The Right and Wrong Way to Handle Employees When Your Biz is Struggling

A Company on the Rocks

I have recently had the experience of being part of a leadership team in a company struggling through hard times.  This was a result of several factors including to the economy, organizational realignment, new brand direction and executive decisions.  We were forced into making moves intended to gain solid footing in stormy seas.  Decisions from stopping the cleaning service to laying off friends and colleagues.  Some decisions made were "right", others were "wrong" but it provided me a clear example of how to handle adversity in business.  I am providing some insight and guidance based on what I have experienced in hopes of helping other companies that are struggling.  Much of this is common sense however the stress and strain of trying to save a failing business can be emotionally, spiritually and physically taxing.  It is very easy to stray from what you know is "right" in fleeting moments of self-preservation.

Communication

The Right Way: Be transparent with your employees.  If the company is struggling, let them know.  You may have some resources jump ship who do not have the stomach for adversity however, the ones who stay are likely fiercely loyal employees who are exactly who you would want on your team in hard times.  When all else fails and layoffs are inevitable, give your team as much notice as possible to allow them to search for employment.  If it is in your power, make introductions to other potential employers and offer to be a reference.  This good will offering will not be forgotten by the employee.

The Wrong Way:  Pretending that everything is "OK" when the business is struggling helps no one.  This approach only casts a shadow of doubt on everything being communicated from the executive team.  After a significant layoff you can't look the remaining employees in the  eye and tell them that everything is great as their friends and colleagues are packing up their desks.  This is perceived as being either aloof or dishonest and it will lead to quicker attrition from those that you are counting on to help get through the tough times.

Culture

The Right Way:  Although it may be difficult, it is important to try and maintain a culture of honesty, confidence and determination.  Identify and take responsibility for those decisions or events that may have had a negative effect on the company. Allow your team to feel as though they have the ability to make an impact and help the company get back on track.  The transparency and sense of being part of something bigger than their individual contribution will help motivate employees and keep them engaged.

The Wrong Way:  Creating a culture of fear and suspicion will only drive good resources out the door.  It is very easy to point fingers and blame others for your problems. This gives the appearance that you aren't serious about addressing internal problems that may help right the ship and taking responsibility for any possible missteps.  It is inevitable, when you refuse to take responsibility for your situation, that you find a villain around every corner to blame your problems on.  This may start with external influences but will eventually lead to witch hunts in your own organization.  Nothing could be more damaging to your corporate culture.

Relationships

The Right Way:  Treat your employees with respect.  The best asset for any company is it's people.  In the event that your company is able to rebound, it is important to have treated your team with professionalism and respect if you would like to have them return in the future.  In addition, a previous employees recommendation might be critical in landing new talent.  For those who have to be let go, offer your assistance in landing a new gig.  For those leaving on their own behalf, thank them for their service and offer them a recommendation.  It is small world and word spreads quickly regarding how a company treats it's employees.  Another note on relationships:  Remember that many of your employees will create lasting friendships with their colleagues while under your employ.  Treating those employees, with whom are effected by the companies struggles, with respect and dignity goes a long way for those resources who remain to help your company move forward.

The Wrong Way:  There are some very clear ways to create ill will and destroy relationships with those employees that you are forced to let go as well as those who remain.  Surprise layoffs will put the entire workforce on eggshells and is an absolute moral and productivity killer.  There is nothing more unsettling than wondering when the next round (and there is always a next round) of layoffs will hit and wondering who will be effected.  Creating conditions as it related to receiving severance pay is a terrible thing to do to an outgoing employee.  This individual has the weight of the world on their shoulders when they walk out your doors.  Don't add any additional weight.  Deliberate deception and lying to your team can never be condoned.  I can assure you that eventually the truth finds a way out and those organizations that lie to their employees about the state of the company will lose all of their credibility.  No one likes to be lied to, not executives, not employees.  Don't do it... it's bad for business. 

Bottom Line

The conclusion has yet to be written for the company with whom I had these experiences.  Regardless of the outcome, any leadership team that does well by their employees will sleep easy at night while the other will see monsters in the closet and under the bed.  I am confident that a company that provides transparency to the employees, creates a positive culture and values relationships can succeed in hard times.  A company that takes responsibility for the current state of the organization and allows their employees to take part in the recovery will be well on it's way to a successful rebound.  If a leadership team finds themselves doing things the "wrong way", they will be mired in doubt in suspicion and talented resources will leave in droves.  Eventually, this will permeate into the market and customers and prospects will take notice.  This could prove to be the death nail for a organization on hard times.

Share your experiences.  I hope to hear about more execs getting it right than wrong.  This is a very hard time for business, especially small business.  Execs are human and prone to mistakes (just like everyone else).  Learning from these mistakes is what is key.