Dodging The Layoff Bullet: What Companies In Lean Times Can Learn From American Airlines

There are times where costs must be cut and layoffs may be unavoidable. If that’s the case, it is critical that you work to maintain the morale of your team. Otherwise, you’ll see a drop in productivity that will perpetuate your financial challenge. Here are a few ways keep spirits up in tough times.

In early February, American Airlines announced plans to cut 500 flight attendant jobs. Weeks later, they reversed course, announcing that the jobs had been saved, largely because employees had volunteered for programs such as job-sharing and voluntary leave. 

This is good news for American Airlines, its flight attendants, and the economy in general. 

But it also draws attention to an issue that many business owners must address, particularly in this struggling economy: namely, how to handle financial uncertainty and downsizing that may be necessary, without demoralizing employees and weakening the organizational culture.

The first thing that you must understand is that laying employees off is incredibly expensive for the business. Consider the investment that you have made in to each employee at your business. You recruited them. You interviewed them. You spent months training them. When you lay that employee off, those investments are abandoned. In addition, when you hire their replacement, you must go through the entire process again. The bottom line: most of the time, layoffs should be avoided at all costs. (Yet another reason to ensure that you hire employees that are a strong fit for the position you have available—it’s much cheaper to hire the right employee to begin with than to keep hiring and firing!)

Of course, there are times where costs must be cut and layoffs may be unavoidable. If that’s the case, it is critical that you work to maintain the morale of your team. Otherwise, you’ll see a drop in productivity that will perpetuate your financial challenge. Here are a few ways to do this:

1) Be honest and up front. Your employees aren’t naive—they can tell when times are tough. The failure to communicate with your team will lead to runaway speculation, so be open. Tell them that your numbers haven’t been strong, that cost-cutting is necessary, and that you’re going to do your best to avoid layoffs. Keep them in the loop as much as possible.

2) If you can’t avoid layoffs, handle them as courteously as you can. In particular, give the individuals to be laid off as much notice as possible so that they have the opportunity to pursue additional opportunities. Not only is this the right thing to do, but it reassures the rest of your team that you’ll be as fair as possible.

3) Seek input. It’s demoralizing for employees when they feel that their future is completely out of their control. Once you’ve communicated your financial circumstances, ask for ideas. This concept worked for American Airlines—enough of their flight attendants were willing to job-share and take voluntary time off that no one had to lose their job. Even if you can't come up with a solution, the fact that you involved your employees in the decision making process will provide a morale boost. 

No business owner looks forward to lean financial times, but they are a part of the business cycle. Do your best to maintain employee morale and to keep your company culture alive and well. How you manage your team in these pivotal times could well determine how quickly your business recovers. 

[Image: Dmitrijs Bindemanis via ShutterStock]

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