Should you include your employees in cost cutting decisions?

06.10.2020

When you’re in a leadership role and responsible for taking your organization through a crisis, pandemic, downturn or times of great uncertainty, it’s normal to question if the way you’ve always done things is the best way to weather the storm. You may start to look at every policy, action or detail in a new way that causes you to consider alternatives to previous problem solving tactics, and employ new ones, like, asking your employees for input when it’s time to cut costs. While it might seem easier to steer the ship solo, let us make the case for including your team early and often when you need to save cash, save credit, or reduce debt.

 

Avoid “Wrong Sizing”

When a company sets its sights on downsizing, there’s always a chance that the people who truly make the company profitable are on the layoff list. This results in the company “wrong sizing,” meaning, it’s taking the numbers it sees on paper to drive its decision making when it comes to staff, rather than understanding how each employee contributes to the organization. When a company decides to take a “bottom up” approach and collects feedback from individual managers or department leadership to understand where it might be able to save some money, the company might be surprised at the other things it learns in addition to avoiding “wrong sizing.” 

 

Inspire Motivation

After analysis, even if your input from managers and employees results in staff layoffs, furloughs or permanent cuts, your remaining team may not resent you nearly as much had you single-handedly determined who would stay and who would go. Of course, the final decision was probably made by the owner, CEO, or an equally influential leader, but the effort made to be inclusive will likely be appreciated, and leave the “downsizing survivors” feeling lucky to have made the cut. This also means you need to make an effort to invest in your remaining employees. According to thebalancecareers.com, you can support your employees and potentially motivate them if:

  1.  You discuss the potential for career development in an expanded role he or she may be assuming.
  2.  Work to restore trust that may have been damaged by the layoffs.
  3.  Individually talk to each person to let them know how and why they are valued. 

 

If you invest resources and energy into your employees, you’ll receive more than just benefits to your company’s bottom line. You will also likely aid recovery, fuel productivity, and boost morale. 

 

Develop Strategic Priorities

Along with gaining an understanding of what each employee truly does in your organization, you will also likely uncover areas where your strategy is lacking. If you seize this opportunity, you can plan for the future in a meaningful way that will allow your company to emerge from the downturn as a more efficient, lean, profitable version of itself. This is not as easy as it sounds however, because this requires you to have a leadership team that has a well-respected visionary to chart the course, an operational guru to identify efficiencies and implement them responsibly, and a marketing genius to sell the changes internally in order to capitalize on them externally. Don’t fret if you don’t have the dream team to make this happen, you can outsource some of this through consultants or contractors to get your strategy moving. 

 

As a leadership team, If you choose to include data from employees in the cost-cutting process, you will likely be able to construct more complex visions, because you will realize significant savings and retain the talent you need to execute the plan. Don’t underestimate the knowledge your team can bring you if you let them!