It’s normal for staff to feel fearful and unclear of the direction of the organization after a downsizing. Continuously discuss how difficult short-term workloads will help the long-term outlook for the company. If the company offers the affected staff assistance with finding new jobs, or retrenchment packages that exceed the minimum requirements, it will positively impact the morale of the remaining staff. Ease fears and establish new goals and new responsibilities. The Time to Reduce Turnover is Now. Employers are responsible for the well being of their employees, and it is therefore important to investigate any alternative options that may impact on the downsizing process. Meet with employees privately. And if possible, explain to your employees why you chose downsizing instead of other types of operational cuts. Employees are always more willing to take early retirement if offered an attractive package. This site uses cookies to store information on your computer. Economic research suggests that for some industries it can cost up to one-fifth of an employee's … Often, you can quell these emotions by giving back or making small sacrifices for your employees. After condensing your workforce, you’re going to want to focus on positive action that will keep employees engaged. While this might seem impossible with a smaller workforce, it’s not. Companies typically downsize in order to: Improve efficiency (by replacing employees with machinery). Many people, especially workers unions, say downsizing is simply a euphemism or doublespeak for a layoff. Unfortunately, a business may have to downsize in order to survive and remain viable. Set goals between meetings so that employees have something to focus on. The company has options to get to the desired workforce size. At the end of the day, if your salary package is less than your competitors, you're already a leg down. It’s not going to be easy, but with these six tips you can minimize the disruption and negative effects that downsizing can have on your business. 7 Killer Strategies on How to Reduce Employee Turnover 03/06 The remaining employees may also struggle with downsizing. Take advantage of our knowledge and create a powerful custom video or employee-focused website. By doing so and acting in response to their requests, you will be showing the true signs of … Or, if it’s around the holidays, you could make an even bigger sacrifice and give your holiday bonus to your employees. Sharing the operational vision of the company with employees will allow them to understand where the company is heading. Improve performance management by overhauling reviews, and watch employee trust and satisfaction grow. Downsizing Effectively 1. Find the median salary for various titles throughout the company and determine what a competitive wage would be. But when done poorly, it can result in prolonged and sustained damage to your sales organization. That is, there are likely to be some people in your organization who would like to change careers, start their own business, or go back to school. As the economy slows, managers may be forced to reduce their sales forces dramatically. How to Downsize Your Workforce – Without Destroying Staff Morale Communication. Or, if your company lost some of its biggest accounts, tell them. Cross-train your employees A “single point of failure” is part of a system that will bring the entire system to a halt if it stops working. Despite how hard you try, you may not be able to avoid a little animosity among your remaining staff at first. Allow team members to know what the benchmarks are and whether they’re meeting expectations. Besides cost to the business’s own bottom line, downsizing has a negative impact on the employees that are retrenched, as well as the employees that remain. In the world of business, the high rate of employee turnover can be a significant problem. A redundancy package might be the key to … For best results, it should combine a balance between rules and regulation, on one hand, and education and stimulus for being on time, on the other. During this uneasy time, conduct team and individual meetings more often. Projections, Inc. has been in the business of helping employers communicate in times of crisis and transition since 1979. They work the most overtime because without them, your business grinds to a halt. This can help them stay on track despite all the changes that are happening around them. One key factor in employee engagement and happiness, according to experts, is to provide them with a sense of purpose and meaning in their work. 4. Organizations will consider downsizing as an option when two big companies merge, the economy slows down or due to negative market or low sales growth. Even without business downsizing, keeping employees engaged can be a challenge. Recognition is one of the best strategies to reduce employee turnover, increase productivity, and promote happiness at work. In addition to … When people are laid off and downsizing plans are in motion, you and your managers must be as transparent as possible. It all starts with a solid tardiness policy. Good job!”. Another idea is to surprise employees with a team breakfast or lunch. Give them flexibility. But here we’ll assume the company wants to reduce the workforce all at once through involuntary terminations–what many would call a layoff. Retaining employees helps manufacturing companies mitigate costs that come with turnover and as an added benefit, employees with longer tenure tend to do better work. How to Reduce Employee Turnover. For example, if a company announces layoffs the day they begin terminations, they are going to get more backlash. In over 25 years of helping companies connect with their employees, Jennifer has gained a unique perspective on what it takes to build a culture of engagement. Learn how Insperity can help your business, Discover how we can improve your business, When you are ready to subscribe click here, The Insperity Guide to Employee Engagement, Issue 1. For example, if you’ve decided to downsize because the company didn’t meet its revenue goals three quarters in a row, tell them. Make sure they know your expectations, the process for measuring progress and the consequences for failing to meet expectations or make improvements. Some creative downsizing plans that HR professionals can help with include: Providing early retirement options, if possible. Start by holding a group meeting with the team to let your employees know why you’re downsizing. Tell them where you see them fitting into the new team. One of the best ways to win it is by holding on to the employees they already have. This will ensure team members are aligned and focused on the most important activities. The downsizing process can negatively impact the trust in and loyalty towards a … Purposeful Redistribution Of New Work And Responsibilities. It may seem counter-productive to encourage your employees to step away from their jobs, but giving them time off actually helps avoid burnout and improves overall happiness among workers. Tagged with: employee communication. Just let us know! Jobs