Never Lay Off Another Employee


The new normal in leadership

If you ever have the privilege of meeting Leo Wells, don't be deceived. The successful CEO of Wells REIT, Leo comes across as a good-old-boy with his easy smile and genuine interest in others. He's a very successful person - however you measure success.

"CEOs dread confrontation." We were discussing the need to reduce headcount during a recession and Leo Wells was explaining why many CEOs know the rule: "Hire Slow; Fire Fast" but have trouble following it. Few people enjoy laying off employees. As the discussion continued, a great idea emerged.

"Whenever two minds come together, a third mind is created"
- Chuckism #27

As Leo talked about how force reductions ultimately lead to productivity increases, it occurred to me that we could use an approach to headcount that has proven successful in finance: zero-based budgets. With this concept, every year each company or department begins with no budget and has to build a case for every dollar it will need.

What if we asked every employee to begin each year by justifying their position? They would lay out how their time would be used, how it would benefit the company/department and, as well as possible, quantify what their contribution would be worth.

Why it just might work:

Everyone would at least be conscious of the corporate objective: profit.

  • The best ideas come from the people who do the work - this would encourage creativity
  • Ruts would be avoided or, at least, revealed
  • Employees might be able to take on additional responsibilities freeing up man-hours that could be reallocated elsewhere in the company

Why it might not:

  • There would be a sense of insecurity - especially among the less assertive employees.
  • Less capable employees who happen to be able to sell themselves better than others might outshine (outsell!) other, more productive people.

Some ideas to make it work:

  • Make it clear that your objective is better use of resources, not reduction in manpower. If additional man-hours are freed up during this process, they will be reallocated elsewhere.
  • Have departmental brainstorming sessions. (You may need to teach or review the rules of brainstorming.) 
  • Encourage creativity - reward it verbally and frequently. There are no bad ideas. 
  • Teach basic selling skills to everyone so that they will be able to better communicate their ideas. 
  • People who are not performing know it, they are usually as unhappy in the position as the company is and they typically need an incentive to leave. This can do it.

I used this process recently with one of my favorite non-profits. Some of the people at the table had not thought about how their specific activities would benefit the organization; they had only thought about doing their job. Once we laid out the need for quantifiable value, they immediately began offering ideas and suggestions for better utilization of their resources.

Lesson learned:

Early in my consulting career I worked with a CEO in sales improvement and cost controls in his company. One non-revenue generating department had an employee retire and the company was having trouble finding a qualified replacement even though the position paid well. At my suggestion, the CEO approached the others in the department with the offer of either replacing the employee or spreading out the work to the remaining employees in exchange for a pay increase. How did the employees in the department respond, do you think?

Chuck Reaves CSP, CPAE, CSO



Chuck Reaves CSP, CPAE is the founder of Twenty-One Associates, Inc., an Atlanta-based sales training and consulting company.

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