It’s more than just Einie, Meenie, Minie, Moe....

It is one of the most difficult things to do, but a legitimate tool to preserve the longevity of your business are staff rationalisation programs. We have all heard more and more about such programs in recent times. And I am sure you have friends who have been affected by them. Heck, you might even be one of the victims of a rationalisation program.

If you are one of the decision makers for these programs, it is important that you understand and manage both the legal/business risk as well as the people risk inherent in such programs. It is therefore important to have the right strategy & process in place to determine and map this program.

I have been on both sides of such a program and I can tell you it is not a simple dispassionate thing to perfect.  However, here are a few tips:

1. The first step is to determine the scope of the program. To do this, you must have a clear objective in mind which must be driven by legitimate business interests. For example, where based on recent forecasts, the direction of the business indicate that a particular service line should now be downsized. Or where each department has been given a mandate to reduce headcount to preserve the revenue stream for the company as a whole.
2. The second step is to identify the roles which may be rationalised based on the objective you have identified. Each role identified must be compared to the goal of the program and objectively assessed. You’ll note that I referred to the “role” and not the person in the role. This is not the time to get rid of poor performing staff summarily or difficult personalities. 
3. The third step is to test the roles identified as necessary for rationalisation. This may involve engaging with your peers or superiors but should also involve your Human Resources Department and your Legal Department. They are best placed to advice you if your objectives are sound, and to identify and help put measures in place to manage any risks. At this stage, it will also pay to inform your insurance companies about the program to put them on notice should something go awry.
4. The fourth step is to develop the roll-out plan. The first thing here is to work out who is doing what – for example who will be responsible for conveying the news to the individuals involved? If the program affects more than one department then each should be given a script about what to say (and what not to say). What about the internal staff notification – people will talk and you will need to have a plan to manage that. What about notification to clients/the market etc? There may be obligations to inform your local stock exchange but affected clients will most definitely need to be told. And of course, the timing of each step in the roll-out will have to be determined as well.
5. The fifth step is the actual plan implementation. It is a difficult time for both the affected staff as well as those left behind. Resources should be made available to both groups of staff to assist them with the transition. For the rationalised staff members, outplacement services should be a bare minimum. For the remaining staff, perhaps some counselling but most importantly their managers should be prepared with answers about the new working landscape – who is now responsible for the work, what resources they now have, what the expectations for output moving forward will be, what changes will be made to their measurable KPI’s in their performance reviews etc.
6. The final stage is to make sure that a health check is done in reasonable time intervals to determine if the original objective for the rationalisation program is being met. If not, then the tough decision about whether a second tranche is required will need to be considered. Another important aspect at this stage is constant communication. Rationalisation programs often leave behind the feeling of uncertainty with remaining staff. This in turn results in decreased productivity. If you keep people informed about what is going on, people are less likely to have that uncertain feeling.

Whilst a staff rationalisation program may be justified and may be the right thing to do to preserve your business, getting it right (both legally and with compassion) will be key to your long-term success.