The news is full of financial woes, failing companies and bailouts. Many of the company recovery plans include layoffs, in the thousands – and representing 5-10% of many companies.
So far the focus has been on the “big picture”, and as the decisions are being made we’re starting to see the effects – on our colleagues. For most it sucks, for a few – a very few – it’s a welcome relief and they can fund a big change.But how is the decision made?
- First in, first out
It has the advantage of being easy to decide, but may be expensive;
– long service people will receive higher redundancy packages
– your company loses valuable experience
– you may put the company at risk of an age discrimination case
- Last in, first out
Again this is relatively easy to decide, but also has some costs;
– some of those new people are talents, and you spent time and money hiring them into key positions, presumably because the skills did not exist within the company.
- Bottom 10%
Using the lowest performers based on their recent performance review, it’s seductively simple; but
– good managers will retrain, change roles or remove the worst performers every year so by removing 10% across the board you may punish efficient (and money making) business units more than inefficient ones.
- Who wants to go
Making those redundant who do want to go has the advantage of removing a lot of personal anguish for both managers and employees however
– it’s unlikely to be in large enough numbers to meet cost cutting goals (and if it is you may have other, unconsidered problems.
– if the “volunteers” are in key positions you may struggle to find a replacement internally, or make a case for external recruitment
- Anyone the boss doesn’t like
While I suspect that this is a factor on occasion – perhaps when distinguishing between two otherwise equal candidates for a layoff- it’s not a useful, fair or legal strategy.
By analysing the work done in the department/business unit or company, including prioritising tasks you can assess which roles are less critical and make a decision on that. This has the added advantage of removing the analysis of performance or personalities for at least the first steps.
So what is the best answer?
I think a combination; the structual approach to make the high level decisions, possibly inline with any strategy changes that are also required. This will generate a list of positions that need to be removed. Then within each position chose the person who must leave based on a combination of “who wants to go?” and performance analysis.