Laying Off of Layoffs-3 Alternatives to Reducing Cost While Retaining Talent — Tanya Stewart Blackmon
With the economy slowing and market uncertainties, many companies in diverse industries are cutting people and jobs. Netflix. Tesla. Coinbase. Peloton. Uber. And many more.
Yet after the “Great Resignation,” some organizations are choosing other options to reduce cost while retaining talent. We can learn from them.
Why It Matters
It’s clear layoffs or reductions in force may be required for some organizations, but there are repercussions. Example: Researchers at the University of Canterbury and Stockholm University found that after a layoff, “survivors” (employees who remain) experienced a 41 percent decline in job satisfaction, a 36 percent decline in organizational commitment, and a 20 percent decline in job performance. And the fact is, high performers may simply leave for more stable organizations.
As a Hospital President, and a Chief Diversity, Inclusion & Equity Officer for the past 18 years, I’ve navigated many a downturn. There are times when layoffs are required and it takes creativity and courage to avoid them. Some organizations are doing just that.
The Obvious
By some measures, the labor market has never been tighter. The latest U.S. unemployment rate was 3.6% and many employers remain scarred by worker shortages in recent years. So some organizations are using traditional alternatives to layoffs and reductions in force. These include hiring freezes, pay or benefit reductions, reduced work weeks and re-negotiating contracts.
When I was President and COO of two hospitals during a down cycle, one of my first actions was a detailed budget analysis. Key learning: a significant percentage of our cost was in orthopedic implants. We negotiated a better price to free capital we could deploy in other ways. Including retaining top talent!
The Not So Obvious
In my experience, there are other creative ways to reduce costs while retaining talent that many leaders don’t consider. These may not replace all of the more traditional tactics, but they can buffer or balance more draconian cost-reduction actions.
As a first step in a downturn, I encourage organizations to ask a few questions before eliminating jobs. Three “Whats,” one “Where,” and one “Who.” I’ve outlined them here with some examples:
What Can We Stop? What Can We Reduce (In Frequency, Volume or Time?) What Can We Redeploy?
Take a serious, detailed look at your business. Are there things you can just stop doing — like eliminating slow-paying clients and incentivizing good ones to grow your business. Or can you reduce service costs, eliminating steps that matter less (or not at all!) to customers? Can you decrease energy costs? Can you streamline processes? Reduce inventories? You get the idea.
Should such considerations be a normal course of business? Yes. Do most companies regularly explore them? In many cases, no.
Another question involves redeploying resources. Example: In the Great Recession, Southwest Airlines’ business suffered along with nearly every company. To prevent layoffs, they redeployed job recruiters who had great people skills into frontline customer service jobs. When the economy recovered, the employees transitioned back to their original jobs.
Where Should We Allocate Resources to Differentiate and Grow Our Business? Another strategy is to explore opportunities to grow revenue. Ok, that’s obvious — but there are not-so-obvious ways to do that. Example: As a healthcare leader, I have long recognized the importance of partnering with the front lines — the physicians and nurses who interact with patients — to identify opportunities to grow business. As the head of a hospital, I engaged doctors to determine the biggest opportunities for growth in our market. Together, we recruited specialists and purchased new equipment, driving measurable market share gains in some of our most competitive service lines, including orthopedics, oncology, medical/surgical and women’s services.
Who Can We Tap to Generate Cost-Reduction or Revenue-Generation Ideas? Sometimes we only see the people who are directly in front of us, missing the hidden talent in our organizations. Connecting with diverse groups of employees and asking for their input can yield big benefits. Example: The hospital where I previously worked wanted to attract more patients from the community’s significant Latino and Asian communities. As Chief Diversity, Inclusion, and Equity Officer, I engaged employee resource groups to help us understand the needs of these potential customers going into the communities to conduct focus groups. The learnings resulted in the hospital redesigning its website to include a Spanish version, making the building more inviting and inclusive and providing some new and needed services. The result? Significant market share and revenue growth among two of the fastest growing populations.
Bottom Line
The economy and market will dictate the severity of measures organizations must take to survive these recessionary times. Before turning to draconian steps, I recommend companies explore a full range of options, balancing short-term results with long-term repercussions. As leaders, we need not go it alone. By engaging members of a diverse team, we can identify new solutions to survive — and thrive — in challenging times.
Tanya Stewart Blackmon is a nationally recognized DEI executive with an exceptional record of leadership, cultural change, performance improvement, and revenue growth. She has served as Executive Vice President and Chief Diversity, Inclusion & Equity Officer and President and Chief Operating Officer at an award-winning integrated healthcare system along with several Boards.
Connect with me on LinkedIn.
