Tom S., CEO of the Jansen Company (fictitious individual and company names, real client), called me a short time after downsizing.
The company had lost quite a few customers due to the bad press it had received for this.
Employee morale and engagement were rapidly sinking.
There was a loss in productivity due not only to the occurrence itself, but also because the remaining employees had to absorb the work previously done by those having lost their jobs.
The cost in dollars to Jansen was significant and surprising.
The move to restructure had been a move to stop profit bleed. But just totaling money spent on loss of market share due to bad press, severance packages for those laid off, and current training costs for those who needed to absorb the work left behind, was more than the company had projected.
Additionally, employee turnover was on the rise, as people didn’t trust what the company might do next. The search for replacements was also costing Jansen money, time, and effort, as well as the onboarding and training to get the new people up to speed.
Things were a mess as a result of the downsizing.
It appeared that Jansen’s downsizing had been an incredibly poor idea that did not pay off.
It’s a fact that a majority of layoffs do not turn out well. Downsizing has become a default response to an ambiguous future marked by swift advances in technology, volatile markets, and growing competition (for more on this, see “Layoffs That Don’t Break Your Company” by Sucher and Gupta, Harvard Business Review, May-June 2018 issue).
There are new and more successful alternatives emerging – but in Jansen’s case, this was now water under the bridge.
The CEO had called me in because the executive team members were under extreme stress. A couple of them who had never worked well together were simply not talking to one another. He was afraid that some of these executives might secretly be job hunting, and the company couldn’t afford such a final blow.
He wondered if executive coaching might be the answer to supporting his team with the agility they needed as they faced managing this unexpected situation.
I agreed to meet with each one of the executives individually to get a sense of where they were vis-à-vis their commitment to the company and to assess their ability to manage change.
As I did so, I learned that their effectiveness as team members and as team itself had been compromised long before the decision to downsize took place.
And I wished I could have coached them sooner – before they found themselves in such a difficult situation. Because what I identified were some areas in their leadership that, had these been strengthened, might have circumvented the downsizing and what led up to it.
Here were the chief team and individual behaviors I uncovered. These led to high COI (costs of inaction).
- Poor communication and conflict management (by the way, this one area account for around 67% of all productivity loss in any enterprise)
- Slow and poor decision-making processes leading to less-than-optimal outcomes
- Ineffective approaches to bring others along in the process for buy-in and commitment
- Poor ability to keep eyes on the horizon for trends and shifts while managing the present
- Poor stress management from high productivity and little return
- Unwillingness to consider multiple perspectives leading to better creativity and innovation
I believe Jansen would not have had to consider downsizing, had decision-makers recognized the value of intentional and consistent leadership development.
Leadership directly affects all levels of the organization’s success.
Is your leadership producing a great ROI? Here are some questions to help you gauge this:
- Are people clamoring to work for your company? Are your employees highly engaged and productive?
- Is your business consistently increasing revenue and profitability? Or are there areas that need help?
- Are you retaining your current market share and capturing more? Or are you stalled at a certain point?
- Where do you stand vis-à-vis the competition? How well are your products and services reflecting the innovation you need to be on top?
- What does overall performance look like for your enterprise? Are there any silos or broken parts needing your attention?