On Staff Reductions

Anybody Can Reduce Staff.
It is the Easiest Part, not the Critical Part of Restructuring.
Make Sure It Doesn’t Hurt More than It Helps.

  1. When most business people need to improve margins and profits the first thing that comes to mind is headcount reduction. It’s obvious. It’s visible. There is no need to seriously look at how pay, benefits and personnel practices could be more productively administered. We miss the chance to find out why we have not attracted, motivated and retained the kind of people we need.
  2. If we make a large, attractive, extra severance package available to any staff who wants to take it, we will tend to lose our better people who can more easily find a new job. Such voluntary retirement programs are often oversubscribed with too many needed people leaving. As they resign the firm’s fabric and corporate culture further weaken. It becomes even more difficult to attract good, dynamic people. We have not succeeded in pushing out the non-contributors who cling on to their jobs.
  3. Headcount reduction is not the critical part of a healthy restructuring. Yet staff reduction can be, and often should be the trigger point to permanent, self-sustaining, positive change in personnel, Rules of Employment, and pay for performance policies and practices.
  4. If such a credible program of change management is carried out, effectively and fully communicated to all your staff, it becomes possible to quickly and smoothly secure the voluntary resignations of all your poor performers. This is because they see that life will be very different for them under the new appraisal and performance pay policies and practices. On the other hand, the majority of your average and good staff will be reassured that key players and the team will be sticking together.
  5. New and improved pay and human resource systems will be smoothly implemented. With proper packaging, communications, and some training, morale and corporate culture will immediately pick up. Your adjusted personnel and pay practices will discourage most less talented people from joining your firm. At the same time they will attract, encourage, and energize a growing number of good performers. They are waiting, and looking to you for leadership.
  6. There are trackable reasons why some firms enjoy the winning edge. TMT has assisted firms like yours with this assessment for over 20 years. Implementation with TMT’s turnkey solutions is surprisingly quick and simple. If we still need to carry out the staff reduction, we will gain much more, and your staff will be reassured that such staff cuts will probably never again be necessary.