How Managers Can Meet the Layoff Challenge

The biggest challenge for managers in the year 2000 was recruiting and retaining qualified employees. Today, in the year 2001, the challenge is deciding who must go.

And the Layoffs Continue

Ever since the New Year, layoff announcements have been piling up from Old Economy companies as well as countless faltering dot.coms. Even behemoth Aetna, the big Hartford-based health insurer, started 2001 by eliminating thousands of workers, while Boston-based Gillette, the shaving-products and battery maker, let go of close to 3,000 employees in the first quarter.

For managers raised on the "we must slim down to stay competitive" mantra, emblematic of the tough and tumbling world of global business, job cuts may seem like “business as usual.” Layoffs, after all, are now an accepted part of the corporate landscape, in good times and bad. And, while corporate profits surged in 1999 and 1998, layoffs hit record levels for the decade as many companies shut down under-performing businesses. On the dot.com front, Silicon Valley and Silicon Alley are mere skeletons of what they once were, just one short year ago.

The scary part is that with the economy slowing, those losing their jobs in the coming months aren't likely to find new employment nearly as quickly as they did a year ago, economists say.

Additionally, managers who ignore the human toll of layoffs — for those who survive the cuts — may find themselves with anxious staffers at a time when they need more teamwork than ever before. The challenge will be to find ways other than salary boosts or stock options (no longer a viable option) to keep survivors motivated while preventing a wholesale exit of talent.

Not surprising, the best ways are often the most obvious ways, such as praising good work and giving workers “ownership” by involving them in decision-making.

Take for example, Brian Johnson, founder and president of eteamz.com in Los Angeles, a website devoted to amateur sports, who says the task of having to lay off a majority of his young staff in recent months was far more difficult, personally and professionally, than he anticipated. Like many dot.com leaders, this was his first experience dealing with a downsizing.

Initially, Johnson cut 14 employees, or almost one-third of his staff, and tried to hold onto key employees. Unfortunately, he soon saw he needed to implement additional cuts. While employees were anxious from the first wave of cuts, when he had to eliminate another 14 jobs, the multiple rounds of layoffs, he believes, exacerbated his staff's angst.

"You should only cut once. I took too moderate an approach at first. I should have cut to the bone rather than have everyone sitting at the edge of their seats," admits Johnson.

Earl Piper, a manager at a struggling Silicon Alley Internet company, says he recently spent the better part of a week trying to persuade a young fast-tracker that her position was secure, even though dozens of other employees had been terminated. “I offered her a plum assignment and a big year-end bonus.”

Piper says all managers can benefit from his 3-Point Plan for Keeping Talent.

• Offer your best workers stellar assignments that will help foster their career and skill set.
• Push your supervisors to grant a year-end bonus based on the growth of the business or your team's (staff's) success to meet quarterly and yearly benchmarks.
• Let your talent know every day that you value them by treating them with respect and acknowledging their successes in team and group meetings.