The Language and Symbols of Downsizing

So the bloodletting continues. Layoffs keep on keeping on. Today, the current culprit is IBM, the company that falsely laid claim to "lifetime employment," and their lemming-like employees fell for it. But what I am concerned about is how these things are communicated. I must admit that corporations have become smarter and more sensitive over the last 15 years. (I was spoiled by the progressive attitudes of General Electric. (So you don't think of me as an uncritical chauvinist, let me say that I was laid off by GE, so I have reason to be critical, even resentful, of the company. Still, I think highly of their internal communications and of GE overall.) But there is still plenty of room for improvement. If you are in an organizations that is downsizing, and you're responsible for a function like communication, human resources, productivity, or morale, ask yourself these questions:

• What kind of language is the company using to describe the action? Layoffs are tough enough on people and their communities. To couch them in corporate-speak such as "rightsizing the workforce" is insulting. Tell the public that your revenues have decreased! Say that you missed your sales target! Describe how you f****d up the business! And then tell them how you will make things right with future actions. For God's sake, have respect for their intelligence.
  
• Are your officers visible to the workforce at this time? Amazing how many open meetings there are when things are going swimmingly for a company, but the bosses disappear during tough times. How much will they trust you in the future if you can't trust them with bad news? The greatest leaders in history, such as Truman and Churchill, described how true leadership was based on how important it was to acknowledge the hell that their people were in, and then lay out the exit route.
  
• Have you announced no raises this year for hoi polloi this year, yet execs received their bonuses? Yuk, bad form there. This "let them eat cake" attitude will come back to bite you eventually in the form of loyalty or quality of the people you attract.
  
  And all of these considerations lead to a very big question...
  
  
• Have you considered the true costs of layoffs? Geoff Colvin writes a terrifically succinct article in Fortune magazine that describes the hidden costs of layoffs, such as letting go future leaders of the company, the downsizing of morale, and the eventual costs of rehiring. (Many people don't think of that. Economies do turn around. When that happens, what will be your company's reputation in the marketplace for qualified employees?) Even the much-vaunted GE suffered from that. Their Financial Management Program is well-regarded in Corporate America. In many circle, having "FMP" after your name is equal to "CPA." However, during the Jack Welch era, many graduates left the program upon graduation saying, "The company has already declared I'm expendable. Why should I stay?" To GE's credit, they took their lumps and realized that this was a fair reaction.

I really believe that corporate leaders are generally better at these things. But there are still enough outliers out there to make these points worth repeating.

Communicating Takeaways - How Little is "Too Much?"

The latest issue of Knowledge@Wharton - for me, a great resource for all kinds of business information - just published an article titled, "'Don't Touch My Perks': Companies That Eliminate Them Risk Employee Backlash." It starts off by discussing how Google decided to "dramatically raise" the price of its day care program, and employees WEPT when they heard the news. (I'm not sure these folks would receive too much sympathy in Detroit, but that's another story).

According to Wharton management professor Nancy Rothbard, "Once you have the perk, to take it away is seen as a violation of a psychological contract you have with your employee."

Here, Here. As the old song goes, little things mean a lot. I once worked for a company named Shared Medical Systems, which was acquired by Siemens of Germany. SMS grew from its three founders to a multi-billion dollar enterprise, but its earlier entrepreneurial roots led to some traditions. One was "Doughnut Day," when the company provided all employees with doughnuts on the last Wednesday of every month. It doesn't seem like much, but when a handful of people are trying to get a brand new company off the ground, it's a nice touch. And it became part of the company culture for more than 35 years. When Siemens acquired SMS, they wisely announced, "We will still have Doughnut Day." Some traditions die hard.

Wharton management Peter Cappelli points out certain perks like Doughnut Day are cheap or may even cost nothing (e.g., casual-dress days), but they don't hurt the bottom line much either, so companies should be careful in the way they handle them. "If you are taking anything away from employees, it's important to explain the need for doing it," he says. "It helps a lot if the need is something driven by factors outside the firm. The need to improve share price isn't going to satisfy a lot of people."

This is hardly a new issue. Think of the benefits that previous generations of U.S. employees used to take for granted: fully paid health insurance, fully paid health insurance upon retirement, pensions, subsidized cafeterias, even mandatory overtime pay. (Yes, overtime pay used to be written into labor contracts - a harbinger of the end of American competitiveness). For those of us in communications, the challenge is how to inform employees of such changes and helping to minimize resentment. Here are some ideas based on my own first-hand experiences:

1. COMMUNICATE CHANGES IN TERMS OF INDUSTRY TRENDS - When I was with GE, which is still a leader in human resources, we announced co-pays for health insurance. This did not go down well at first, as GE was always known as a paternalistic employer. However, GE was also among the last companies to provide completely free healthcare. So we informed employees of all the companies, especially local one, that had instituted the change before we did. It brought down the grumbling at least a little bit.
   
   
2. TIE THE NEED FOR CHANGES TO THE BUSINESS'S COMPETITIVENESS - Referring back to GE, each business unit communicates its own situation. Many during my tenure, such as turbine manufacturing and certain defense businesses, were being buffeted by changes in their respective markets. Once employees understood that such changes were needed to keep those business alive, the employees were (somewhat) more accepting.
   
   
3. EXHIBIT FAIRNESS - If it's one thing that the average employee can't stand is to see one standard for themselves and another for executives or other management. So let them know that the bosses are forgoing their bonuses, or losing their dedicated parking spaces, or paying the personal expenses on their company cars.And if such changes are NOT being shared, well, you have an additional set of issues, don't you? Better look inside your chests and see if there is still a heart there.