Leading through layoffs
How did we get here?
In a word, 2020. As many will agree, this year has given us all our fair share of challenges. Many in leadership positions can recall crafting organizational strategies and goals this time in Q3 of 2019 but nothing prepared us for where we are now. 2020 was supposed to be the year of growth, transformation, and dramatic steps forward for many of us but our collective reality has been much different.
As the headlines highlight hiring freezes, reductions in force, and department eliminations many have questions about the path ahead. Some industries have navigated this terrain in previous years, while for others this is brand new territory. Industries that were once considered growing and rock solid now find themselves in hyper competitive business climates and need to re-evaluate not only how they compete but in what arenas.
And here’s the thing, downsizing sucks. It sucks for those impacted, it sucks for the leaders that’ve had to have tough conversations, and it sucks for customers who in most cases are losing trusted advisors while simultaneously trying to figure out their own strategies. Having been on both sides of the table, I can say that there are no winners but there are definitely opportunities. Opportunity lies in the ability to refocus, realign, and reinvent. I want to use this piece to shed light on some proven ways any organization can take to move forward in an economic downturn and position itself for future success.
What are the short and long term strategies?
In the short term, it is prudent for organizations to rely on conventional wisdom. Good leadership teams must have a laser focus on which areas of their businesses are contracting and which areas are growing. In a turbulent business environment, the need for immediate action becomes paramount to the company’s success. It is necessary to take a holistic look at your organization and ask responsible questions:
Which areas of my business are high cost but have marginal returns?
What is the cost of sale for certain categories versus others?
Which categories have a strong growth trajectory versus those that are mature or downward trending?
What are the big bets the organization is placing and are those initiatives / objectives well-resourced?
Where is our opportunity to re-deploy top talent if they are on teams that will be phased out?
How will we measure the progress of our response to this economic downturn?
What investments do we need to make to be better positioned for the future?
How the organization answers these questions will guide the short term strategy and identify which actions should be taken immediately. But that’s just the beginning. Many organizations realize there’s a hole in the boat and just fix the hole. Great organizations draft plans for a better boat, hire skilled sailors, invest in rafts, jet skis, and train more people to be lifeguards. That is the real work of leadership as well as those impacted by economic downturns, to respond to the short term while also planning for the long term. To begin this planning process, the most important question must be, “where’s the growth?”
Where’s the growth?
As an Business executive, or even as an employee on the front line of your organization, when you look around at the industry and your peers, you must ask “where’s the growth?” Which categories seem to be growing the fastest, have high customer value, and high company profitability? During a conversation with one of my mentors, a former publisher of a major news organization, my mentor offered how she responded to a similar economic climate.
“After sharing the news with the staff that some of the team members would be impacted, I knew it was critical for me to paint a picture of where we’re going,” she said “I needed everyone to know their value, and how we were positioning the organization for long term success.” For her, leading a legacy news organization, she knew as many do now, the growth was in digital transformation. She stated “I needed the newsroom to buy in to reporting with a digital first mindset and I needed the sales department to embrace our digital assets as a way of providing greater value to our customers.”
The answer to your company’s long term growth strategy will vary. But as an executive, a mid level manager or even a front line employee, everyone has to be in lock step around the strategy in order to respond appropriately. Think about this... Is Amazon still just a bookstore? Is Google still just a search engine? Does Apple only make computers? The answer is overwhelmingly, No. All of these companies realized synergies and opportunities in thriving economies as well as economic downturns and followed the growth. I’m willing to bet, all of the companies named will launch new products and revenue streams in the middle of this pandemic that will help bolster the company in the future.
Critical Questions:
Front Line Employee: What skills do you need to develop to pivot out of low growth categories to increase your value? If you’ve been displaced, what skill sets will you invest in during your time between opportunities?
Mid-level Manager: If you’re managing a mature category of business, what competencies can you develop in your team to increase efficiency and productivity? Are there additional responsibilities you can take on to diversify the economic outlook of the team?
Senior Leader: What does your talent landscape look like against your high growth categories?
Executive: What guidance from finance and research can help with redeployment and reinvestment?
What’s the big bet your organization is placing? Does everyone know?
As mentioned earlier, many companies will have to pivot in response to economic conditions. Things that were once priorities may get shelved to support an accelerated response to market conditions. The point is, from a senior leadership perspective, you have to get the organization to understand and embrace where you’re going together. You have to paint the picture of growth and what it will mean to each of the stakeholders within the organization.
So what does that look like? Let’s say you’ve just delivered the news to the team that some of the people they’ve worked alongside for years will no longer be with the company. If they don’t ask aloud, the questions will remain, “Am I safe?” “Will I be next?” “Should I be looking?” “What does this mean for my future here?” If you’ve had the unfortunate responsibility of delivering this kind of news, you will agree that it must be accompanied by a thoughtful, tactful and executable plan for growth.
Start with the state of opportunity. Where is the company investing and why? What has the organization learned during this time and what will be the coordinated response? For example, you may find your organization in a position where the regional or mid-market team is not impacted as severely as the SMB team or vice versa. Make sure everyone knows why. Gray areas create distractions and disruptions. Explain to them the opportunity cost and expected return of each move. You may also announce layoffs at the same time that other teams are hiring, again communication is key. Every engagement with the teams as a senior leader is an opportunity to reinforce the vision of the organization and instill confidence in the future. But vision is one thing, you also have to implement and execute.
As far as implementation, clear timelines with attached action steps give teams confidence as well as accountability. “Here’s where we are today and when this plan is realized, by the X Quarter, this is what our organization will look like.” Month by month, here’s our actions as well as how we’re measuring success. This also facilitates actionable planning and communication. All levels of the organization can quickly understand progress or the need to adjust.
Necessary Considerations
What is the quality of your CRM system?
How adept are your sellers and managers at quarterly planning and forecasting?
What best practices can you utilize and implement to ensure repeatable success?
How often are the various levels the organization gathered together to communicate questions, concerns and progress? Is that a safe space?
Short Term Strategies Require Conventional Wisdom, Long term Strategies Require Innovation and New Thinking
Different challenges call for different solutions. It doesn’t mean that your current team can’t steer you out of your current challenges. You hire people with experience for a reason, even consultants have to cut their teeth solving organizational problems with hands on experience. But as mentioned in the intro to this piece, economic downturns present a valuable opportunity to reinvent. New voices can help bring some of the challenges that were in the organization’s blindspot front and center, so that everyone moves ahead more effectively. For example, if digital transformation is your focus, seek out people with that experience and skill set and trust their ability. If your company needs improved customer service, find talent from organizations that have excelled at customer service. Let’s say your company or industry has enjoyed a serious growth trajectory but now finds itself in a highly competitive space, that’s a different kind of fight. Have your folks been there before?
To be clear, none of us have seen a situation like Covid-19. The impact and scale across the country were unthinkable a year ago. But here we are and smart companies will adjust and adapt. This could be a great time to incorporate new voices, embrace innovative thinking and work together to ensure your company is successful for years to come.
Leading through layoffs and economic downturns is tough work. Many of those impacted will have to face situations they never expected or don’t want to accept. Those that remain in the organization will have fears of their own and will need reassurance.These times call for inspirational leadership, vision and executional excellence.
As always, these articles are meant to spur conversation and serve as a guidepost for possible strategies for your business. We’re here to help and would love to connect. Click the link below and let’s solve your current challenges together.