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Get Started Tips to Navigate Post-Recession, Pre-Recovery Flexible Downsizing

Last week we heard from Scott Jones, a senior executive who is grappling with how to respond to an uneven recovery in his business.  A year ago in the heat of the economic downturn, Jones’ company used organization wide salary cuts and furloughs to reduce operating and labor costs in order to minimize layoffs.

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Last week we heard from Scott Jones, a senior executive who is grappling with how to respond to an uneven recovery in his business.  A year ago in the heat of the economic downturn, Jones’ company used organization wide salary cuts and furloughs to reduce operating and labor costs in order to minimize layoffs.  Now as the recession sputters, and the recovery struggles to begin, the company faces hard choices.

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How does he reset the organization’s flexible downsizing strategy to reflect post-recession, pre-recovery realities? What’s the best approach when the recovery isn’t strong enough to return to “business as usual,” but the support for a shared sacrifice seems to be waning?

To answer these questions, I went to two of the best change and innovation experts I know, Joanne Spigner and Donna Miller, who also happen to be my WLF consulting partners.  Here are our tips for managers to begin charting next steps:

#1: Go back and assess where you are.  Know where you stand in the business.

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What do you really know about the business?  How do people really feel about the specific adjustments in salary and/or schedule that were implemented?  Is the shared sacrifice being questioned by a majority in all businesses, or is it coming from pockets of loud voices?  Get the facts on paper.  You do this by:

  • Not owning and solving the issue yourself.  Expand the circle of discovery.  Bring other leaders and high potentials across the organization along for the ride.  Compare notes and problem solve together.
  • Going wide and deep—Interview all business leaders, talk to a random sample of front line managers and employees, and conduct a survey.

#2: Once you have the facts on paper, reset the organization’s flexible response to match today’s realities. 

  • Acknowledge the benefits derived from minimizing job cuts at the start of the downturn.  For example, Jones’ company had enough staff to handle the increased volume of business created by the stimulus package.  That would not have been the case if they had made across the board layoffs.
  • Use resources such as the AWLP/WorldatWork Flexible Rightsizing Tool to help analyze the cost/benefit of continuing to manage costs and productivity flexibly versus layoffs.  In the case of Jones’ company, the inconsistency of the recovery across businesses may require a tailored response.  In the parts that are thriving, continue to be creative with alternative forms of reward.  For groups where opportunity is visible but there’s uncertainty about when the business will actually materialize, consider continuing the flexible approach that keeps job cuts to a minimum.  And in the businesses in which a recovery seems unlikely any time soon, layoffs may be necessary.
  • While there is no crystal ball, determine how long you are willing to make the investment in this round of flexible downsizing.  Set a date for the next review and reset cycle.
  • Look beyond the economic crisis to other business applications of flexibility.  Start thinking about ways the same flexibility in how, when and where work is done that you just used to manage costs and productivity can achieve other business goals, such as: Impacts graphic

Now that you’re more familiar with flexibility, use it as a strategic lever that’s an integral part of your operating model. (This involves a broad, business-led change management initiative that I am happy to talk about with anyone who is interested.)

#3: Reframe and communicate the business case behind either the continuation or discontinuation of any type of flexible downsizing in the post-recession, pre-recovery era.

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  • Explain why you’ve either decided to stay the course, or shift gears in the context of what you learned from your review of the business.  Communicate a sense of urgency, especially if the decision is to continue sharing the sacrifice.
  • Drive people to business results you want. Don’t just emphasize what people are losing, tell them where you want them to go in order to return to prosperity. Balance the sacrifice with hope.  Keep their eyes on the prize

What do you think?  Where should a manager begin as he or she considers a flexible approach to managing costs and productivity as we move out of the recession, but haven’t felt the impact of a recovery?