What Companies Still Get Wrong About Layoffs

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Today it’s difficult to read the news without seeing an announcement of layoffs. Just this week, Morgan Stanley announced it will reduce its workforce by 2%, Buzzfeed said it would cut headcount by 12%, and PepsiCo said it plans to cut “hundreds” of jobs. The same is true at Redfin (13%), Lyft (13%), Stripe (14%), Snap (20%), Opendoor (18%), Meta (13%), and Twitter (50%). So many companies have initiated layoffs recently that tech and HR entrepreneurs launched trackers like TrueUp Tech and to Layoffs.fyi dedicated to monitoring the staff reductions across the tech sector.

Traditionally, employers resort to layoffs during recessions to save money. Companies continue to cling to the idea that reducing staff will provide the best, fastest, or easiest solution to financial problems.

As if layoffs aren’t painful enough, many companies make matters worse by handling them poorly. Handling layoffs in a humane way is important for the morale of both the impacted and retained employees, it will impact the company’s ability to hire strong talent later, it affects litigation risk (people who feel mistreated are more likely to sue), and, of course, it’s the right thing to do.

Layoff Myths and Mirages

Contrary to popular belief, there’s not much evidence that layoffs are a cure for weak profits, or, to use the current euphemism, that they reposition a firm for growth going forward.  It’s very difficult to sort out the relationship because firms that are laying off are almost by definition in trouble. The research evidence has not found any support for the overall idea that layoffs help firm performance. There is more support for the idea that where there is overcapacity, such as a market downturn, layoffs help firms. There is no evidence that cutting to improve profitability helps beyond the immediate, short-term accounting bump.

Employers also often underestimate the cost of layoffs in immediate financial terms, as well as in the lingering burden it places on remaining resources — both financially and emotionally. There is a huge problem in HR generally that the stuff that is easy to put on a spreadsheet outweighs the stuff that isn’t.

The toll of layoffs is high. In many industries, layoffs beget lower productivity and profits. When sales are slow, for instance, many retailers cut staff. But several studies show a correlation between bigger staffing and substantially higher sales.

Layoffs destroy trust

Eighty-five percent of respondents rated job loss as their top concern in Edelman’s 2022 Trust Barometer. Layoffs break trust by severing the connection between effort and reward. The premise of a layoff is that if it weren’t for the economic conditions facing the firm, employees would keep their jobs as long as they perform them well.

The fact that this is a psychological contract rather than in most cases a legal one is beside the point. In the domain of trust, what matters is that employees are being asked to willingly be vulnerable to the power their company has as an employer, and trust that the company will act in ways that don’t violate their trust. Research finds that, once betrayed, this trust is hard to recover.

Forgetting to be human

In the process of trying to do everything “right,” some managers forget to be human. It’s amazing how often people rigidly follow a script during notification meetings for fear of saying something wrong. It’s even more amazing how often they forget to mention the niceties, like the fact that they appreciate everything the employee did for the team or affirmation of the employee’s abilities. Layoffs are emotional and raw; it’s critical to show empathy when delivering such painful and often scary news.

It’s also critical to help employees maintain their dignity. That’s why having a security guard escort the employee out the door should be avoided, except in the rare cases where it’s truly needed.

Failing to plan ahead

Founders and executives at high-growth companies are often caught unprepared for layoffs. Many assume the only possible direction is up. With pressure to grow, it’s easy to hire too many people too fast, and later need to lay off employees quickly. And, even under conditions of sustained growth, layoffs can become necessary due to acquisitions.

Successfully managing workforce changes within today’s landscape ultimately requires evaluating your actions against the backdrop of trust. Your company will weather the storm of layoffs more successfully if you can maintain trust with three groups who will determine your success in the future: employees you let go, employees you retain, and employees who don’t yet work for you.

You have a great opportunity to be better at this than other companies. Keeping trust at the centre of your decision-making can lead to surprising, beat-the-odds success, as the above examples from Honeywell and Nokia show. Centring trust also offers leaders a reminder: Your actions will have consequences that are more visible than they’ve been in the past and you will be judged as trustworthy — or not — based on them.

Given our current situation knowing that your colleagues or employees are best suited for this new scenario we find ourselves in. Finding the right talent, the best fit for the job and your organisation can be a very challenging task. It is now important to find out whether your managers or your team is well-equipped of working together from various locations. It requires deep knowledge of their personalities, strengths, weaknesses, interests, work style and other characteristics. Our technology and solutions will do the work for you, helping you discover if your people are resilient during times of hardship, if they are autonomous, if they are team players, without actual human contact. Given that our platform is cloud-based, everyone can use it from home as well. Humanity finds itself at a crossroad for various reasons now, why not help people discover and develop themselves from the comfort of their own homes?

