A Wren Says

I got into the research tunnel about layoffs. That led me to this HBR article: A Better, Fairer Approach to Layoffs . The authors, Sulene and Gupta, pointed to multiple examples where layoffs led to reduced sales and company performance. Trying to reduce costs through the labor force led to trickle effects that damaged the reputation of the company in the customer’s eyes. However, those who strategically thought about how to manage their workforces were better off. I suggest you read the full article yourself, but I want to highlight his quote:

Datta found that companies tended to get better financial results after a layoff when employees thought it was handled equitably and done for strategic reasons rather than cost cutting.

(Deepak Datta was a researcher from University of Texas Arlington who penned a 2012 review of companies that had gone through layoffs.)

This is a key thing you have to remember: Your employees can be your best advocates or your harshest critics. How you handle reductions in force will shape their ongoing opinion of your brand and the overall public perception. You might think it’s company secrets, but word will definitely get around.  

How you treat your employees, especially when they will be terminated, will impact how they view your brand overall. Those same employees, those who remain and those who let go, will go and talk to their families about your company. They will chit chat with friends about how things are going. They themselves will either choose to continue to purchase your products or potentially dissuade others from ever setting foot in your stores.

The same effort you put into attracting and retaining customers is what you should be using to manage employee relations. Perhaps even more. It is possible to shift your workforce management without destroying your image, but it takes intentionality and strategy. It’s hard work, but it will be worth in the end.