November 22, 2022
This is the fourth article of a four-part series on how founders can help their businesses navigate downturns.
The global macroeconomic environment suggests that we are in a moment to be thoughtful about what it means to be an organization that can weather a storm. It is indisputable that the considerations and decisions made now will impact businesses for years to come. We asked the members of the Oak HC/FT CPO Guild for four tips on how to navigate a downturn.
Here’s tip number 4:
Develop a consistent framework around people decisions.
Scarcity breeds focus, and focus means you won’t be able to do everything on the priority list. You will need to choose the areas in which you double down and ones in which you choose to wind-down or decrease your investment. Don’t delay. Identify areas and roles and then mobilize to decrease spend. Eliminating roles means saying goodbye to people, which is really difficult. Boxes and roles are one thing but when you know business decisions will impact people—the heart and soul of a company—it’s anything but easy and so critical to get right. Though it’s obviously more difficult for the people who leave; it still leaves a mark on the people who stay.
Local Laws and Market Severance Offerings
If your company is global, how you legally say goodbye to colleagues needs to reflect the practices of the region. Get smart quickly. Leverage internal and external counsel. Understand what other companies are doing. If possible, having an “at least” approach is beneficial as it is a consistent message and package to those losing their jobs. Take the most generous path and treat employees with dignity and respect.
The employees who remain at the company will have a lot of questions. Provide them with a safe forum in which they can voice their concerns. Have a plan in place to re-recruit these employees so they are inspired to stay and dig deep. Painting a path for impact and growth, along with ensuring employees feel valued, will be even more important in the months following a reduction.
If the steps outlined here are done well, companies can emerge from the eventual recession in a position of strength. They will have a robust bench of talent and the organizational fundamentals in place to weather a future storm.