Downsizing: 3 crucial areas to consider

So it’s certainly not going to be good for the employees you have to show the door. But if you have to make this tough call, you certainly want to make sure your company gets the most out of it.

It’s a decision no one makes lightly: cutting payroll by cutting headcount.

Chances are no matter how stable your company, the thought has crossed every one of your employees’ minds in this volatile economy. And for some of them, those fears may be founded.

If you and other top execs have decided there’s no other option, that’s when the real hard work begins.

To make the best of a bad situation, you’ll have to be confident of these three things:

Look out for your company

Some companies settle upon a magic number when it comes to downsizing: “We’ll cut staff across the board by 10%.”

Be careful: That may lead to choices that don’t better your company’s overall strategy. Short term savings; long-term headaches.

Instead, encourage other top execs to really think of how your company can work smarter. Do an informal inventory of the talent in your organization before names for the chopping block start coming up.

You’ll want to be the voice of reason here: If the finance person isn’t advocating cuts simply for the sake of a quick cost savings, others will be more likely to take a deeper look.

Look out for legalities

All that planning will serve you well in terms of making sure your company does not run afoul of the law during an already tough time.

The good news: Your organization can downsize any way it likes as long as you don’t discriminate in terms of whom you choose to let go.

Once you have a list of those to be let go, be certain the cuts don’t follow a pattern of being only (or mostly) to a specific gender, age, religion, ethnic group, etc.

There’s more reason to document your decision process every step of the way. Even if your downsized employees are all members of a protected class, if you can show business reasons for the decisions, you should be in the clear.

Look out for all employees

No matter who gets shown the door, be prepared: All eyes are on you and other company leaders. Yes, naturally that means showing the utmost respect and understanding for downsized staffers. It also means making extra efforts to ease the minds of “survivors” who feel everything from guilt for keeping their jobs to fear that they may be next.

You probably can’t (and shouldn’t) make any promises about there being no more cuts. But some overcommunication or even just letting staffers express their concerns can go a long way toward keeping a calculated staff reduction from turning into a mass exodus.