Getting Through Layoffs Without Losing Customers


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Layoffs and bad economies usually go hand in hand. Fortunately, we’ve been light on the layoffs so far, considering how badly our economy has tanked (although there’s no “fortunately” for employees already let go). But the likelihood of major employment cuts occurring continues rising, and some companies should start planning now how to minimize impact on customers should cuts come.

Time was when layoffs affected manufacturing workers first, followed by some pruning of “office” positions, if necessary. But with less than 10% of U.S. employees remaining in manufacturing jobs, the order has reversed. Office positions—including all customer contact and customer impact roles—have become the primary target. And to make matters worse, most companies use the “meat ax” approach to layoffs, meeting a set number or percentage employees to go regardless of impact on customers, thereby putting customer relationships at risk.

Frankly, given C-level executive mindsets, attempts to prevent layoffs in customer-sensitive positions usually go nowhere. However, by thinking ahead and working ahead most down-sizing companies can reduce or even eliminate negative effects on customers. And as counter-intuitive as this seems, some companies can strengthen customer relationships while cutting staff.

What’s the secret? There is no secret, other than having the smarts to reduce the amount of work required in order to reduce the number of people required. In other words, if companies eliminate all the kinks, bends, duplication and drops in office process before they cut staff, they can mitigate or even eliminate the risk to customer relationships.

When we apply our Visual Workflow office process analysis and design tool, we typically find somewhere in the range of 10% overstaffing, and we’ve seen instances where overstaffing tops 20%. But this over-staffing is invisible to companies, because, these excess employees are hardly standing around. They’re working as hard as everyone else. Deficient processes require more people doing more work, while effective office process design reduces the amount of work required, thereby reducing the number of workers required. It’s that simple.

In contrast, when companies break out the meat ax to sever employee relationships, they don’t consider cutting the amount of work, and workers, required. They just assume staffing exceeds workload. Or they decide remaining employees will just have to work harder. And they naively believe everything will sort itself out. But that rarely happens. Instead, when employees go away without work going away, work performance suffers. And when the work is customer work, customer relationships take a hit. Consequently, very often customers closely follow employees out the exit door.

So here’s a question for you. “Why do the vast majority of companies use the meat ax approach rather than the process approach?” In the new book I’m writing, “Process to the People,” I’ve dedicated several chapters to explaining the genesis of all this bad decision-making. But suffice it to say now that despite 90% of workers having non-manufacturing jobs, the preponderance of them office jobs, business continues applying 90%+ of their process efforts against the less than 10% of the workforce in manufacturing. The notion that process redesign can permanently shrink the office workforce has never crossed most CEO’s minds—or has crossed their minds only to be crossed off, sometimes for fear of cutting people they know, rather than “just” anonymous manufacturing workers. The only thing keeping their companies from being at a competitive disadvantage despite such deficient decision-making is the scarcity of office process-smart companies.

Back in the beginning, I mentioned opportunities to actually better customer relationships post-layoffs. Two “truths” about office process redesign create this opportunity. First, good process design simplifies work. And simplifying work increases work-quality, reduces errors and speeds up cycle times—all big positives for customers. Second, among the principles of office process redesign is training and empowering employees to make context-sensitive decisions. Doing so usually shrinks or eliminates supervisory levels across a range of functions, the contact center being a good example. Research shows that training and empowering customer-facing employees finishes behind only product/service quality in triggering supplier selection.

Oh, and a quick aside. If you’re good buds with the HR folks, eliminating roles instead of eliminating people mitigates the risk of EEOC actions and legal claims.

All this notwithstanding, layoffs are ugly and hurtful. But by redesigning work to require fewer people before cutting, you’ll mitigate the potential damage to customers and company both. You’ll also take away at least a bit of the sting employees feel when they believe they’ve been targeted personally to leave, rather than their departure stemming from job elimination. And you’ll potentially ease “survivor’s guilt” as well.

Not a happy topic. But something many of us will have to deal with until the economy rebounds.


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