Reassuring Employees After Layoffs

Q: Recently, sales have been down at my company, and I had to lay off some of my staff and cut operating costs. My company is in no danger of going under, but morale among my remaining employees is way down. How can I convince them that their jobs are safe and my company is going to be around for a long time, while boosting their morale?

A: No doubt, you have a very timely problem. With the near-daily stories of company failures layoffs, as well as your own layoffs, it's not surprising your employees have an uneasy feeling about the company's future.

Resource Guide Get your company back on track with Healing the Wounds: Overcoming the Trauma of Layoffs and Revitalizing Downsized Organizationsby David M. Noer.

Unwarranted rumors can be real killers in terms of productivity and morale; anxiety among employees can wreak havoc on companies of all sizes. Dealing with rumors in the workplace is a leadership issue of the highest priority. And that's why it is so sad to see so many examples of upper management remaining silent, as whispering campaigns spread throughout their organizations like a cancer. Perhaps senior management feels that it is beneath their dignity to comment on company gossip, and that its comments would only lend credence to the rumors. But silence from above is not the answer; it only confirms the suspicions of the rank and file, who can only conclude, "It must be true; management is not denying it."

The best way to stop rumors is to prevent anxiety from taking hold in the first place-and that can only be accomplished by a manager who has never lied to his or her people. Managers who build a reputation of credibility-and who share with their employees both the good news and, perhaps even more important, the bad news-are an organization's best bet against the loss of productivity and valued personnel due to unfounded rumors of impending layoffs, lost contracts, reduced value of company stock, etc., etc., etc.

We have to ask ourselves: Am I that kind of manager? Am I open and frank with my subordinates? Do I share with them news of company triumphs, as well as the bad news of lost market share? Does the rank and file view me as part of an exclusive managerial club, immune from personnel cuts, or do they see me as their leader, whose career is linked to their productivity and general well-being? When our employees always trust us to give them the straight truth, the destructive whispering campaigns will cease, and their fellow workers will look upon those who persist in spreading rumors as "out of the loop."

Hopefully, you are that kind of manager and your employees will trust you. So it's time to have a meeting with your employees and acknowledge that sales are indeed lower than expected. But also assure them the profits are adequate to maintain every remaining job in the company, that the few layoffs were painful but necessary and no further personnel cuts are required. Let them know that you've reduced nonpersonnel costs to compensate for the loss of business. And if you haven't done so in the past, now would be a good time to share your company's profit-and-loss statement with your employees. But don't just share it; explain it.

Years ago, I had a conversation with my mother and told her how much business I did and the level of my profits. She said, "Rod, if you're not making 50 percent, you don't belong in business." Well, some of your employees may have the same misconception about your company's profits. If you can truthfully demonstrate that this year's profits are in line with the recent past, you will have gone a long way to easing their concerns. Let them know what new steps you're taking to replace the lost business. Remind them of past downturns that were worse than the current one and how you weathered those storms and are even stronger now. And, just remember, if your employees have no prior reason to doubt your word, they'll accept your truthfulness and appreciate the additional information you are now offering.

Rod Walsh and Dan Carrison are the founding partners of Semper Fi Consulting in Sherman Oaks, California and the authors of Semper Fi: Business Leadership the Marine Corps Way.

The opinions expressed in this column are those of the author, not of Entrepreneur.com. All answers are intended to be general in nature, without regard to specific geographical areas or circumstances, and should only be relied upon after consulting an appropriate expert, such as an attorney or accountant.