The Coronavirus Crisis Doesn’t Have to Lead to Layoffs

So before announcing deep layoffs, we recommend that you consider these measures first.

During a crisis, denial of the situation can often lead to layoffs. For weeks, our corporate clients and contacts waved off concerns about a potential economic impact from the COVID-19 outbreak.

Then something changed around March 9. First, our contacts told us they were restricting visitors to their offices and encouraging remote work. Now, we are hearing that many them are considering layoffs to ensure they make it through the crisis — and a recent survey found that a vast majority of corporate leaders are considering some sort of financial action as a result of the pandemic.

To be sure, a cost-cutting reflex is understandable. Leaders are obligated to make responsible decisions to keep their companies afloat. But those who manage the economic effects of this crisis in a clear and compassionate way will create more value for their companies and will come out of this pandemic stronger than ever. So before announcing deep layoffs, we recommend that you consider these measures first.

COMMUNICATE OPENLY

Many leaders assume that admitting that the company is facing turbulent times would scare away its best employees. The assumption is that these employees would worry less if management keeps its plans undisclosed. Nothing could be further from the truth. Everyone knows that we are going through a global pandemic. Everyone knows certain sectors of the economy are already getting hit hard by changes in consumer behavior. And everyone knows this slowdown and increased uncertainty may impact their company as well.

Instead of leaving your employees to second-guess how their jobs will be affected, be clear with them about the financial health of your firm and what goals you will prioritize. These goals will not be the same for every company, and you shouldn’t communicate empty statements you don’t believe in, such as “we put our employees first.”

SHARE THE PAIN

If you are making cutbacks to save job losses, you should lead by example and make cutbacks that impact your own day-to-day as well. If you don’t, there is a chance that employees will feel like the C-suite is taking advantage of them. Senior leaders should also get pay cuts. And the CEO should take the largest salary cut.

CONSIDER CROWDSOURCING IDEAS FROM EMPLOYEES

It can be overwhelming to open the floor for ideas from employees on what the company should do. Some leaders may fear that employees will be resentful if their ideas are not selected. Managers may also fear that crowdsourcing would make them appear to have less control. But it is critical that employees have the ability to voice their ideas. By showing them that you care about what they think, you can create stronger buy-in for the initiatives that you eventually prioritize.

REVIEW ALL THE OPTIONS (EVEN THE LESS CONVENTIONAL ONES)

Before cutting jobs, consider taking other measures to reduce costs. Implementing a four-day workweek for roles in departments with excess capacity can reduce staff costs by nearly 20%. Some employees may agree to working half-time if they believe that doing so will save jobs.

You can also offer employees the option of taking unpaid leave. Framing this leave as a sabbatical can help remove some of the stigma associated with the absence. In fact, when the overriding goal is to avoid layoffs, you may find that employees are amenable to the personal sacrifices inherent in salary-increase freezes, bans on overtime and other cost-saving measures.

KEEP YOUR COOL

Being a leader in turbulent times can be nerve-wracking. Acting too quickly (or too slowly) may cause the business to go under. It would be wise to keep your cool in a critical situation.

Leaders should recognize that government assistance may be coming, and that economic aid for companies can be used to prevent layoffs. Also keep in mind that slowdowns may be temporary and are not all equal. If your client is a movie theater that now needs to pause your project, you have reason to believe that the client will not be able to pick the project back up anytime soon since the theater industry is taking a big financial hit. However, if your client is a hospital that wants to pause your project so that it can focus on patients, you should communicate to the client’s management team that you understand its current priorities. It’s also reasonable to explain that you are trying to understand what the economic impacts of this pandemic will be on your firm; ask if the client would have an open discussion about whether they will continue the project once things calm down.

This is a time to show empathy, especially for the most vulnerable members of your company. If you lead with compassion, you can enhance the shared values of all your workers.

Copyright 2020 Harvard Business School Publishing Corp. Distributed by The New York Times Syndicate.

Topic: Leadership