19 senior people to be cut or demoted

Bob Prosen is the author of Kiss Theory Goodbye and President and CEO of The Prosen Center for Business Advancement whose mission is to help business leaders rapidly increase performance, productivity and profits. He has been successfully teaching top business leaders how to apply his Five Attributes of Highly Profitable Companies.

Dear Office Politics,

Our department is dealing with reorganization and possibly position rollbacks as a result of budget cuts. We were told this week that 19 senior people will either have their positions eliminated or rolled back to a job level one step below their current positions. Therefore, people who have reached a certain level of success because of their hard work will in essence be demoted.

It has caused the rest of us to debate the decision. However, it has also begun a series of discussions about each person’s worth. Do they deserve the position to begin with or should they just be eliminated completely? It is a difficult situation. The purpose of these moves is to prevent budget cuts that would affect the rest of us. These people are basically being sacrificed for the good of the department and everyone seems to be throwing them under the bus. How do you deal with such discussions without alienating your co-workers?

Thanks,

Concerned

OFFICE-POLITICS GUEST REPLY BY BOB PROSEN

Dear Concerned,

Thanks so much for your email. What you are facing is never easy, but it may be the necessary and right thing to do if your company is going to survive. For companies that are facing reorganizations, rollbacks, and budget cuts, the bottom line solution always becomes a question of cost.

Based on what you shared in your email, your company plans to implement a combination of job elimination and demotion plans among upper level employees in order to buffer the bottom line. While the habitual practice of job cuts and reorganizations can have a devastating impact on company morale and culture, the process itself, when done sparingly, is often a necessary, and needed, step in shaping an effective, productive work force. When done properly and communicated effectively, the practice is consistent with achieving bottom line results, which should be every company’s ultimate goal. (One caveat, if a company has a history of layoffs and demotions, the problem may be poor leadership at the top.)

If eliminating positions is the best alternative, there is no question that low performers must be the first to go. That decision is simple and fairly straightforward. However, demoting well-qualified and productive employees is another situation altogether. While this practice will provide the company a savings in salary costs, the trade-off is a marked decrease in morale. Faced with an increased workload due to a diminished workforce, those left (assumably your top tier performers) will not view rollbacks altruistically. From an organizational standpoint, if low performers have been let go and the company still needs to cut salary costs, it is often better to then exit good people, rather than demote, since it often stimulates those most qualified to seek employment elsewhere. Demoting top performers also creates a stigma and unnecessary hurdle that has to be overcome when searching for a new position. With the right attitude, the top tier performers may find that their exit turns out to be the proverbial silver lining in a dark cloud. Every employee should be given some counseling and support on how to make the transition to a new job.

You also asked, “How do you deal with such discussions without alienating your co-workers?” In dealing with co-workers, honesty is still the best policy. Clear and direct communication is key to quelling internal controversy and rumors that could detract from the company’s overall mission and objectives. In addition, as a senior leader all eyes will be on you, and it is important that you show support for corporate decisions, while empathizing with the personal anguish this upheaval is causing in people’s lives. Each person who is laid off or fired suffers a psychological blow. However, it will be easier for those affected to accept the tough decision if they have been honestly informed as to why it’s happening — and see that it’s necessary to stop the bleeding so that the corporate body survives.

Regards,

Bob Prosen
Author – Kiss Theory Good Bye
The Prosen Center for Business Advancement
http://www.bobprosen.com