Best Way To Prevent Layoffs

Over the course of my life many companies find themselves having to cut staff whenever budget shortfalls are demanding financial change. Most organizations usually have these troubles after merger activities or take overs of other companies.

The typical mindset behind this common behavior is that to save money the company must shed employees after they trim everywhere else first. The problem with this behavior is that it's never discussed in the most creative of ways which could lead to no one losing their job. 

To understand the way any company could avoid having to put experienced and loyal people out in the cold we have to look at the numbers game all wrongfully think is the only way to get out of the red.

Let's use an example of a company with 193,000 employees who seeks to prune the highest earners of their organizations to save money and say 600 people are laid off. 

If the average salary of these 600 workers represented a figure of $156,000 a year then laying all of them off would save $93,600,000 in payroll. The 600 people that would have to leave are usually the ones who have been with the organization 5-40 years and are often and wrongfully considered obstructionist to change verses newcomers who are typically agents of change that are willing to come in for much less money. 

Think about the facts I've just shared. Does the company really save $93,600,000 in payroll if they must replace those they let go for less salary? 

No they only end up saving on average of around $45,000 per head average which yields a net savings $27,000,000 which means the cuts 193,000 employees would need to make to avoid any layoff would amount to a loss of salary of .06 cents of hourly wage instead of the .23 cents needed to help this organization save $93,000,000.

Anytime an organization is engaged in reform or transformation it's the leaders who need to bring their talents to the table and enable the organization to promote and champion those efforts and this requires directing by example what that change requires and will or should look like once its complete.

Is it not fair to say the leaders are part of the reason the organization is doing bad financially?

If any organization would stop assuming the veterans of their companies are not going to embrace change and instead use open ended surveys to capture a statement of truth on what those candidates feel could make the organization more efficient it would be self-evident which ones within the organization are actually agents of change and which ones are not. 

For those who appear to be obstructionists it's not always so and more effort should be put into vetting the truth from the perception so that the company does not inadvertently eliminate some of their greatest assets.

Communicating the consequence of failure is a good way to convey the importance change is demanding but when it comes to just numbers and one of the best way to avoid the layoff of others in the example we've provided to reach the numbers without harming morale is to do the following.

Take the desired number in our example of $93,600,000 and divide that up by the total number of employees and so we get the following results. A pay reduction of $484.97 per employee which amounts to .23 cents an hour of each of those employees within the organization. 

Now in order to make this more appealing to the consensus it would make more sense that the ones who make the most money bare the greater burden of the cuts starting with leadership.

If the leaders take a cut of $1000.00 and reduce the burden on the consensus it will mean less of a loss to the majority and could be something so trivial that many would gladly chip in but only so long as they see leadership making the first sacrifices which is only right. 

If you look at the cost of living and the impact that the real number has on the lower earning employees who live paycheck to paycheck it seems only right that the leaders be responsible for making sure no organization ever finds itself in the position of having to shed employees should meaning they should rightfully bare the greatest responsibility given people within the business matrix don't have control over policy or governance as leadership does.

That is what servant leadership is all about and we only get out of life what we put into it and if the leadership is not putting much in than there is little we can expect to come out of it. 

The reality we see far too often is that the executive leaders are often rewarded with bonuses for making the decision to axe a certain number of employees to achieve the numbers corporate accountants say must happen in order for business as usual to remain the status quo.

Should these leaders receive a reward at the expense of another’s demise? Were these leaders not appointed by a board of directors and shareholders to assure this never happens?

Every organization can and should make salary concessions at the top first and move to retain people on the lower levels instead of eliminating them so that they can keep and leverage the environmental and proprietary knowledge those earmarked for elimination possess. 

Because common sense of the matter is self-evident that many would choose to keep their job verses losing it by taking a nominal cut in pay knowing when business improves the money will return and be more motivated to help the organization implement the changes needed. 

No one should have to face their family due to poor management practices saying they lost their job due to budget shortages, and just because this happens so often is not a good reason to dismiss its destruction on American families and your brother or sister you've worked with for many years. We must think of everyone outside ourselves as we would think of ourselves. 

It's not a me, myself and I proposition. They are us and we are them. 

Leadership all over the world needs to lead in service to those who make the things each organization does possible and show by good faith they are willing to bear the brunt of the cuts so others see and feel it's a necessary evil in order to remain employed verses being unemployed. 

Those who have worked for the same company more than 10 years have an extremely difficult time getting rehired by other companies due to so many things in the business world hiring process changing and with cultures changing over ones who have been laid off after only providing service a few years they will be more agile. 

These employees helped make the success of the company a reality and should not be treated this way as the product or service that company will continue to profit from is always going to be the result of those past workers efforts.

The efforts these laid off workers paved in the past delivered sustainable passive income to the organization and they deserve more than a kick in the pants and a good luck nice knowing you as they walk out the door.

The level of agility is more evident in the younger crowd than the old timers who won't recognize the world when they get there. There are other things which could be done to help those who must dampen the punch of losing their jobs and that is where all organizations need to create an outbound program to help those that may one day be needed to return at some point down the road due to oversight of overly anxious or zealous leaders just seeking to shed.

It's never easy to ask people to take pay cuts but it's so much easier if leadership is showing the rest of the organization they are willing to bare the greatest loss and for them it won't hurt the operational expenses of running their households like the lower paid employee's would.

If you’re a leader contemplating making this difficult decision don't just keep doing what we've always done, or you'll continue to get what you've always got.

The people who remain employed after such cuts will most likely lose confidence they can have a long future with your organization and will become active seekers in the job market. This may be the expected side effect modern management expects after cutting heads to prevent anymore reformations but none the less it's transparency that is needed most to assure none are kicked to the curb and cast into the cold.

All problems with enough creativity can be solved without having to resort to the means of an end that layoffs in the real world actually deliver. Layoffs are not a real solution because financial trends and legislative side effects are seen on the balance sheets far before the layoff thinking ever occurs. It's at that point the most needs to be done to assure no losses are a result.

The aftermath of layoffs always results in more loss of those the company sought to retain or considered a greater value yet it's the cause and effect consequence none ever consider when these things happen. 

As you sow so shall you reap and to this there is no escape. The moment anyone in leadership makes the decision to let others go the cosmic forces are fast at work looking to return that fate back to your reality.

Never invest in job elimination or else yours will be next, servant leadership is all about promoting the interests of others before yourself because in doing so you know that greater output and reverence to knocking out the action items you delegate result from those you love.

Love all of them and don't fall into the trap of treating people like numbers, it's never a wrong time to do the right thing and speak up when you see decisions moving in the wrong direction. 

We have to look out for one another to get the maximum return every organization is seeking and all are more than willing to help them achieve.