Restructuring with Intention
The doom and gloom articles are extensive these days — a recession, layoffs, inflation — and at the same time the complete opposite stories are hitting the headlines — lack of employees, candidate market. Compensation is too high and somehow at the same time too low. It’s a never ending flow of mismatched information. Whether you’re a first time founder or a seasoned leader these headlines have you a little on edge.
As a leader you have a lot of responsibility on your shoulders, it’s not just about investors and customers but you have dozens, if not hundreds of humans and families relying on you to put food on their table. So what happens now? How do you keep everyone happy? Employed? Profitable?
The first thing you have to do is try - see if you can achieve all of that - you may have a recession-proof business, if so, congrats, this article is likely not for you. But like most of us, we will likely be impacted and we need to make thoughtful and organized decisions.
The biggest mistake I have seen in my career (and I have seen a lot of downsizing/restructuring) is when leaders focus on cutting jobs, versus keeping skills. The early Covid layoffs were a perfect example of this; things shifted quickly, people panicked, revenues dropped, leaders made cuts. But very quickly we started seeing companies clambering for talent again, top folks that had been let go found amazing homes in a matter of days amidst a global pandemic and that is because leaders cut jobs without thinking about skills.
If you’re in the unfortunate situation where you need to restructure your team let’s look at a few things you need to do to determine how to make the cuts:
Determine which jobs - NOT people - don’t make sense for the business anymore
Break it down by short, medium and long term, the roles that will not be relevant for the long term should be at the top of the list
Determine which employees no longer make sense for the business, regardless of the state. This is a tough one but it’s key to remember that high-growth companies go through stages and those stages require different people with different skill sets
Determine who are your High Performers vs. your High Potential employees, (https://calipercorp.com/blog/develop-high-potential-employees/)
HIPO employees are much harder to backfill.
Determine which employees are revenue generators and which are revenue enablers.
Then determine who can wear both hats if needed
Ex: An Account Exec. may not be able to generate their own leads but a BDR may be able to close and manage the sales cycle. Even though your instinct would be to terminate the BDR, when looked at at a high level, their versatility may be more valuable to the organization in tougher times.
Determine which employees have the broadest skill sets, have shown the most growth in their time at the company and have proactively and positively helped grow future leaders. These are key traits of people you want long term.
Now comes the tough part - taking that first list of roles no longer relevant and seeing how many match the employees from the second list, or employees who’ve essentially not shown up on any of your other lists. There will likely not be a lot of matching, so this is where the hard work comes in.
From the people who’ve shown up time and again on the high potential, broad skill set, instinctive leadership lists, are there roles they can be moved into for the short term (plug the hole) or with the right support (hello C-Suite!)?
These will be your people, these will be the folks that can shift from a role that may not be crucial in the current market to one that is crucial for the business at this time. They are team players, they understand that different situations require people to do different things and they see the opportunities in those times.
Once these people are identified you have a hard thing to do, you need to do your layoffs before you can brief them on your plan.
Be organized, have a game plan ready for them, let them know that you’ve decided to have them stay on even with their role not being essential at the moment.
Have one story that all of leadership tells, communication solidarity across the business is key to keeping calm
Have raises prepared (without them asking) for those taking on additional responsibilities.
Focus on what this smaller but mighty team is here to accomplish.
“Getting out alive” isn’t enough, a huge missed opportunity during the pandemic for companies that had a really slow period was not taking advantage of that time to solve for issues the company has had across all areas of the business before things slowed down.
And finally, be prepared for some of them to leave. It will happen, there will always be people we give more credit to than they give themselves, and there’s often nothing you can do to save it.