Asking employees to make sacrifices is not as difficult as it used to be. In years past you might need to appeal to abstract notions such as company loyalty and career development to mitigate the anger and minimize the resistance with which such initiatives would be met. Today, these dialogues need not be cloaked as appeals and there's less necessity of placating feelings.
In a difficult job market these discussions become presentations of fact; less dialogue and more declaration. Though it's an uncomfortable metaphor, these discussions today take on all the trappings of extortion. Employees are made offers they cannot refuse without losing their job. Still, employers shouldn't offer a hint of apology or make a request for assent. You don't have to hide the fact that you're informing, not requesting. Employee sacrifices and cut-backs are today's efforts at maintaining company health and individual employment. It's unnecessary to even hint at what should be obvious: for the employee the alternative to accepting this change is unemployment.
Any employee who today responds to these changes, however draconian, with an instant resignation, is someone who already has a foot out the door anyway, and is just looking for an excuse to leave. That isn't to say you won't lose people in the long term. Recognize that by changing the terms of employment you are really forcing people to launch job searches. Those who can find a position with conditions better than those you've just imposed will leave. That's the risk when an employer is resorting to extortion.
These efforts will be less shocking today than they would have been in years past, since employees now have little or no trust in employers. Asking for sacrifices will be seen as merely one more example of the increased uncertainty of work. Because short-term results are now all that matter, employee arguments about past practices and prior performance carry less weight. The answer, bluntly, is "That was then and this is now."
The degree to which employees understand that jobs and careers now have expiration dates could make them more accepting of whatever change you must make to the nature of their job. A veteran employee who realizes that his or her job is near extinction will be less resistant to change. And since it's these very veterans who are most often the targets of cutbacks, it's possible you could avoid long-term morale problems.
In the short term, the rarity of face-to-face communication today can also help lessen the impact of the blow. The moment you ask someone to come in to speak with you, they will assume the worst. Presenting them with almost any scenario that's short of immediate termination could actually be received with relief.
Taking advantage of this "relief effect" is one reason to hold all these discussions as one-on-one dialogues. Another reason is that such meetings allow for details to be discussed privately. That could give prideful employees a chance to save face. Finally, by avoiding group discussions of employee sacrifices, you minimize the chances of dissension spreading. In a group setting, all it takes is one person voicing complaints for others to feel more comfortable airing their gripes, as well.
Since these sacrifices can have profound, perhaps immediate personal impact, but not necessarily instant workplace impact, the best day to announce them is Friday. This provides employees with a weekend in which to talk to family members. Have the discussions after lunch to minimize the amount of work time lost to commiserating and gossip.
Any company that is facing a temporary downturn in revenues, or a short-term cash flow crisis, can potentially weather the storm by furloughing employees without pay. As a rule, furloughs should be no shorter than one week and no longer than a month: shorter than one week, and the potential savings aren't worth the effort; longer than a month is blatantly unfair. Businesses cannot expect employees furloughed for more than a month to ever return. In that situation you might as well fire the employee and then look to rehire when the company can afford to re-staff.
You must have a fixed return date established before you break the news. Without a set return, it's a termination, not a furlough. Unless the furlough is the result of a sudden emergency, you should provide some advance warning. If the leave is going to be of one or two weeks duration, you should provide a minimum of one week's notice to allow for him or her to make whatever financial arrangements they can. If the leave is going to be of more than two weeks, do your best to provide a month's notice, since the arrangements will be more problematic. Make the announcement on a Friday to provide an added two days of time to make arrangements and eliminate as much on-the-job unhappiness as possible.
It's vital that you provide as honest an assessment about the extent and composition of the furlough as you can. You have to assume that news about who is being furloughed and who isn't will spread throughout the company, whether it's supposed to be closely held information or not. To maintain what little credibility you have as an employer in today's environment, it's important you don't make false or misleading statements.
Explain that the furlough is an effort to keep the company from getting into trouble, rather than a way of getting out of already-existing trouble. The alternative isn't the status quo, it's termination.
Point out that, while a burden, the furlough isn't unfair. Unfair would be asking people to work for no pay. In that spirit, you can't agree to any exceptions, even in special circumstances. See Workscript 4.1.
