Since the new year started, many organisations have been reviewing their finances from the previous year.
When doing so, some may notice that they are not doing as well financially as they would like to. This realisation comes with a hard choice, as one of the easiest options to save money quickly is to downsize. This strategy typically involves dismissing employees to cut spending on salaries.
However, losing staff can quickly backfire as there needs to be a plan in place on how the work done by those workers will be carried out. Below is a guide on how to downsize without losing efficiency.
Centralisation of Power – When companies start reducing personnel, usually the first employees to get terminated are supervisors because they have higher salaries than other workers. In order to terminate the employment of supervisors that report to you, you, as a manager, need to centralise power. You will still retain the workers that your previous supervisors managed, but now you will take all of the responsibility for managing them on yourself. The worst mistake during downsizing that executives can make is to let go of department heads without absorbing the responsibility to lead those teams.
Outsourcing – Outsource Magazine states that outsourcing, or transferring jobs that were done locally to workers overseas, leads to higher efficiency. The magazine explains that “outsourcing is a means of getting more final output with lower cost inputs, which means lower costs for local business and consumers.” There are many knowledgeable and qualified employees that live in other countries; popular countries to outsource to are Phillipines, India or parts of Eastern Europe. The cost of life is cheaper there than in England, so organisations can find staff that will accept much lower salaries than citizens of the UK. This is a great strategy to make up for the work that needs to be done after downsizing at a much lower rate.
Communication – One of the most important pieces of advice when it comes to downsizing is remembering to communicate with staff. If a manager simply terminates a number of employees in one day, and then stays mum about future plans, it can lead to a panic among the remaining staff. Employees will feel uncertain about their future at the company, leading them to start a search for new employment. If you start losing your remaining workers, on top of the layoffs you already did, you will face a crisis. Therefore, sit down with your subordinates and be truthful about your plans with them. Let them know that you are not planning any more downsizing, and that you will be upfront with them if that changes.
Many managers can be hasty about downsizing to cut costs, but face bigger issues when the workload can’t be met. Therefore, a carefully thought out strategy on how to downsize without losing efficiency needs to be prepared before any employee reductions are carried out.
Head of Training
Updated on: 9 March, 2015
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