Taking the Sting Out of Downsizing

By Barry Thomsen

When business slows down, you may find that you have more people on your staff than you really need. Most business owners hate to let anyone go, especially an employee who has been with the company for a while and who does a good job.

Before you start showing people the door, take some time to assess the situation. You do have some options. If you employ many hourly employees, figure out how many total hours you need to cut and see if you can accomplish it by taking a few hours from a lot of employees. If most employees are salaried, hold a meeting and explain the situation to the entire staff. Ask for any volunteers to take extended time off and be called back when things pick up. You may be surprised when one or two people come forward saying they want to spend some time at home with their family, take a long trip or take some college courses.

Also be on the lookout for anyone you think may soon be leaving the company on his or her own. There’s nothing worse than putting good people on furlough and then having one of the remaining ones decide to leave. Listen to the grapevine and see if you hear grumblings. Sit down with the person and ask if he or she is planning to leave the company. Explain that you’re trying to avoid layoffs, and that being honest with you could save someone else’s job. Most people will admit their intentions rather than live with the guilt of causing a colleague to lose his or her job. Offer the person a letter of recommendation, if they are worthy of it. They can carry this with them to future endeavors and they’ll remember that you were always honest with them. You never know—they could end up in a position where they could be a potential customer for your business.

If you do have to lay off some staffers, there is always a chance that some of them will join the competition. It’s not a pretty picture, but it’s part of being in business. You may want to remind your people that certain information is considered as confidential and shouldn’t leave the company. Explain that if this proprietary information is shared with the competition it could give unfair advantage to a competitor and hamper your business’s recovery. Let your exiting employees know that you appreciate their past work and, under other circumstances, you wouldn’t want them to leave.

Additional questions to ask departing employees:

• Should you call them back if business improves? Their answer will give you an indication of their honesty and loyalty.
• Might they be available if you get surges in sales and need help on a temporary basis? (Explain that they shouldn’t just sit around and wait for your call, however).

Most employees will understand if you have to resort to cutting hours or laying off some people to ensure the company’s survival. Hopefully, using some of the tips outlined here will take some of the sting out of the situation.

Author Bio: Barry Thomsen is publisher/editor of the Small Business Idea-Letter and Small Business Advisor. To receive a free copy of the Idea-Letter, contact him at idealetter@aol.com or via www.idealetter.com.

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