Layoffs Aren't the Solution to Your Profitability Crisis. Here's the Simple 4-Step Process You Should Be Following Instead. A people-centric business model offers an elegantly simple alternative to falling into the debt trap.
By Brook Zimmatore Edited by Jessica Thomas
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With layoffs sweeping the country and a recession looming, it would be hard to argue in favor of "big business" with an employee who recently found themselves out of a job. Layoffs are being thrown out as a last-ditch strategy to mitigate the consequences of corporate leaders over-leveraging their companies by accumulating too much debt. But making staff the collateral damage of this form of enterprise-level gambling is not only socially reckless, but it's also contrary to the very strategy that ensures financial sustainability, even through a recession: investing in employees.
Although executives at large companies might measure the size of their ambition by the size of their staff, sustainable growth requires a strategic approach in which new hires are adding bodies to flesh out a hopeful expansion plan and also meet a real need driven by profitability.
Supply and demand is the oldest and greatest business model that has ever existed for a reason. Targeting hypergrowth to pay interest rates fails to ensure there is adequate demand. There's a better way to get the basics right. Ask yourself these two questions:
- What do you want your company to produce?
- How can you create high-potential teams to reach your goals?
To that end, it's vital to know the value of each player on your team — and for your team to feel valued in return. This people-centered approach can help companies avoid large layoffs and remain stable through cyclical recessions.
Define your goals and create alignment
Layoffs have exposed the frailty of huge companies that can't pay salaries when their revenue isn't consistently growing. Businesses bloated with debt can try hiring a 50-man marketing team in hopes that sales will boom to service extortionate interest payments, but by then, it's often too late. Companies need a plan to create sustainable and consistent revenue before trouble strikes.
The premise of this approach is entirely different from throwing darts (funding and staff) at the wall. It's an embarrassingly simple equation. Identify consumer demand, create a supply strategy and invest in your teams to get your production goals over the line. Then, constantly inspect and organize for policy so your company will never be in conflict with itself and have to micro-manage crises.
Policy forms a road map of a group's agreements and creates alignment. The stakes are not just survival, but surviving better. Every new employee should be aligned with the company's purpose, and they should have a specific value that they add to solve an identified stress point.
Then, do the math. Calculate the cost of supporting new staff members to do their jobs against the value of growth. By doing this, your employees become vital pieces of your overall strategy for profitability.
Related: 5 Ways to Sustain Company Growth During a Recession
Take inventory of your team
Managers who don't know how to handle people are often mismanaging their team and letting talent go untapped. If your staff are allowed to contribute and are given space to use their incredible minds, the business will only benefit from their creative potential. How much more will an employee who knows they are valued contribute compared to a member of a marketing squad hidden in the basement like some kind of bear trap?
Innately, every individual has a high potential worth to society. When this is truly understood, your focus can move from staffing size to staffing quality. Identify the strengths of your teams, and leverage them to meet your goals while also organizing for your new hires properly. If you have ensured your new employee is aligned culturally and have provided them with all the support they need, they will deliver.
Just as policy is not a one-time act, so your investment in staff needs to be ongoing. Providing opportunities for growth-minded employees keeps them motivated and engaged. Gamification is one strategy that also helps build a sense of community through a system of challenges and rewards. The team that plays together, thrives together.
Bootstrap your company organically
Layoffs occur at the end of a chain of events. Leaders who believe they can't grow their companies without money being dumped into the business are the beginning link. Such financial generosity doesn't replace the need to observe what is successful, document it and then train your team so the process is replicable.
There is a simple process that can help you to realign your company goals and team inventory:
- Identify the company's stress points, and understand what roles are needed to support the business to become strong where it was weak.
- Identify who will fill this role. If they are new, make sure they fit in with your company's culture.
- Train the employee so they have everything they need to be successful. Spend time aligning them with your goals through apprenticeship, refinement and quality control. Lay out a great program for them to execute.
- Follow, support and evaluate their progress through clear communication and policy.
Related: Gamification Can Solve the Great Resignation. Here's Why.
Mutual growth is recession-proof
A lot of big businesses talk a good game about creating a strong culture and treating staff as family, but layoffs show who is first in the firing line. Management needs to know how to use their team to help them grow to be successful.
When you invest in your staff, you invest in your company. Aligning your goals with your team's goals can create a high-performance environment that ensures your company can withstand inevitable economic downturns.
