4 Quick and Easy Tips to Avoid a Company Restructuring Disaster

Layoffs or restructuring, whatever you want to call it, is a last resort move for small and medium companies. Unlike companies with 500 or more employees and multinationals, employees in SMBs quickly feel the restructuring’s effect because the organization is already small. It can also impede
ability to bounce back production once demand rises again.

During the recession of 2008, Tony Hsieh, CEO of online shoe and clothing shop Zappos.com was forced to lay off 135 employees—about 8% of the company’s workforce. He wasn’t the only CEO doing it, but how he handled the situation set him and Zappos apart from other companies.

So What Made Zappos’ Layoff Special?

Most companies, especially the giants with a big turf to protect, keep things hush-hush during a layoff. They embargo the news as long as they can, sometimes employees only find out on the day itself. Some companies even go as far as forbidding employees to talk about what happened.

Threats of losing severance pay—not a government mandated benefit, by the way—when caught ranting on social media aren’t unheard of.

With Zappos, however, Hsieh was very transparent with everyone—his stakeholders, employees and the general public. He blogged and tweeted about the whole ordeal, explaining why it was needed and what Zappos was doing to help displaced employees.
More surprising, he allowed employees to talk about their feelings on social media. His only instruction was, ‘use your own judgment.’

You may not agree with Hsieh’s actions, but there’s no denying he handled the layoff quite well.

Here are several ways you can handle a company restructuring without further damaging your company’s reputation.

4 Tips to Conduct a Better Layoff that Won’t Ruin Your Chances of a Comeback

1. Have a Third-Party Conduct the Exit Interview

Displaced employees can provide valuable feedback to improve operations. But they might not be too keen to share this with an insider—even someone from HR.

Hire a third-party to conduct the exit interview. Talking to an outsider will give displaced employees a chance to vent their frustrations, which can clue you in on broken processes in your organization.

2. Train Employees Left Behind

Obviously, those left behind will have to shoulder the work of those who left, unless you’re eliminating an entire service or product line.

Training employees during a layoff might not sound like a good idea, but doing this will boost morale of remaining staff. It will also equip them with the skills to handle their new tasks. If nothing else, the training will take their mind of the restructuring.

Just don’t ask the soon to be displaced employees to train their replacements. That’s just tacky.

3. Update Everyone Even if You Don’t Have Anything Good to Say

Gossip, rumors, and conflicting information from employees sharing their opinion as if they have a reliable insider source will create more chaos within the team.

When the annual or quarterly income is dwindling, and you realize that it’s no longer enough to meet payroll, just be honest. Hold a meeting and explain how things stand. Ask for their input, and commitment to help you turn things around. Yes its bad news, but it will also inspire the committed employees in your team to step up their game.

Explaining the situation also dispels rumors flying about, and allows everyone to make an informed decision regarding their career.

4. Don’t Get Stuck in the Situation. Create a Plan to Move Past the Crisis

If you get stuck in ‘crisis mode,’ you’re done for.

Your ability to respond quickly will largely determine how quick your company can bounce back. It’ll also restore your employees, shareholders and clients confidence in you.

When announcing the layoff, explain why you had to do it for good of the company. Then move on quickly to your plans for helping displaced employees by providing outplacement services or a severance package.

But it doesn't end there. Create a plan to bounce back. If that layoff is your only plan, then it won’t be long before you have to do it again.

Examine your current business structure. Is there anything that could be optimized? Are their products or services not making a profit? How can you make money from them? Are their leaks in your budget?

The plan you create will give remaining employees a renewed sense of direction. A company restructuring might sound like a no-brainer when your business is in a pinch. But if you don’t do it right, you may have a hard time bouncing back

Have you experienced a layoff at work? Do you think your employers handled it well?

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