October 14, 2021

Making tough workforce choices for COVID’s long-term impacts

People are your most important resource, particularly when you are operating an ecommerce company or expanding your operations online.
Making tough workforce choices for COVID’s long-term impacts
Bardia Dejban
Making tough workforce choices for COVID’s long-term impacts

Making tough workforce choices for COVID’s long-term impacts

COVID continues to impact the economy across various industries. One thing is for sure, your online presence – whether improving what you already have or creating it from scratch – among the most important steps that you will need to take.

People are your most important resource, particularly when you are operating an ecommerce company or expanding your operations online. This is even more so when formulating a successful online strategy, which, in most cases, will involve some form of a subscription.

As a business founder and owner, there is a tendency to micromanage, to assume that you can do every job better than anyone else in your organization, or operate as if everyone is replaceable. While it is important to know all of the parts of your business and be prepared to replace any position that becomes vacant, it is also crucial to have respect for the expertise of your team. 

Start with a Plan

At the same time, major disruptions such as COVID, will require some level of restructuring. That generally comes down to two things: (1) people; and (2) capital. While it may be attractive to approach your capital sources, lenders and investors, you will be in much stronger position to work with them if you have first taken stock, identified a safety net, reduced costs, restructured internally, and are coming to them with a plan.

So, now comes one of the toughest decisions you will need to make: personnel. This is something no one enjoys. It may seem better to avoid laying off anyone by reducing salaries. While this may have some success within the c-suite of the organization or where you have a family business and family members are the ones affected, it is generally not advisable as an overall plan. It will only tank morale in the organization and lead to attrition, but one that you do not control.

Instead, you should engage in a very purposeful process, understanding that there is no good time and no easy way to do this. Ultimately, your employees are looking for safety and that safety comes in the form of a paycheck when it comes to your business’s role in their lives. You are removing that safety in exchange for the safety of your business, and the safety of those who you will be able to continue to employ.

Transparency and Messaging

Start by crafting your message. Take the elements from your company culture, and make sure your messaging incorporates those key elements. If you are a transparent organization, talk about how you have less than a million in the bank, and you would run out of capital in months at this burn rate. If your culture is built on ethics, then explain how you cannot ethically kill the entire company who everyone has worked so hard to build up, when you know you would be able to solve this with a tough decision today.

Make Decisions

Next, and this is the hardest part, you need to select who stays. While it may seem logical to focus on creating the list of soon-to-be departed, don’t. Instead, you should focus on who you want to retain, at all costs. Ask yourself who are the employees that make the business.

Focus on the employees who might have taken years to find, months to train and that you have seen grow into stellar team members. Next, make sure that those employees are part of departments that you are keeping and if not, ask whether they can be transferred to another position. Also, ask other leaders in your organization to assemble their own list as a cross-reference. 

There is a tendency to have the retention list include mostly highly compensated employees, in part because those are the people with whom you have the most contact and familiarity. Unfortunately, this is not going to be the best way to approach a restructuring. First, these are the higher cost employees, not just in salaries, but in benefits and perks. Second, while these are great managers, they are rarely the ones who are doing the actual work in the organization. One or two layers below, you have lower-paid employees who are doing jobs that their bosses don’t know how to do, or never want to do. You need to make sure your list is a meaningful reduction of operating expenses, and not just pure headcounts.

Take Action

Once you have compiled the list, you will need to plan the process and do it as quickly as possible, one day being preferrable. However, if it involves a large percentage to let go and your human resources does not have the bandwidth, it can extend to two days. If two days is insufficient or you do not have the internal resources for executing the plan, you should consider consultants who specialize in this. Whether or not you provide severance is dependent on legal obligations, employment contracts, geographic restrictions, cash in the bank and your internal processes.

If you have a large amount of terminations due to performance, you also should address with the hiring manager why they waited for this time to come before they took action and the reasons behind that. It’s not fair to the company or employees. Performance issues should be handled during the course of normal business operations and with an avenue to provide the employee a chance to remediate.

In the end, no one likes laying off employees or causing someone to lose their livelihood. At the same time, unless you make those tough decisions, you may well be risking the livelihood of your business and those that are important to its survival. It is crucial to put together a plan and move forward swiftly in order to make sure your business is set up for success.


Photo by Alex Kotliarskyi on Unsplash

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