A Leadership Dilemma.

One of the important lessons that leaders must learn is how to make a decision between two rights!  Anyone can pretty easily make a decision when presented with an obvious right and an equally obvious wrong.  Those choices don’t involve much leadership courage.

But what about having to decide between two rights?

Here is an example.  Several of my clients are facing significant changes in their marketplace.  Specifically for those in the defense sector, global military spending is down and the US military and defense budgets are dropping and cuts will probably continue for several more years. The logical response to market conditions that are beyond our control is to get spending in line with the forecasted drop in revenue. Whether you call it “right-sizing”, cutbacks, layoffs, or restructuring, in the end, people will lose their jobs, both those directly associated with customer programs as well as indirect staff jobs.  There may even be a need to close one or more facilities where capacity has fallen.  An unpleasant task, but necessary if the company is to remain competitive in a shrunken market.

Now, here is the leadership dilemma; the choice between two rights.  Should management tell the employees about the need for potential or upcoming layoffs, or should they keep it quiet until all the plans are done and it is time to make the cuts?  Both approaches achieve the final result, lowered costs, but they come with very different leadership dilemmas.

Choice One: Announcing an upcoming staff and cost reduction brings in the very real possibility that good people will leave since the company is contracting and opportunity for advancement or challenging work is decreased.  They may also leave because of the fear that those left after the cuts will have more work piled on them and they are already very busy. The other risk of this approach (pre-announcing the intention to downsize) is that people will get “freaked out”, become overly stressed with worry and become less effective at work.  There is also the real concern that the threat of impending layoffs will cause people to take less risk and generally keep their heads down (“run for cover”).  Overall the big concern among management is that during the time between the announcement and the actual layoff, productivity and creativity will suffer.  On the other hand, for those employees who will be getting laid off, it is always easier to find a new job while you are currently employed.  In other words, letting people know ahead of time, even several months, gives them time to plan their life and search for a new job. The HR department can even help in the job search process.

Choice Two:  Keeping the layoff plan secret until it is time to make the cuts reduces the risk of loss productivity and “freaked out” employees, but runs the risk of damaging the trust between employees and management.  People who feel surprised or badly treated on the job often spread negative comments about the company and management, thus damaging the company brand and reputation in the community and the marketplace. Also, the sudden shock of being fired or let go causes many people considerable stress and damage to their self-esteem, which not only impacts them personally but also has a negative impact on their family life.

No easy choice.  Both have benefits and drawbacks which will need to be managed if the process is to end successfully for the business.  The leadership dilemma is that the CEO has a responsibility to both the company (shareholders and investors) as well as a responsibility to employees and the community.

If you have ever been part of a leadership team facing this type of decision, then you know there is no easy answer.

How would you choose?  How would you explain your choice to your boss or to an employee? How would you explain it to yourself when you look in the mirror?

Tight Lines . . .

John R Childress

john@johnrchildress.com

About johnrchildress

John Childress is currently Visiting Professor in Strategy and Culture at IE Business School in Madrid and a pioneer in the field of strategy execution, culture change, executive leadership and organization effectiveness, author of several books and numerous articles on leadership, an effective public speaker and workshop facilitator for Boards and senior executive teams. In 1978 John co-founded The Senn-Delaney Leadership Consulting Group, the first international consulting firm to focus exclusively on culture change, leadership development and senior team alignment. Between 1978 and 2000 he served as its President and CEO and guided the international expansion of the company. His work with senior leadership teams has included companies in crisis (GPU Nuclear – owner of the Three Mile Island Nuclear Plants following the accident), deregulated industries (natural gas pipelines, telecommunications and the breakup of The Bell Telephone Companies), mergers and acquisitions and classic business turnaround scenarios with global organizations from the Fortune 500 and FTSE 250 ranks. He has designed and conducted consulting engagements in the US, UK, Europe, Middle East, Africa, China and Asia. Currently John is an independent advisor to CEO’s, Boards, management teams and organisations on strategy execution, corporate culture, leadership team effectiveness, business performance and executive development. John was born in the Cascade Mountains of Oregon and eventually moved to Carmel Highlands, California during most of his business career. John is a Phi Beta Kappa scholar with a BA degree (Magna cum Laude) from the University of California, a Masters Degree from Harvard University and was a PhD candidate at the University of Hawaii before deciding on a career as a business entrepreneur in the mid-70s. In 1968-69 he attended the American University of Beirut and it was there that his interest in cultures, leadership and group dynamics began to take shape. John Childress resides in London and the south of France with his family and is an avid flyfisherman, with recent trips to Alaska, the Amazon River, Tierra del Fuego, and Kamchatka in the far east of Russia. He is a trustee for Young Virtuosi, a foundation to support talented young musicians. You can reach John at john@johnrchildress.com or john.childress@theprincipiagroup.com
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4 Responses to A Leadership Dilemma.

  1. A couple of comments from Jeff Armfield-

    Isn’t it better to be forthright with everyone up front? And then communicate to the staff that you want to stay that “We need your help” ?

    Also, doesn’t the forthrightness also allow time for everyone to start working on the problem on their own and/or collectively? None of us is as smart as all of us.

    Lastly, Aren’t we as leaders supposed to be communicating consistently to everyone? Would just as soon get the issue out on the table and deal with it.

    “Where there is unity there is always victory” – Publilius Syrus

    JSA

    Like

  2. Pingback: 3 ways managers damage their reputation without knowing it « Rubber Tyres –> Smooth Rides

  3. Pingback: Daily Leadership Thought #175 – You Can Cut Too Much « Ed Robinson's Blog

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