Leadership

Video: Five smart ways to handle workforce reductions

If workforce reductions are not handled right, they can make an already difficult situation even worse. Here are tips to minimize the impact of layoffs on IT operations.

Reducing workforce costs is often necessary to keep companies solvent during difficult times -- but if it's not handled right, it can make an already difficult situation even worse. This episode of Sanity Savers for IT executives shares five ideas that will help you reduce your workforce costs, while minimizing the negative impact on IT operations and on the business.

For those of you who prefer text over video, you can click the "Transcript" link underneath the video or you can read the original white paper that this episode was based on: 8 Steps to Immediately Reduce Workforce Costs.

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Jason Hiner is Editor in Chief of TechRepublic and Long Form Editor of ZDNet. He writes about the people, products, and ideas changing how we live and work in the 21st century. He's co-author of the upcoming book, Follow the Geeks (bit.ly/ftgeeks).

8 comments
stephen.dowling.au
stephen.dowling.au

Cutting too severely to get it over and done with adds cost to the company on having to pay termination payments and then recruitment costs. I think my employees would think I was a bit of an idiot if I cut too far and then had to recruit staff. We have implemented a series of step downs as the economy has contracted. Our greatest fears are: losing good staff and not being able to scale up when the time comes. I think this is a far better approach than taking the worst case scenario.

rkilroy
rkilroy

I agree about not cutting too severely, but better to make one deep cut than three shallow. Each series of cuts you make increases employee defection. They no longer feel secure in their job and worry about being let go in the next round of layoffs. This leads to poor moral and people looking for a job while they still have a job. So you may loose the very people you are looking to keep.

Dyalect
Dyalect

There is always a cheap solution out there. Whether performance will be at the same level is another matter. Money talks.

rdehart
rdehart

We always talk about 'The company', but who is this? We, 'The employee', hear this phrase a lot both in good and bad times. We also hear the word 'team' thrown around too. We're always a team until there is big profit or no profit, then it's 'The company' and 'The employee'. The company with the best and most talented 'team' keeps there work force intact during hard times because the team is the comany. Look back on IBM and Endicott Johnson if you want to know what a team is.

Datacommguy
Datacommguy

Your example of 'team' companies may not be. IBM, for example, ditched thousands of workers back in the IT purge of '87, and lost a law suit when they tried to change their retirement plan to one which would severely reduced payments for long term workers. That may be ancient history for may IT workers these days, but more recently in my own experience the IT department in the company I was working for was indeed a 'team' environment. However, senior management viewed the IT department as a non-income producing cost and mandated a 24% cut. They also chose the criteria for the cut, choosing maximum cost reduction by letting the highest paid (and oldest - all over 50) workers go (and replacing most with younger cheaper labor). That achieved their goal in the short term, but cost them a bundle for consulting fees, age discrimination law suits, and lost productivity company wide as the survivors tried to cope with decades of missing knowledge and expertise or ran headlong into problems with systems and application problems which weren't being resolved while they worried about what the criteria for the next cut would be. In short, for all the advice in this article, the almighty dollar - and only the dollar - is still the main focus for far too many managers of today's companies.

rdehart
rdehart

I should have qualified my reference to IBM and Endicott Johnson. I was referring to pre-sixties. When they couldn't pay their employees they had pay cuts but made up the difference in stock. The important part was you were still employed. It doesn't take any brains to know that cutting people will save money near term. However, it takes 'real' management skill and talent to turn things around and not resort to cutting your work force. You're right, it is all about the dollar!

MyopicOne
MyopicOne

My old employer took great pains to show that it was not only the greybeards that got laid off. But they still got rid of too much, as service quality is down and costs up...

jmgarvin
jmgarvin

The idea that you have an actual team that you take care of and build, you can't have that. It's about the bottom line and nothing else. What do you mean we didn't make our numbers for the month, hell for the day!? You're fired. Welcome to corporate America.

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