Home Builder Tips for Enduring Layoffs

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Layoffs are inevitable in struggling industries. Professional Builder’s HR columnist Rodney Hall offers tips for how to handle downsizing.

November 01, 2007

Laying people off is never easy. If your group has been given that task, there are steps you can take to ease the pain. Here are some things to keep in mind if you are faced with implementing a reduction in force.

Making the Cut

Deciding who goes and who stays is no simple feat. HR professionals we polled rely on several factors in the evaluation process:

  • Consolidation. Which employees can handle more than one role? What positions can be merged or consolidated as a means to gain efficiencies? Don't rely on titles alone.
  • Expendability. Which activities or roles are not critical to the business?
  • Experience. Besides tenured experience, how versatile are the employees?
  • Future fit. Which employees will thrive in the leaner system and continue to grow professionally? Especially important when asking people to take a step backward: will they be content a year from now if not moved back into a bigger role?
  • Performance. As you consider each employee, ask, has this person been a consistent top performer? An employee might meet all of the above criteria, but truth be told is not an A-caliber performer. Once the paring is done, do you want your team to resemble an All Star Team or a second-place finisher? Conversely, can you afford to keep a franchise player who does one thing incredibly well but meets none of the first four factors? This is where you must look at the bigger picture and the blended talents of the team.

For Those Leaving

Clear and consistent communication is critical to successful downsizing.

  • Tell it like it is relative to the economics of the situation. It's about the survival of the company first and foremost.
  • Give a departing employee a letter that details what he or she will receive in terms of lump sum compensation, extended benefits and any severance. (Note: Every company we talked with required employees to sign a mutual release as a condition of severance.)
  • Some level of outplacement support should be offered.
  • Recognize that many managers know how to terminate a person for cause but don't have a clue how to handle a downsizing. To that end, one public builder we talked to prepares communication kits that instruct managers how to handle the process. This includes what should be shared with employees, what to steer clear of and how to handle issues that might arise.

For Those Staying

Sustaining morale can turn into a full-time job immediately after a downsize. Recognize the need for people to grieve the loss of valued co-workers, but be prepared to move on. Lead the team out of the post-downsize funk by sharing the new game plan as soon as possible.

  • Prepare a weekly statement from the president that updates everyone on the current state of affairs and re-emphasizes the new game plan. Remember, it is impossible to over-communicate in situations like this.
  • In addition to the above, one builder we talked to develops a weekly message solely for the salespeople that managers deliver during sales meetings. Because they are the ones on the front line with the customers, they need to have fresh information and ideas to counter the negative perceptions permeating the market.
  • Performance will suffer if everyone is sitting on the edges of their seats worrying about additional cutbacks. Communicating what needs to be done to prevent further cut backs will keep everyone focused and alleviate unnecessary worrying, which zaps productivity.

Author Information
Rodney Hall is a senior partner with The Talon Group, a leading executive search firm specializing in the real-estate development and home building industries. He can be reached at rodney@thetalongroup.com.

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