Tuesday, July 28, 2009

In a perfect world...

My July 2009 column in Metal Architecture titled Reload your team: Use the downturn to improve the quality of your staff discussed strategies for using the availability of outstanding staff created by the recession to weed out underperformers among your current employees. The article failed to point out some obvious concerns, most notably that in the messy reality that characterizes most of our businesses - it is very important to protect yourself and your current employees throughout the "upgrading" process. Here is an excerpt from feedback that I have received:

"...let the survivors [of the lifeboat drill] know what you have done and assure them that there are now more cuts in the foreseeable future.” That statement is double talk for “You are lucky today and there are more cuts coming.” I do not know if you have ever heard a boss say that, I have twice and have been on the receiving once. I can assure you that your statement will only start talk, slow work progress and have your quality people start looking around.

As for parting with Non-performers, and they work at the company’s discretion, you have many legal issues and hoops to jump through. Keep in mind that if you bring in another person after you terminated one to fill that position you have opened up your company to legal actions. This can disrupt your company’s performance due to water cooler talking as well as time off for depositions etc. Firms need to let people go in a gentle way to keep their name in good standing within the community. You do not want to be known as a “Hire Fire” company.

Good points all. Here is my response:

In many instances the boss' statement about there not being more cuts is indeed doubletalk. That said, it's also an opportunity for real leadership to come through - particularly from C-level people in the organization.

We recently worked with a firm that confronted its management team with a choice: lay off 10% of the workforce and everyone else go to a 4-day work week (with a corresponding 20% salary cutback) or lay off 25% of the workforce and keep everyone at their current salary. The advice we gave them was to cut 25% of the people and be done with it - but only under the condition that the CEO be in the office every day, motivating staff and helping them overcome the challenge and be inspired to come to work. The CEO of this firm wouldn't commit to providing the required leadership (which I guess tells you something about him) and he went with the 10% layoffs and 20% paycut plan. It has been a disaster - productivity is way down and people are either looking around or waiting for the other shoe to drop.

There certainly are legal issues associated with letting people go and replacing the exact job soon after. There are ways to do this without exposing the firm the unnecessary legal risk. As for being known as a "hire and fire firm", that is indeed a concern - moreso when times are good and people are in high demand. The best way to address that is through clear communication and ongoing reviews of expectations of everyone in the firm. If the outstanding people are confident that their performance is directly proportional to job security - not only will they stay above the fray in the "water cooler talk", they will also be less tolerant of non-performance. Of course, the outcomes in these cases are not absolute - they are influenced by prevailing firm culture and leadership style -but clear communication sows the seeds for the desired outcome. This is particularly true when dealing with personnel issues.

I would be very interested to hear other opinions on this issue.

Until next time,


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