Is Downsizing Really the Answer?

As the economy struggles more and more employers are  looking to downsize their workforce in order to cut back on costs. They figure that getting rid of employees is the best way to save money and are thinking about the present – where business is dwindling.

But what happens when business picks back up again? Will you have the workforce you need and – most important – will you be able to find the same high-quality help you let go just months earlier?

As a leader and manager you’ll be partially responsible for determining if layoffs are necessary and, if so, who has to go. I don’t know about you, but that’s not a situation I’d enjoy being in.

Instead you need to take some time to think about whether or not layoffs are really the answer to your problem. Start by projecting your future level of business. Are things progressively getting worse? Do you see a chance or opportunity for improvement on the horizon?

There are quite a number of options, aside from downsizing, that can help organisations to cut costs. They include:

  • Reducing the hours of every individual within the organsiation or team.
  • Reduce income. This sounds harsh but right now more people are happy to have a job and are less worried about seeing a decrease in pay. That’s not to say they’ll welcome it but the response may not be as bad as you think.
  • Can you put employees on a temporary leave of absence that would allow them to keep their insurance benefits while they are “temporarily” laid off?
  • Is it possible to offer voluntary layoffs to employees who may have already considered leaving or who are unhappy but were afraid to quit for financial or personal reasons?

You’ll be suprised at the number of options you really have when it comes to cutting costs without getting rid of your key employees. You might even want to ask your employees to brainstorm with you one day. Perhaps if they feel as though they were able to participate in the process they won’t react as negatively to the actions your organisation takes. It’s your job, especially as one in a leadership role, to make sure you’re making the right decision.

Thanks again,


Sean McPheat

Managing Director

MTD Training   | Image courtesy of Big Stock Photo

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Originally published: 30 April, 2009

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