If you're called in and told you're being furloughed without pay, you need to focus on minimizing the potential harm to your personal finances. You can assume that rather than being singled out, you're just the first in a cycle of furloughs, since the company can't furlough everyone at once and stay in business. After all, if you were a singular target you'd have been fired, not furloughed.
One alternative you can propose is that, rather than taking two weeks off without pay, you could work half-time at half-pay for four weeks. While the total economic impact is identical, spreading a smaller cut over a longer period of time can be easier to absorb personally. Another option to consider is to offer to give up your two weeks of paid vacation. The long-term effect will be the same for your employer. Not interrupting your cash flow may be more important than two weeks of relaxation.
Decide which of these two options you'd prefer, and propose that first. If you're turned down, propose the other option. If that too is rejected, give up the effort. Making an end run to a higher authority could put your long-term employment in jeopardy. See Workscript 4.2.
Jobs don't become extinct overnight. Many businesses act that way, however, waiting until a position makes zero economic sense, and then firing the individual who held the job. A more sensible, and perhaps more humane response, is to act more quickly but less drastically. The moment it becomes clear that a position is becoming less necessary, it can be reclassified as a part-time rather than full-time job.
It's important to realize that doing this to an employee, while less painful than immediate termination, represents a traumatic shift in the terms of employment. Very few employees will be able to function on such a dramatic cut in their earned income. A handful who are devoted to their job, for one reason or another, will look to supplement this now part-time job with another part-time stream of income. Most will simply start looking for another full-time job, using the free time they now have to do their job hunting. Some may actually request termination instead in order to search for a new job full time. In that case you should provide them with the same severance package they'd receive if you were terminating them.
Even though odds are high that you'll eventually lose your current employee, it's worth making the effort to keep him or her in place for as long as possible, rather than just firing and then rehiring a new part-timer. You have someone who knows the job and, presumably, is good at it. Hiring someone new involves a cost and a risk you may as well defer for as long as possible.
Try to give at least one month's notice before the change takes place. That gives the employee a chance to make whatever personal arrangements they can to compensate for the cut in income. It is likely they'll also use this time to look for another job. That's only fair.
Hold this conversation after lunch on a Monday, giving the employee a chance to start working on their financial options right away. See Workscript 4.3.
There's no way around it: if your full-time job is suddenly turned into a part-time job you are, for all intents and purposes, being fired. No employer can realistically expect someone who relied on a full-time income to suddenly be able to cope with a part-time income. And no employer can assume a suddenly part-time employee will be able to find a second part-time job that fits his or her now altered schedule. The employer is trying to have it's cake and eat it, too: eliminate a full-time position, but keep the person who has been doing the job well for as long as possible.
There's no point in trying to argue them out of their decision. If they desperately wanted to keep you, they would have fired someone else and moved you into their place. And if there were some way to expand your job's responsibilities in order to keep it full-time, they would have just added to your workload. They've reached a decision they're not going to change.
Rather than debating, I suggest you respond in a similar manner, in terms of wanting to have the best of both worlds. Explain that this is, in effect, a termination, so ask for a severance package. Then, add that you would be happy to fill in as a part-timer for as long as they need you up until you land a new full-time position elsewhere. Your part-time pay, however long it lasts, will be a good supplement to your severance. Since they knew you'd only probably remain with them long enough to find a new job, your being a temporary part-timer won't be a surprise. And they had to be prepared for a severance request from the moment they conceived the plan. You're just suggesting they do both. See Workscript 4.4.
Cutting pay can be an effective way to trim expenses without incurring the traumatic impact terminations have on morale. While it will never be a popular step, if salary cuts are framed as an attempt to preserve jobs, they'll be accepted by most.
Ironically, it's easier to cut pay across an entire department or company than it is to cut a single person's pay. That's because spreading the pain makes it clear this is an economic measure. No matter how fervent your denials, a person singled out for a pay cut will see it as an attack on their personal value.
Your goal in a department-wide cut is to mitigate damage to morale and get the team to focus on the job-saving nature of the cuts. Your goal in an individual cut is to convince the employee that this isn't personal, it's about the position that he or she holds, and to keep him or her on board. After all, if the employee wasn't effective, you'd be discussing termination, not a pay cut.