Request a free demo:

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Sources:

https://hbr.org/2022/12/what-companies-still-get-wrong-about-layoffs
https://www.entrepreneur.com/leadership/the-7-worst-mistakes-companies-make-when-laying-off/307308
https://knowledge.wharton.upenn.edu/article/how-layoffs-cost-companies/

Leaders Are Struggling with Collaboration

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Collaboration is critical to thriving in an ever-changing environment — it helps organisations solve complex problems in less time by bringing together various experts, accelerating go-to-market time, and responding more rapidly to fast-changing environments.

Failing to practice collaboration can put your organisation behind your competition in a fast-paced 21st century. Research shows that 81 % of people believe that collaboration is critical and 71% think their managers are making it a priority.

So, why do so many companies still fail to collaborate?

Senior executives have an unrealistic vision of collaboration. They assume their direct reports are aligned with the strategic vision. Or have an idealised — conflict-free — image of what a highly collaborative team should look like. Pushing people to work together doesn’t work.

True collaboration cannot be imposed — it happens from within. Merely putting a team of experts or specialists on the same project is not enough — leaders must create the right conditions.

A survey by Harvard Business Review cites — no surprise — that organisational silos (67%) are the key obstacle for lack of collaboration (no collaborative vision from leaders 32%, and senior managers not wanting to give up control 32%). However, those silos are not physical barriers but driven by people’s mindset and behaviour. The culture, leadership, fear of control, and lack of time inhibit successful collaboration.

Collaboration is a byproduct of culture — it requires the right conditions, mindset, and tools.

How to avoid falling in these collaboration traps? Well, here are a few tips and tricks.

1. Avoid the Collaboration Burnout

Always-on cultures, demanding bosses, collaborating with a decentralised workforce spread across different time zones, and inefficient use of technology are draining people.

Tech tools like collaboration platforms have increased team communication and productivity. But overuse and inefficient practices create a collaboration overload.

Also, new research has uncovered another reason: much collaborative overload is driven by people’s desire to maintain a reputation as helpful — by trying to over-collaborate, they find themselves at a breaking point.

When clients hire me to help their teams adopt new behaviours, the first I tell them is, “What are you going to get rid of? New practices should replace old ones, not add more burden to your team.”

The collaboration burnout drains teams. People are busy jumping from one thing to another at the expense of having less time for deep work, effective decision making, and to build strong relationships with other team members.

Your team doesn’t have an infinite capacity — collaboration is time and energy consuming. If you ask people to engage in a new collaborative project, give them space to get rid of other tasks.

2. Groups Don’t Want to Sacrifice their Identity

In mandating and driving collaboration initiatives, leaders tend to focus on outcomes, processes, and logistic. However, they forget to consider how the groups interpret that request — Lisa Kwan calls this the collaboration blind spot.

Each team has a culture of its own. When managers ask them to break down barriers, share information or resources, people feel threatened — they worry about how this might affect their identity.

Respect each group’s identity. Not doing so can make people retreat into themselves and assume a defensive posture — they will become siloed instead of collaborative.

To engage in effective cross-group collaboration, teams might feel safe and protected. It’s better to start small than to expect groups to share all their secrets and resources instantly.

3. Technology Doesn’t Solve People Problems

Most managers now spend 85% or more of their work time collaborating via e-mail, meetings, group messaging platforms or on the phone — that has increased by 50% over the past decade.

The digital revolution has accelerated the ability to engage with other people. However, there’s a difference between interacting with other people and effective collaboration — it’s the outcome, not the time spent, what matters.

Technology facilitates collaboration but doesn’t encourage it. Having the right tools is essential to accelerate cooperation, but if organisations don’t fix the people problems discussed above, technology won’t be useful enough.

Lastly, organisations must train their employees on how to use technology more mindfully. Today, many people are suffering from burnout — they need a digital detox, not more tech.

Collaboration is a way of working — it attracts and brings together people outside the regular structure, practices, and expertise — to accomplish a complex shared goal. But it’s far from being smooth or conflict-free.

A human-centred approach can help avoid the collaboration trap. It requires understanding the challenges through people’s eyes. To develop a culture that is safe for teams to let go of being defensive and work together in achieving something more meaningful.

Human beings are collaborative by nature but don’t collaborate by default — it’s up to you to create the right conditions for successful cooperation.

Given our current situation knowing that your colleagues or employees are best suited for this new scenario we find ourselves in. Finding the right talent, the best fit for the job and your organisation can be a very challenging task. It is now important to find out whether your managers or your team is well-equipped of working together from various locations. It requires deep knowledge of their personalities, strengths, weaknesses, interests, work style and other characteristics. Our technology and solutions will do the work for you, helping you discover if your people are resilient during times of hardship, if they are autonomous, if they are team players, without actual human contact. Given that our platform is cloud-based, everyone can use it from home as well. Humanity finds itself at a crossroad for various reasons now, why not help people discover and develop themselves from the comfort of their own homes?

Request a free demo:

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Sources:

https://hbr.org/2022/12/when-leaders-struggle-with-collaboration
https://sloanreview.mit.edu/article/when-collaboration-fails-and-how-to-fix-it/
https://medium.com/liberationist-thoughts/the-collaboration-trap-a6fbcccd24c6