Lay-offs are a common contributor to poor morale, especially when they are not communicated appropriately. Transparency between management and employees is key to making the change as smooth as possible.
In their mind, an employee’s job is fundamentally linked to their financial security. Threaten that security and they enter panic mode, becoming defensive and untrusting, especially of leadership.
Employees’ in this state of mind are not productive. Their minds are elsewhere, perhaps contemplating such questions as:
“Will this change my role?” “Am I next to go?” “Is the company in trouble?”
The fact that these questions are considered points to the existence of an unhealthy corporate culture where employees are in the dark when it comes to organizational change. This is a threat to your business, since employees who do not trust leadership become disconnected and unproductive, affecting your bottom line.
The truth is that if they knew your rationale and business reasoning for the decision to cut staff, they can start to empathize and understand that your job requires tough decisions to be made. Furthermore, they will respect you for acting in the best interests of the company.
In a recent article published in Fast Company, Erickson’s Director of Corporate Relations, explains that, “internal communication that outlines the what, why, and how of personnel changes are key to managing employees’ fears after someone gets laid off.”
Technology for instance is a huge driving force of change in business. The growth of online tools for connecting with customers has cut the need for human interaction across almost every industry sector. Making the decision to reduce costs by cutting call center staff in favor of an online solution could well be a good long-term business decision. However, if staff are not informed about the direction you wish to lead the company, how are they supposed to empathize with your decision?
Media giant, Shaw Communications is facing this issue right now. Shaw is cutting 400 jobs in an attempt to "consolidate operations" with the aim of becoming more efficient. An article in The Huffington Post explains the decision, with Brad Shaw remarking that, "the roles and structure we established years ago to support us as a cable company can no longer support our growth". The fact that Shaw is hiring 100 new employees (in different departments) at the same time offers a public relations challenge, as does their significant profit from last quarter. Shaw is displaying at least some transparency to the public, we wonder how much more transparent they are being with their employees...