Why Layoffs Could be the Biggest Company Culture Cover Up

company culture layoff noticeAccording to a report by US outplacement firm Challenger, Gray & Christmas “Employers have announced plans to cut 515,441 jobs from their payrolls, 16.6% higher than the 441,702 cuts announced through October last year. It’s the highest January-October total since 2015 when 543,935 cuts were announced.

Top reasons for reducing the workforce

WeWork is about to layoff between 4,500 and 6,000 workers according to various news reports published on Nov 17, 2019, including The New York Times and CNBC. These layoffs are part of an attempt to turn around the financial instability of the company.

Lowes plans to close 34 stores across Canada on top of 31 stores that it closed in November of 2018. These actions were taken to address locations that were not performing as well as expected.

Volkswagon has announced a planned reduction of jobs in the order of 5,000 by the year 2023 due to increased automation.

In May of 2019, SAP announced the elimination of 4,400 jobs globally however they expect their workforce to grow from 96,500 employees to over 100,000.  These layoffs represent a “reprioritization” according to Brad Shimmin, Service Director at GlobalData.

Financial instability, poor performance, increased automation, and a change in strategic direction are just some of the many reasons that companies lay people off.

Your layoff culture

The culture of an organization plays a huge role in these situations. If a culture is weak and not resilient, job jeopardy becomes the focus of the employees. Performance, the very thing that the organization is trying to improve, suffers. If not planned properly, there is confusion in the workforce as people adjust to changes in roles and responsibilities. Guilt and grief are borne by those left as they watch co-workers being walked out the door.

The values of an organization are tested during these times. If you pride yourself on coaching, innovation, and continuous learning and yet you don’t reskill or retrain existing employees to take on new roles as a result of automation are you really living your values? This is where trust in leadership can start to diminish.

Are your layoffs the result of a poor culture?

Many leaders shy away from doing a culture assessment or employee engagement survey when a company is in flux due to layoffs. They want to wait until the conditions are “right”, hoping to get a good result. However, the purpose of an assessment is not to get a checkmark in the “everything is fine” box, it’s to source out the friction that is preventing people from doing their very best work. And the best time to do this may be in the heat of the moment. Putting off hearing from your employees only lets the current frustrations fester and potentially grow into cancerous behaviors.

Nobody likes to lay people off. It can feel like a failure. However, instead of dealing with the root cause for the lack of performance, it’s a common tactic to re-arrange the deck chairs. It’s easy to shuffle people around and out. The short term reward for cutting the workforce is an attractive incentive to leaders.

A better alternative to layoffs?

I have had to layoff many people during my corporate career. Sometimes it was due to an acquisition that resulted in duplicate job functions. Sometimes it was the response to getting that 10% reduction in costs as part of the budget exercise. I’ve been caught up in the annual workforce reduction hamster wheel. I spent many Christmases knowing that when the New Year came around I’d be having tough conversations with wonderful people.

The more sustainable effort, which takes courage, is to dig deep into what’s stopping people from delivering the high performance you need. That information is gold and is easily identified by doing a values-based assessment followed by focus groups with your employees. If you’re looking at layoffs, I invite you to a complimentary discovery call to see how getting a handle on your culture and finding the leaks in your productivity pipeline might be a better solution.

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