Stopping the Labor Cost Roller Coaster
Workforce reduction is a painful reality for many in today’s tough business climate. Unexpected and underestimated economic downturns can cause even the best managed firm to find itself with a cost structure too large to support the realities of its revenue picture. All too often, a swollen workforce is a major contributing factor to cost structure woes. Eventually, the path becomes clear. Reduce or die.
Business leaders are faced with this uncomfortable task while balancing the emotional, legal, and manpower strain associated with getting through it. The one thing common across all companies is the desire to avoid the need to do it again.
While reductions are a reality for many firms, not many are comfortable with the cost, complexity, and risk associated with managing through the event. In addition, the initial planning and strategy associated with making the appropriate workforce adjustments is often overlooked. To make matters worse, the process tends to be cyclical as companies ride the waves of business success and slowdown.
Having lived through this unsavory reality several times, I have come to realize that there is both an art and a science to conducting a workforce reduction effectively. Navigating carefully through the human issues, organizational questions, and supporting processes is vital.
In my next installment, I’ll share ten important questions that every executive team should address before beginning a reduction. It is only by proactively considering a wide array of issues that one stands a chance to make the next reduction… the last one.