In the 1990s, “downsizing” became a popular catch phrase.
When executives announced they were downsizing their organization, their company’s share price would jump as investors celebrated these “fat” organizations shedding “unnecessary headcount.”
Rightsizing, de-layering, business re-engineering, streamlining the organization…these are a few of the more current—and more politically correct, as some would argue—terms for the conventional business practice of eliminating jobs to improve profit. With decades of experience in dealing with changing economic conditions, downsizing becomes a conditioned response in order to ‘right size’ the company to preserve financial performance, investor confidence and share price.
The executives never take responsibility for the situation. External market factors, the previous management, or some force out of their control are standard excuses.
At least once, wouldn’t you like to hear a senior executive say, “We really didn’t get this right. We made a lot of mistakes in our assumptions about the business and markets, and unfortunately our people are going to have to pay for our mistakes.”
Regardless of the cause, executives dehumanize a downsizing by using terms like layoffs or reduction in head count. When talking to other CEOs, they say that “it was difficult” but “we are better off” as we were able to “get rid of some performance issues.”
You rarely hear anyone talk with compassion about the impact on the lives of the individuals and the family members of those laid off after sending them home with damage to their self-worth and a dramatic loss of income! Rarely do they consider the impact on those who remain in the organization to witness the devastation and treatment of the people with whom they worked.
During the economic downturn of 2009, Barry-Wehmiller was forced to consider downsizing.
At our January Board Meeting, several Directors asked “Don’t you need to lay off people?” At that point, our executive team felt that our backlog of orders and prospects were reasonable enough to get us through this challenge without impacting our people. However, within days customers began calling to cancel orders. When the phones stopped ringing, we faced a 40% drop in new equipment orders. Suddenly we found ourselves facing the challenges we thought we could avoid.
To preserve financial performance, our executives were poised to react as we always had: layoffs of team members in the offices and plants experiencing a significant drop in new orders. But something had changed in our organization along the way.
In 2002, a group of team members had gathered to create our vision of leadership, our Guiding Principles of Leadership. We articulated a simple measure of success: “We measure success by the way we touch the lives of people.”
This vision created a ‘true north’ for the organization that did not exist before. This ‘true north’ allowed us to face the economic crisis with a different sense of responsibility to those lives in our care.
When the impact of the loss of orders began to hit, I was alone on a business trip in Europe. I immediately spent some time reflecting on how best to respond to this crisis within our vision. New thinking emerged. I asked myself, “What would a caring family do when faced with a crisis?”
The answer came to me easily: The family members would all take a little pain so that no member of the family would have to experience dramatic loss.
I challenged our executive team to determine a way past the crisis through shared sacrifice. We would not simply lay off manufacturing team members, as was the traditional practice; every team member throughout the organization would share the burden.
Ultimately, we decided that every team member would take a furlough of four weeks of unpaid time off. We also suspended executive bonuses and 401K match.
To further assert our commitment to living our Guiding Principles, we continued investing in our leadership development and continuous improvement initiatives. We encouraged team members to use idle time to take classes in our corporate university. We used gaps in the production schedules to accomplish major improvement events. We continued our signature recognition events, and team members found creative ways to make them meaningful without spending a lot of money on the celebrations.
Because our executive team had clarity about what we believed in and how to act, implementation throughout our global organization was simple. Within 10 days the furlough plan was rolled out company-wide.
The reaction was astounding–far better than we anticipated. The furlough plan revealed that we cared deeply about our team members. They felt an overwhelming sense of relief that they could count on their job and income. Furthermore, they were happy to offer up four weeks of income, knowing that it was not to make the company more profitable but rather to keep others from losing their jobs!
Team members took the furlough when it was most valuable. Some relished being off in the summer with their school-age children; others used it to perform volunteer work. Some team members stepped forward and ‘took the time’ for peers in strained financial situations who could not afford to lose four weeks’ pay. Still, others needed coaxing to take time away, simply preferring to work through their unpaid time.
After nine months, we saw our business rebound well ahead of the broader economic recovery. In fact, our fiscal year 2010 was a record year in earnings! So we again asked how to respond in alignment with our beliefs. We decided to not only reinstate the 401K match, but to increase it as a way to show our thanks and give back what team members had sacrificed.
Looking back, it was clear that our shared vision and fierce commitment to measuring success “by the way we touch the lives of people” provided an ‘internal compass’ to look for solutions beyond traditional business norms. We recognized that the most fundamental way we touch the lives of our people is by the security of their employment with us. True commitment to Truly Human Leadership meant designing a business that offered sustainable success—for every person in our organization.
When layoffs occur, the impact on culture through loss of talent and morale can be devastating. Our experience was just the opposite.
Although we had been on a leadership journey centered on our Guiding Principles for more than seven years, many team members still weren’t convinced of our sincerity. ‘Walking the talk’ during this tough period did more to confirm our beliefs and strengthen our culture beyond anything we could ever verbalize or proclaim through a framed mission statement on a wall.
How do you walk your talk?