How do Reality-Based™ Leaders best contribute during headcount reductions?

In these challenging times, many leaders are seeking to reduce expenses through the reduction of head count. While it is important to ensure that the resources of the organization are being tightly managed, the organization’s talent still needs to be led. Reality-Based™ Leaders lead first and manage second. 

Here’s how:

When making the decision on which employees to impact – focus on talent rather than function or position. 

When reducing your workforce, don’t be short-sighted and look to reduce positions or functions that no longer serve the highest good for the organization. Instead, assess your talent and use downtime as an opportunity to transition talent that is no longer relevant and/or change-resistant to outside of the organization. Work to keep employees who are high-performing, learning-agile, utility players and are willing to serve the organization in a variety of capacities.  Once you decide which talent to keep, take a look at how they can be utilized to best serve the organization. Use this downtime as an opportunity to fine-tune your talent mix. 

When reducing head count, resist the urge to be overly conservative.

If you are in a position that truly merits a decrease in head count, cut a bit deeper than the budget calls for so you can recoup the dollars from additional downsizing to reward, recognize and develop the top talent you have chosen to keep. Such foresight will ensure that you are better able to retain and develop your best people while reducing their risk for burnout. So, for example, if the budget indicates that cutting 10 to 12 people would make the numbers work, cut 15 and use the dollars freed up from the extra three positions to focus on bringing out the best in the top talent that remains through reward and development. 

If you are not in the position of decision maker, offer expertise – not editorials.

Editorializing about any decision made by another level of the leadership team, especially when times are tough, is a cardinal sin. In many cases, there are no perfect or right decisions. All decisions have one or many downsides. The best use of your talent and energy is to help identify any risk posed by the decision and rally your team around mitigating those risks. When possible, be proactive. Offer up a variety of options to the decision makers, outlining the potential benefits of each course of action along with the corresponding risks, complete with your team’s plan to mitigate the risks of any chosen option. Resist the urge to favor any option as “right” and instead deliver with excellence on any option chosen.   

Think in terms of the income statement, not the balance sheet.

When engaged in cost reduction, many leaders lose sight of the income statement that measures the true return on investment or profit, as they work to simply balance the books and match cost against the budget dollars available. Not all costs are equal when reviewed in terms of the potential income or benefit they will generate. The same dollar cost can return significantly different levels of value, depending upon where in the organization it is invested.  Get very clear about the future value of the threatened resource and cut those expenses delivering the lowest return. 

Downsize the sales force to increase sales.

Many leaders focus their downsizing efforts on the non-revenue generating portion of the business and resist any decrease in the sales force. These leaders are operating under the inaccurate premise that any and all production is worthy in down times. When the sales force is predominately commission-based, it appears that there is little downside to having a large, under-producing sales force. After all, they believe, the organization is only paying for the business delivered, with little additional cost. 

This can be counterproductive as times get tough. First, sales resources do have a cost over and above their commissions – the cost of supporting and managing them. Depending upon a salesperson’s volume, the return on investment of support and training efforts varies greatly.  Also, chronic wasting begins to take place, which ensures that you will downsize your talent to the lowest common denominator. Keeping a huge sales force can lead to a wasting syndrome where too many resources are fighting for the same sales and all are starving. The “alpha” sales people will quickly realize the lack of prospects for top performance and will leave. Those less confident in their abilities to produce anywhere else will stay, thus ensuring that not only do you have a smaller sales force, but one of mediocre performers.  It’s better to cut even commission-only sales people and focus on the top performers, and insist that they reach higher goals with less and then compensate accordingly. 

So, if you must: “Off with some heads and on to results!”

Remember, Cy rocks and you rock.

Lead on my friend.