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