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(originally published by Booz & Company)


Building Talent in a Time of Layoffs

Step Four: Conceive and Execute an Effective Exit Process
Even with a strategy-based approach in place, it is still possible to lay off the wrong people for the wrong reasons. In the midst of a crisis, it is difficult to immediately identify people, especially at lower levels, who will matter most to the company’s future. Some of the most common ways of “avoiding pain,” such as attrition programs or voluntary severance packages, can encourage employees with critical, marketable skills to walk out the door. Most important, if the company’s recovery strategy isn’t clear and people requirements are poorly defined, those making individual layoff decisions will lack the guidance they need to make the right ones. Therefore, an effective exit process requires a program owner with a keen understanding of both future requirements and the best ways to separate employees while doing the least damage to the remaining organization. Managers must be trained and held accountable for making the right decisions about who goes and who stays.

Step Five: Ensure High Engagement and Productivity during the Change
The greatest damage to employee trust and engagement occurs during times of layoffs; some companies never manage to fully repair it. By taking certain measures now, however, the leadership team can stem cynicism, build greater confidence in the future, and retain key people while minimizing the impact on productivity. Layoff survivors will need to be reenergized, re-sold, and reengaged in the company’s future.

During layoffs, generously share information — both good and bad news — as soon as it is available. Saying there is nothing new to report is better than periods of silence. During this time employees want to hear about the sacrifices being made at the senior ranks. Assurances that laid-off staff are being treated fairly and with utmost respect go a long way toward relieving the guilt and anxiety survivors may feel. Schedule frequent updates on the state of the company, progress on the new strategy, and the path to accomplishing it. Online surveys are a powerful tool for checking the pulse of the workforce on trust and engagement issues and surfacing concerns.

The pain of layoffs is probably unavoidable. But if the company uses this episode to address its long-standing talent challenges and to solidify its strategic direction, people will know that the company took the most viable path for the long run, and that they did not suffer this pain for a capricious or self-defeating outcome. Integrating people strategy with the business strategy will most likely translate to competitive advantage. There is an added incentive to making change during periods of economic turmoil — people are much more willing to acknowledge and accept that change is indeed necessary. Now is the time to make sure that, looking back, people will recognize that the suffering was necessary, because the company emerged stronger.

Author Profiles:
DeAnne Aguirre is a senior partner with Booz & Company based in San Francisco. She is an expert in organizational effectiveness and change leadership, and has led transformations in both U.S. and global corporations.
Laird Post is a principal with Booz & Company based in San Francisco. He focuses on talent management, change leadership, and HR function efficiency, effectiveness, and impact in the U.S. and globally.
Louisa Finn is a senior associate with Booz & Company based in San Francisco specializing in designing and executing the people side of organizational change.
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  1. DeAnne Aguirre and Laird Post, “Building Talent Advantage in Recession and Recovery: A Memo to the Chief Human Resources Officer” (PDF), Booz & Company white paper, April 2009: How chief human resources officers can improve talent management and performance over the long term.
  2. Cesare Mainardi, Paul Leinwand, and Steffen Lauster, “How to Win by Changing the Game,” s+b, Winter 2008: How investing in a capabilities-driven strategy can help equip a company for growth in uncertain times.
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