I need to downsize my business – what is the best approach?

You know you need to downsize your business, but how do you approach putting it into action? What should you do first?

Salaries are often a business’s biggest cost, so cutting back on people is likely to be a part of downsizing – and this usually involves redundancies. But who should you keep and how do you restructure to plug any gaps?

Even if you already have a clear idea of what you want to do, who you want to stay and who might go, I recommend stepping back for a moment, considering all of your options and putting a plan in place before you make any announcements.

1. Prioritise what’s critical

   Don’t lose sight of your overall aims; keep in mind the vision and the goals of the business. What is critical for the business to achieve in the coming period? If you have fewer people and fewer skills, what is vital to keep the business resilient, and what are the nice-to-have systems or activities that could be streamlined or eliminated?

2. Identify the skills you need

   Once you’ve clarified the vision, what’s critical and what can be streamlined, think about the skills and experience that are needed to help the business achieve its goals. Think of the key roles and responsibilities that are essential – ensure job descriptions are clear and accurate. Who in the business has those skills and capability to deliver?

3. Draft a structure

   Now it’s time to think about how to organise those roles and people. Decide the number of people you need to deliver the goals of the business in the most efficient way. Draft an organisational structure of the key roles and map the people who have the skills you need onto it. Consider options for upskilling.

4. Draw up a comms plan

   Once you’ve got a proposed structure, you’ll need to share it with your people, and this is where great two-way communication is vital. Draw up a plan to make sure every single person in the business is communicated with and consulted on developments at every stage of the restructure process. Talk about what it might look like and how long it’s likely to take. At all stages of the process, don’t let people lose sight of:
   – What you’re going to do
   – How you’ll do it
   – Where to go for more information.

5. Make sure everyone feels valued

   Whichever way you look at it, redundancy is rarely a pleasant process. But it is possible to make sure everyone feels valued – I have seen it happen in organisations I’ve worked with. If you make it about the roles rather than the people in them, it becomes less personal. Other ways that employers can make the process more constructive is to consider allowing people to express an interest in volunteering for redundancy (although this is not a guarantee of success) and supporting people who are leaving with outplacement support. A good HR director will be able to provide advice and help those exiting to explore their options.

6. Maintain a positive vision for the future

   Don’t underestimate the emotional toll it will take on those remaining in the business, especially managers tasked with getting remaining people back on board. They’ll need repeated reassurance that the business is now in a stronger position, and they are seen as being key to its success. Have a plan for energising people back towards the business goals.

In short, there’s a lot of hard work and preparation required before you make any announcement about downsizing. But it’s worth the preparation to avoid sticky situations and maintain good relations with former and current employees. With careful planning, you can make downsizing a success for everyone.

If you need help downsizing, People Puzzles can help you through the process every step of the way. Call us on 0203 633 6830 and speak to one of our highly experienced HR experts.

Lynn Morrison, People Director