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Exploring Leadership in the News with Steven Pearlstein and Raju Narisetti

Steven Pearlstein

Steven Pearlstein

Steve Pearlstein is a Pulitzer Prize-winning business and economics columnist for The Washington Post and co-host of washingtonpost.com's "On Leadership" forum.

No Sugarcoating, No Spin

Let me suggest ways NOT to plan and execute a downsizing strategy:

First, set up a small group of top managers to work quickly and in secret to come up with the plan, so that nobody finds out about it in advance, lest it upset employees and shareholders.

Second, announce it in a press release that tries to spin it as a painful but necessary adjustment but allows the company to get the current crisis behind it.

Third, give scripts to managers to use when calling in the people who will be laid off, telling them the bad news and ordering them to clear out their desk within the hour, and have them escorted out of the building by security officers.

The sad thing is that this is the standard "best practice" in corporate America these days, driven mostly by lawyers and HR directors who often have very narrow views of what is in the best longterm interest of the country. It also plays into the growing gap that exists between the corporate suite and the offices and factory floors and labs where the real value creation takes place.

Here is another, more successful model:

First, send out a notice to the entire enterprise outlining what the problems are and the gaps that need to be filled to get the enterprise through the crisis. Appoint a steering committee to come up with options drawn from various sections and levels of the enterprise. Give the committee a tight deadline and lots of support from the planning and financial office. Invite everyone to contact committee members by email with ideas.

Second, when the committee has had time to consider various options, sit down with them and come to a tentative consensus on the general direction to go in. At this point, swear them to secrecy, head off on a retreat and come up with a plan.

Third, announce the plan yourself in small group meetings around the enterprise in which you go through the trade-offs that you made and why the decisions were necessary for the longterm health of the company. Don't sugarcoat a thing. No spin. Put videos of the sessions on your website for everyone to see, including the back and forth with employees who are unhappy or who disagree.

Finally, give all employees several weeks to clean up their affairs and say their goodbyes.

This is the respectful way people want to be treated and the way they want to see their colleagues treated. It creates the right culture for winning the creativity and loyalty of all employees, sets a model for how mid-level managers should treat their people and is most honest and open with the long-term shareholders.

By Steven Pearlstein

 |  February 9, 2009; 2:21 PM ET
Category:  Economic crisis Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati  
Previous: Fire Yourself | Next: Cut Hours, Not Heads


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As usual, Pearlstein's recommendations are as sensible as they are radical.

Organizations treat separated employees like suspect jihadis because of a fear that they will "go postal" or that they will sabotage the firm that has dispensed with their services. They will throw monkey wrenches (or wooden shoes) into the machinery and perpetrate whatever destructive acts they can. Giving these individuals a half hour to clean out their desks and then calling security to escort them to the front gate makes sense in light of a record of vengeful behavior in the past by other former employees.

But does such a record exist? Is there any justification for this fear? Has anything like this ever happened? Even postal employees don't go postal. When is the last time you heard of a former postal employee mailing packets of anthrax or turning into a sniper and taking potshots at his ex-colleagues?

The vengeful ex-employee may not be a total myth, but for every resentful ex-employee who actually commits a destructive or violent act of revenge there are a million current employees who resent being treated like Guantanamo inmates.

Posted by: donnolo | February 16, 2009 8:17 PM
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I only wish your smart, sound advice would be followed. It is demoralizing for all people who take pride in their work to see employees -- at your own company, on the news, or in photos -- packing a cardboard box with a few framed photos, an award or two and a calendar -- while an HR person hovers nearby.
Where, please, is the compassion? Or was that one of the first things slashed from the corporate budget to make sure the CEOs get their fat raises?

Posted by: astamand | February 12, 2009 11:43 AM
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