Who re-moved my cheese? Responding to staff reductions.

• Author: Garnant, Carol W.
• Position: Employee morale

A few years ago, noted author Dr. Spencer Johnson wrote a popular book entitled Who Moved My Cheese?[1] For those who have not read this book (and I heartily recommend it if you can carve out an hour of your time), it depicts the story of four imaginary characters and how each deals with change.

The two mice (Sniff and Scurry) and the two little people (Hem and Haw) represent the simple and complex parts of ourselves, particularly as we respond to change. First, there is Sniff -- who sniffs out change early; then there is Scurry -- who scurries into action. Hem denies and resists change because he fears it will lead to something worse, and Haw learns to adapt in time when he sees that change leads to something better. It is likely that you have seen yourself in each of these places at one point or another.

What single change causes the most consternation in the office place? The announcement of job cutbacks. With all the recent staff reduction announcements, this news is all too familiar. With it comes the immediate negative effect on employee morale, both for the laid-off employees and the remaining staff.

A study by Watson Wyatt Worldwide reported that fewer than half of the companies it surveyed after the 1990 recession met profit goals after downsizing. Mercer Management Consulting found that 68 percent of the "cost cutters" it studied did not achieve profit growth for five years. And Bain & Co. determined that companies that announced mass layoffs or repeated layoffs under-performed the market over a three-year period.[2]

Thus, study after study has challenged and often contradicted the long-term benefit of staffing cutbacks as a means to return to profitability. Nevertheless, relentless pressure by Wall Street to deliver short-time profitability often makes this decision inevitable. Perhaps one of the reasons for the lack of long-term benefit is not the decision itself, but how the downsizing is implemented.

Implementing staff reductions requires that you (1) address employee morale; (2) communicate and involve; and (3) search for long-term, "out-of-the-box" solutions.

Employee morale is normally the number one issue that you immediately face. Addressing this issue in a sensitive, yet decisive fashion can set the tone for a well-executed set of responses. Prompt resolution of staffing and organizational issues is essential to the first step in change. The longer the process takes, the more painful it becomes, and the greater the chance of losing key employees in the disruptive environment.

Communicate with and involve key managers to the greatest extent possible to enhance the prospect of employee buy-in and, ultimately, the success of the implementation process. While the final decision-making requires a leadership role (not a group consensus), you should not be timid about seeking out valuable input from subordinates, managers, and peers.

You should be conscious of the natural reaction by some managers and employees to resist any change whatsoever. Beware, too, of those who provide advice that, though well intentioned, may be ill suited to the changed environment.

Look for "out-of-the-box" solutions that may not be evident at first glance, but may provide the best long-term Solution. For example, how many of your staff have openly or subtly expressed an interest in a reduced work schedule? While you may feel you cannot afford to lose time from key employees, you might be pleasantly surprised at the real versus perceived loss of productivity. It may be less than you think! Consider reduced work weeks, job sharing, unpaid sabbaticals, or other creative solutions that simultaneously address workers needs and reduce costs. By responding to a motivational need, you may be able to reduce cost with little or no loss in productivity. Furthermore, you have retained institutional knowledge and probably gained the loyalty of your workers.

Don't become insular in your approach. Brainstorm with employees, other departments, or other companies to fully explore innovative ways to accomplish corporate objectives. The results are often surprising and productive.

Most important, avoid "short-term fixes" that foster long-term problems. Some typical reactions may be to delay audits, cut out documentation...