Department or company-wide reductions should be presented in a group meeting. Bringing in an entire department and announcing a comprehensive cut can have the ironic effect of increasing team togetherness: they are all sacrificing for each other. It also prevents the backstabbing that could result from a series of one-on-one meetings in which employees might offer up one of their coworkers as a sacrificial lamb. Cuts should be announced as soon as possible after the decision has been reached, so the news doesn't leak. Schedule the meeting for a Friday afternoon to avoid a week's worth of sulking. Cuts should take effect immediately to signal the urgency of the effort and to make it clear there's no flexibility. Explain that the situation will be reviewed in six months to see if the cuts can be restored. See Workscript 4.5.
Be completely truthful about the extent of the cuts, since the news will leak out eventually. If cuts are company-wide, say so. If they are limited to specific departments, explain why.
Individual pay cuts should be done in private. Most times the individuals targeted for pay cuts are the highest-paid, longest-serving employees. As a result, their self-identification with their jobs will be strong. That means their reactions may run from one extreme to another. Be prepared for some pushback and denial, but also grief and shame. Absorb anger to the extent possible and offer to do what you can to help them save face.
When cutting an individual's pay, it's wiser to have the dialogue early in the week and day to give them a chance to "get back on the horse" immediately, rather than stew at home over the evening or weekend. See Workscript 4.6.
Having your pay cut is painful and problematic, but . . . it's not as bad as being fired. That's what you need to keep in mind when you're told your salary is being trimmed. Rather than being antagonistic, self-pitying, or obsequious, try to use whatever guilt exists as leverage to mitigate the harm to your stream of income.
One possibility is to ask for the pay cut to be phased in gradually, rather than take effect all at once. That will give you a better chance to adjust your personal finances. Another option is to use this as a rationale for a flex-time arrangement. Offer to work the same amount of time, but to do it in four days rather than five. Suggest that the now free fifth day gives you an opportunity to make up for the cut in your income.
Choose whichever of these options makes the most sense for you. If you're turned down, don't make an end-run appeal. Your higher-than-typical salary put a target on your back and resulted in this pay cut. Now that your salary is in line with the pack, that target has been removed. Go over your boss's head and the target reappears, even larger than before. By all means, try to mitigate the damage of this cut, but if you fail, accept it and surreptitiously start looking for a new job. See Workscript 4.7.
Businesses in which increased hours on the job will result in increased revenue—such as a retailer—always have the option of asking employees to work increased hours without additional pay, in order to boost their bottom lines.
While you can present this effort as an alternative to cutting pay or firing someone, employees are unlikely to be supportive of the effort. Despite its more dire impact, pay cuts and terminations are perceived by employees as emergency defensive measures, whereas extending working hours is perceived as a money grab by management. Regardless of how well it's explained, this effort will always generate resentment. The best you can hope for is to make the case and keep overt grumbling to a minimum.
This should be done in a group and at the end of the workweek. Try to give at least one or two weeks' notice to allow employees to make whatever arrangements are needed to deal with longer working hours. Be prepared to absorb the inevitable pushback and anger. If the situation allows for some flexibility in terms of when in the workweek the hours are added, do what you can to accommodate people. See Workscript 4.8.
One way to save money in trying economic times is to stop farming out work to vendors and bring the tasks in-house. By expanding the responsibilities of a current employee to include work previously done by an outsider, without increasing his or her pay, a business can cut expenses without cutting salaries, while offering a growth opportunity to a promising individual.
This shift must be presented, not as a matter for debate, but as a certain step. The added burden should be framed as both a means of keeping the employee's salary at its current level, and an opportunity for him or her to grow professionally.
Obviously, this conversation should be held one on one with the person whose portfolio is being expanded. The specific timing of the conversation is less important than that it is held far enough in advance, allowing the individual to tidy up their current schedule, but near enough the change for it to clearly appear inevitable. While every situation has its own unique circumstances, one week's warning would be a good general rule.
Having been called into your office for a private meeting, the employee will be fearing termination. When they find out they're being given more work, not being fired, it will come as a relief. It's unlikely you'll get direct pushback since you are, presumably, dealing with one of your top performers who is apt to be more savvy than confrontational. Instead, you'll probably hear about scheduling problems. In addition, you're apt to field questions intended to either plant the seed for future pay increases or minimize expectations. See Workscript 4.9.
If your workload or responsibilities are increased without a corresponding increase in pay, there's really nothing you can do to either fight it or seek redress without weakening your hold on the job. You can perhaps reduce expectations, and maybe plant the seeds for future opportunities, but otherwise all you can do is smile, say thank you, and accept that you're now probably going to have to work harder for longer hours. See Workscript 4.10.
