about awarding severance pay: If no precedent exists, be sure to balance compassion for the current crisis with the fact that today’s decision could set a standard that, if continued, may affect the organization’s future viability.

Alternatives
In addition to the measurable costs of layoffs, an immeasurable cost could take its toll - the high price of low morale. You may be able to achieve target reductions in ways that have lower “emotional” costs, such as a hiring freeze, work-hour reduction, salary cutbacks, sabbatical offers, and mandatory time off. Especially in the nonprofit world, employees may volunteer for some type of reduction if it means layoffs can be avoided.

If layoffs are unavoidable, you’ll need to establish parameters for deciding which positions to eliminate, set a timeline for implementation, and firm up other details, such as who should address the staff, how the news will be delivered to the public, and what role the board will play.

Announcements
When downsizing is inevitable, discuss the situation openly and honestly with your staff. If layoffs are part of the plan, be compassionate toward, and supportive of, those who are leaving and those who are staying. Both groups will be traumatized. Leave the door open for valuable staffers to return when conditions improve.

At Lewis, Hooper & Dick, LLC, we offer comprehensive services in human resources. Please contact David Lunzmann at (620)275-9267.

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