may be eliminated voluntarily, by offering employees a buyout, or involuntarily, through a layoff . It’s normal for … Reduce employee turnover When a valued employee leaves, your bottom line suffers. Copyright © 2021 Insperity. When downsizing a business, you must be proactive – look at the long-term problems and goals. Provide an inclusive vision. It may sound funny, but some of your employees would probably be happy to lose their jobs. You'll have constant turnover, ticked off employees, and record-low morale. Working hours of all employees may be reduced by 20 per cent (say, from 40 hours a week to 32 hours a week). All of these things let your staff know that while times are hard, you still care about their well-being. The downsizing process can negatively impact the trust in and loyalty towards a company, so it is crucial that a company engage with employees during this time. Rightsize resources relative to market demand. employee ambitions tend to have creative and innovative individuals. If one employee is the most skilled or has the most experience, they’ll likely be the ones picking up all the slack. Reduce costs. Youve tried company-wide cost Flex time, short term contracts, reduction in salary, limited benefits and the outsourcing of non-core functions can reduce the number of employees that will lose their jobs. Establish an Open-Door Policy. The findings: As a group, the downsizers never outperform ... employee morale and commitment Meeting with an employee to let them go in... 2. Before the business downsizing, it’s possible you focused on making sure employees were productive during the required work hours. Let people go in person, rather than over email or via a telephone call. Alternate names: layoff, reduction in force, rightsizing. Fill out the form and one of our representatives will contact you within one business day. For example, you might say, “I know you have a lot on your plate right now, but I have received several compliments from our clients about the excellent customer service you’ve delivered to them. Chances are, this wasn’t an easy decision. This free assessment will guide you to the right strategy to create employee advocates. How to Reduce Turnover . Replacing a single employee can cost 6 to 9 months of their salary in hiring, training and lost productivity. Here are smart strategies for approaching a manager's toughest challenge: choosing who stays, and who goes. Mental Health & Human Resources: Prioritizing A More Resilient Workforce, Relaying Bad News: How To Communicate with Employees, Communicating Employee Benefits to Enhance Relationships with your Employees, Getting Over “I Got It” And Asking For Help, Closing the Communication Gap with Field Workers, Today’s “Must-Have” Employee Benefit: Financial Wellness, Employee Apps: Communicating Positive Employee Relations, Best Practices in Employee Relations: Iron Mountain. With fewer employees, it’s going to be difficult to function the same way you did before. Some are essential to make our site work; others help us improve the user experience. Engage with Employees. Take advantage of cost synergies after a merger. Make sure to be genuine toward the people who were let go and understand that the remaining staff will have a heavier workload. Downsizing impacts people in various stages of the employee lifecycle, which is why solid HR support is so important. By blending a deep understanding of labor and employee relations with powerful digital marketing knowledge, Jennifer has helped thousands of companies achieve behavioral change at a cultural level. This is termed as organizational downsizing which is a reduction in organizational size and operating costs to improve efficiency, productivity, and … It isn’t a sign of weakness to listen to what your employees want. Check out our magazine, The Insperity guide to employee engagement, for more tips. Downsizing is a negative, stressful and potentially disastrous process that may result in long-term damage to your business. You need to have a 30-60-90 day plan so you can smoothly transition employees into their new roles and so business initiatives don’t fall behind. Downsizing business: How to manage downsizing employees 1. The communication structures that are put in place during downsizing play a vital role in the success or failure of the process. It could gradually downsize by attrition when people leave. Mindfulness meditation has been shown to increase employee morale. When done right, downsizing can have a positive effect on sales productivity and growth. How a message is communicated and delivered can have either a positive or negative effect on the organization’s morale. It will be up to you to make the calls that can nip employee turnover in the bud. In order to reduce employee absenteeism, you need to develop a comprehensive approach to tackling it. By using the site, you consent to the placement of these cookies. Downsizing is a big challenge, for employers and employees alike. downsizing firms versus nondownsizing firms for as long as nine years after a downsizing event. All rights reserved. Creating or outsourcing a health seminar, webinar, or training for employees. However, by focusing on the employees that are still with you, through careful planning, clear and concise communication and a lot of empathy, downsizing can be managed effectively without leaving your team lacking motivation. But nonetheless, here you are, preparing to lay off a large percentage of your staff. From Implicit Bias to Managing Change, your leaders need training that moves the company forward. Once employees know why you’re choosing to downsize, you need to communicate how their jobs might change. How does the plan tie into the organizational goals. The best way to make sure you have the right employees working for you is to find the right employees during in the hiring process. Then, lay out what’s different about their duties and what’s critical for success going forward. One of the most often sought out immediate measure is to reduce manpower by firing employees or reduce the payroll payment. Then divide that number by two. Layoffs and downsizing are a reality and companies that are affected take a huge hit to morale. Downsizing normally leaves you with smaller human capital to perform the same amount of work. Asking them for their thoughts is much better than conversations happening behind your back. Are your leaders aligned with the company vision? 4. Staff morale is a vital component of a successful business, and the morale of employees requires special attention when a company downsizes. Take our 5-minute quiz to identify both internal and external factors that impact unionization – and get tips on how to become union-proof. It is only natural that the employees that remain with the company will be concerned about job security. Be real with them. Next, take the number of employees who left the company during that period and divide it by the average number of employees. The consequences for failing to meet expectations or make improvements for more tips both and! 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