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Avoiding a downsizing disaster

Wednesday, March 1, 2006 - 01:00
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In November 2005, GM announced a plan to close 12 plants and parts facilities, slash 30,000 jobs and cut structural and material costs by $7 billion a year. At the beginning of the year, Ford Motor Co. announced it would shut down 14 manufacturing plants and lay off 30,000-plus workers in the next six years in a move to save $6 billion.

North American automotive executives are scrambling to stay afloat lately, and some realize that downsizing might be necessary. But if done wrong it can be detrimental to your business.

All too often, “downsizing is executed with a brisk, compassionless efficiency that leaves laid-off employees angry and surviving employees feeling helpless and de-motivated,” says Alan Downs on About.com. Downs is a management psychologist and consultant who specializes in strategic human resources planning and helping business executives reach their maximum potential.

He explains that companies often make the mistake of letting people go with little notice, avoid talking about the decision with current employees and don’t have a good vision of what their company will look like afterwards. These things can result in employee de-motivation, low morale and a decrease in sales. Your employees are going to talk, so the least you can do is provide them with all the key facts upfront so they aren’t forced to make their own assumptions.

If you are not open and honest with employees about what’s coming, those who get let go in the spur of the moment will despise you and those who stay will no longer trust you. “Trust is based on mutual respect. When employees discover what has been brewing without their knowledge or input (and they will when the first person is let go), they see a blatant disrespect for their integrity, destroying trust,” says Downs.

How downsized employees are treated directly affects the morale of valued employees. So, if you need to lay off people, proceed with caution.

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