Downsizing Eloquently

According to the U.S. Small Business Administration, there are nearly 28.8 million small businesses in the United States employing 56.8 million people. In 2013, small businesses alone created 1.1 million net jobs [1]. The impact of small businesses on the American economy is without a doubt monumental.

Despite their positive gains, many small businesses have experienced a recent downfall and are resorting to last-ditch efforts to reduce costs, including downsizing. When considering this approach, there are many ways to prepare and mitigate the backlash of a company downsizing. Businesses can also benefit by creating a plan, which may include the following details [2]:

Strategy

  1. Identify the future vision of the company to accomplish the overall mission and goals of the organization.
  2. Devise a strategy which determines the budget and timeline for activities related to the downsizing.
  3. Partner with legal counsel to review the downsizing plan and identify any potential legalities.

Selection

  1. Establish criteria to identify individual employees to downsize.
  2. Designate a selection committee with the responsibility of documenting and finalizing the selection decisions.
  3. Appropriately train these committee members on the selection and documentation process, as well as the legal implications of each selection.

Audit

  1. Conduct a human resource review of the decisions and the supporting documentation.
  2. Conduct an adverse impact audit, which is a comprehensive analysis of practices which appear neutral but may have a discriminatory effect on a protected class.
  3. Consider offering separation agreements to the displaced employees.

As the downsizing progresses, there may be many obstacles and challenges along the way. Below are eight (8) categories of consideration for management teams as they adjust to a downsizing [3]:

  • Communications necessitated by downsizing.
  • Reallocation of job responsibilities.
  • Adjusting compensation and benefits.
  • Retraining.
  • Maintaining employee engagement and satisfaction.
  • Retaining and rehiring.
  • Maintaining customer relationships.
  • Evaluating systemic and individual performance.

Readers may have noticed at the top of the list is communication. The communication presented by management should convey to employees the design of the downsizing. It is important for management to communicate what employees need to hear with a continuous and comprehensive approach. Ensuring the dialogue evolves as the downsizing progresses will allow for a smooth transition from crisis to business-as-usual.

Additionally, management may need to partner with human resources professionals to perform many of the remaining categories, such as reallocation of job responsibilities. Detailing these new responsibilities in an updated job description is highly recommended to ensure all operational or administrative tasks are completed.

As managers try to adjust to the new environment, showing consideration to the displaced employee illustrates to retained employees the culture and values of the company. Companies may downsize eloquently by offering transition and job outplacement services, which may include assistance with an employee assessment, cover letter/resume writing, job search/networking techniques, interview skills or one-on-one coaching.

Creative Business Solutions has been intimately involved with numerous downsizings across multiple sectors and understands the stress and emotional difficulties associated with a downsizing, as well as the legal and economic realities. Our professional staff will provide quality services to help reduce the stress and assist with each employee’s job transition in a personal and confidential manner. Please call us today and we will be pleased to assist you with any HR compliance issue you may be experiencing.

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[1] DePriest, Darryl L. "Small Business Profile." 35 (Mar.-Apr. 2016): 3-6. Print.

[2] "Downsizing: Checklist: Reduction in Force (RIF) Strategy and Selection Checklist." SHRM, 13 Aug. 2014. Web. 19 June 2017.

[3] "Managing Employees in a Downsized Environment." SHRM, 23 Nov. 2015. Web. 19 June 2017.

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MRH Insurance Group, Inc.

Ross T. Hendrickson

President
MRH Insurance Group, Inc.

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