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Downsizing business: How to manage downsizing employees


So, you’ve made the decision to downsize your workforce. Chances are, this wasn’t an easy decision. But nonetheless, here you are, preparing to lay off a large percentage of your staff.

And you know, if this process isn’t handled properly, it could cause a huge disruption to your business.

When downsizing a business, you must be proactive – look at the long-term problems and goals.

It’s not going to be easy, but with these six tips you can minimize the disruption and negative effects that downsizing can have on your business.

1. Be transparent

When people are laid off and downsizing plans are in motion, you and your managers must be as transparent as possible.

Start by holding a group meeting with the team to let your employees know why you’re downsizing. Be real with them. For example, if you’ve decided to downsize because the company didn’t meet its revenue goals three quarters in a row, tell them. Or, if your company lost some of its biggest accounts, tell them. And if possible, explain to your employees why you chose downsizing instead of other types of operational cuts.

Remaining transparent will help reduce rumors that can create worry and distraction. Employees are more likely to stay engaged and positive during the transition when they’re not trying to guess what’ll happen next.

2. Ease fears and establish new goals and new responsibilities

It’s normal for staff to feel fearful and unclear of the direction of the organization after a downsizing. During this uneasy time, conduct team and individual meetings more often. Set goals between meetings so that employees have something to focus on. This can help them stay on track despite all the changes that are happening around them.

Once employees know why you’re choosing to downsize, you need to communicate how their jobs might change. Identify each team member’s new goals and responsibilities.

Remember to constantly reiterate why their roles are important to the company’s overall goals and objectives. Tell them where you see them fitting into the new team. Then, lay out what’s different about their duties and what’s critical for success going forward. When your employees have a clear picture of how they fit into the future of your company, they’ll be less worried about losing their jobs and more engaged in their day-to-day work.

3. Have a vision and a plan

With fewer employees, it’s going to be difficult to function the same way you did before. You need to have a 30-60-90 day plan so you can smoothly transition employees into their new roles and so business initiatives don’t fall behind. Here are some questions you should ask yourself as a leader:

  • Do I have the right people doing the right tasks?
  • Do team members have the tools and resources they need to work efficiently and effectively?
  • How does the plan tie into the organizational goals?

When possible, cross-train people so that certain tasks and functions aren’t disregarded when the employees who are responsible for them are let go. You don’t want one person to feel overworked as the only employee who understands a task.

4. Focus on the important stuff

Before the business downsizing, it’s possible you focused on making sure employees were productive during the required work hours. After condensing your workforce, you’re going to want to focus on positive action that will keep employees engaged.

Set benchmarks for employees to keep them focused. Allow team members to know what the benchmarks are and whether they’re meeting expectations. Address what is measured on a consistent basis and provide real-time feedback. This will ensure team members are aligned and focused on the most important activities.

Continuously discuss how difficult short-term workloads will help the long-term outlook for the company. For example, you might say, “I know you have a lot on your plate right now, but I have received several compliments from our clients about the excellent customer service you’ve delivered to them. Good job!”

5. Give back and make sacrifices for your employees

Despite how hard you try, you may not be able to avoid a little animosity among your remaining staff at first. Often, you can quell these emotions by giving back or making small sacrifices for your employees.

For example, you could offer flexible work schedules. While this might seem impossible with a smaller workforce, it’s not. You just have to get creative, such as allowing employees to alternate their work hours so that everyone can take longer lunches or arrive an hour later. It might be a little difficult to coordinate at first, but the boost it will give employee morale may be worth it.

Another idea is to surprise employees with a team breakfast or lunch. Or, if it’s around the holidays, you could make an even bigger sacrifice and give your holiday bonus to your employees.

All of these things let your staff know that while times are hard, you still care about their well-being.

6. Be empathetic

Make sure to be genuine toward the people who were let go and understand that the remaining staff will have a heavier workload. Ask the staff how they feel about the downsizing and let them vent their feelings. Asking them for their thoughts is much better than conversations happening behind your back.

Even without business downsizing, keeping employees engaged can be a challenge. Check out our magazine, The Insperity guide to employee engagement, for more tips.