It is usually best to have the individual who directly leads a work team be the one to choose whom to fire, and then do the actual termination. The man or woman on the spot is apt to have the best understanding of which employee is either at the bottom of the performance range or whose absence will have the least negative impact on the team. In addition, their personal relationship with the employee being let go could provide a modicum of human warmth to an awkward and painful situation.
The exceptions to this rule are when you fear that nepotism or favoritism may play a role in the selection of who to let go, or when the team leader voices extreme trepidation about pulling the trigger.
Having been called into your office, the team leader will have a moment of relief that it's not him or her being let go, but that will quickly be replaced by apprehension. No one wants to fire somebody. Everyone dreads the act, even if they've been forced to do it dozens of times in a long management career. So dismay is to be expected and usually worked through. However, you as the higher-level manager are ultimately responsible for the pro- cess. If the team leader is so shaken you fear he or she will not be able to do the job professionally, then it's in your and the to- be-terminated employee's best interests that you do it yourself.
Be prepared to give some broad guidelines for both the selection and the actual act of termination. It's a given that losing a staff person will have some negative impact on productivity and morale. The idea is for the team leader to select the individual whose loss will have the least and briefest impact. Give them sufficient time to make a reasoned choice—at least a week—but caution them that any leak could be disastrous to the entire team's morale.
Most human resources departments have instructional materials on how to conduct a termination. But if such material isn't available, offer some tips. Explain that it's vital the decision be presented as being absolutely irrevocable; there is no appeal or delay available. Note that the only reason for termination that isn't open to debate is economic necessity. Point out that it's usually best to fire someone on a Monday because he or she can then file for unemployment benefits and launch their job search right away. Give them instructions on the severance range available and ask them to be prudent.
Expect some pushback on the need for cutting staff. Besides the personal fear of the process and the potential impact on overall team performance, it's natural for the team leader to see a staff cut as a diminution of his or her own power and status, and to fight against it.
Even though they're expected, perhaps even reflexive, don't automatically dismiss the arguments that the team leader may raise against the firing, especially if they are issues you haven't previously considered. One reason you're turning to this team leader to select and execute the staff cut is because he or she has superior knowledge of the personnel and issues. This same superior knowledge could offer an informed alternative that you and other higher-level managers could not foresee.
Your goal is to prepare this individual to make a sound decision and conduct the termination in a humane and professional manner. See Workscript 4.11.
Whenever you're asked to cut your staff, you owe it to your employees and yourself to make the best argument you can to preserve the position. Just be sure your case is based on practical business reasons rather than on emotions. But if you can't change your own boss's mind about the advisability of cutting your staff, don't prolong the fight. Instead, accept it, but ask that in recognition of the added responsibilities and burden that will result, you receive an improved title. A title costs your employer nothing, but can be valuable to you when you ask for an increase or look for another job. See Workscript 4.12.
Perhaps the simplest and most effective way for a business to cut back in lean times is to mandate budget cuts from its departments and teams. While problematic, it's certainly nowhere near as traumatic as cutting staff or salaries. And while it's sure to earn some pushback, the reaction of those who are charged with cutting back and the impact on the morale of the rank and file won't be as dramatic.
Rather that insisting on specific cuts, it makes more sense to provide general guidelines and ask the manager or team leader to come up with the specifics. He or she is the expert on his bailiwick. Besides, handing over the selection of cuts reinforces the individual's perceived power and authority, which will probably take a hit from any budget cut.
Provide an amount or percentage goal, insist that neither quality nor productivity decline, and set a deadline for submission of the new budget. You want to look at the proposed cuts yourself before they're enacted to make sure they won't have a negative impact. If they can convince you that any budget cut will necessarily result in a loss of sales, you'll need to rethink the idea. Otherwise, objections and protestations should be brushed aside with an insistence that finding nonhurtful savings is part of their job. See Workscript 4.13.
In trying economic times, you have to expect that you'll be asked to trim spending. It's a given that you'll need to come up with savings that don't hurt quality, even if it requires you and your team working harder and for longer hours. Rather than pushing back, embrace the responsibility and stress your willingness to do whatever it takes to help the company. See Workscript 4.14.
