Companies fail; however, failure is often preventable or even reversible. In aviation, there is a saying, “It takes three mistakes to kill you.” Meaning that just one failure doesn’t usually cause a catastrophic incident. Rather, it’s the compounding effect of multiple independent failures that leads to a catastrophe.
For example, if the automatic landing gear doesn’t work, the back up gear will help everyone get home safely. If the manual landing gear extension is also broken, you’re in for a rough landing, but you’ll probably still make it. However, if for some reason you also don’t have enough fuel to make it to a safer area for a crash landing, you’re in trouble...
Just like airplanes, companies are complex machines and it takes a lot to bring them down. Most are resilient enough to survive one or two big, strategic missteps. But compound that with an unexpected economic downturn and morale-deflating layoffs not too far behind, that’s when one enters dangerous territory. It’s the crucial decisions made, and not made, in the aftermath of those layoffs that will determine the future of your company.
The Unearthing Effects of Layoffs
Following heavy layoffs, the remaining employees will become overwhelmed and concerned for their own job security. Eventually, many will leave for more welcoming and nurturing work environments if their current ecosystem doesn’t improve.
The first ones to leave, logically, are those who have the easiest time finding another job. Unfortunately for struggling organizations, those happen to be the people they can least afford to lose. Those who stay will then be burdened with filling the gaps created, facing exhaustion and burnout risk. In time, depleting team morale and uncertain job security will begin to push these employees out.
Studies paint an unpleasant picture of the impact that a culture of lowered morale has on employees. As if trying to hire during a rough stretch wasn’t already tough enough, 87% of surviving workers say they are less likely to recommend their organization as a good place to work. Given the uncertainty and turmoil, 77% of surviving workers unsurprisingly report that more errors and mistakes are made and 64% say the productivity of their colleagues has declined.
Perhaps most important of all to the company’s present and future bottom line is that 81% of surviving workers say the service that customers receive has declined. This is a post-layoff nightmare; a downward spiral of diminishing engagement, yielding an atmosphere of greater detachment and lower productivity making it harder to recruit and retain top talent.
Lean Into the Challenge
Crisis management 101 – don’t run away from a crisis. Embrace it. Lean into it. Learn from it.
All right, we’ve made our point – layoffs negatively impact company culture. We’re writing this post because there’s absolutely something companies can do about this!
Research (see footnotes) shows that by investing in people, organizations can increase engagement, retention, productivity and revenue. Fostering an authentic learning culture remains critical to an organization’s recovery and growth plans.
As Marcus Aurelius eloquently said, “The impediment to action advances action. What stands in the way becomes the way.” Or, in the more modern words of Ryan Holiday, “Turn trials into triumphs,” from The Obstacle is the Way. Let’s visit some of the ways leadership can judo flip the crisis into a culture-boosting opportunity.
Invest in Growing Talent
After a layoff or business split, individuals are uncertain about their future and place at the company. Many are often fearful of making any noise out of fear of being cut. Unfortunately, this stifles productivity, innovation and other significant contributions. A company full of people “keeping their heads down” during a crisis is exactly the opposite of what the company truly needs to turnaround.
Telling the team to pick their heads up and “shake it off” isn’t enough. Instead, leverage this instinct by providing an avenue for personal and professional growth. When employees recognize that staying at the organization remains the best way to develop skills valued by the marketplace, fewer people will think about heading for the door.
Mitigate the Hard Costs of Layoffs
Leaders must remain aware and mindful during and after layoffs. If positive actions aren’t taken to shore up morale and reduce turnover, it can make the problem far worse.
Studies show that the cost of lost employees can be nearly two times their annual salary. According to Josh Bersin, Principal at Deloitte, turnover costs include:
Hiring costs associated with advertising, interviewing and screening a new employee.
Onboarding, training and management time of a new team member.
Lost productivity as new talent may take up to one to two years to reach the full productivity of an existing person.
Reduced engagement and efficiency from other employees who disengage following high turnover.
Low customer service and additional time to resolve errors as a new employee undergoes a learning curve.
Fruitless training costs as the average company invests 10-20% of an employee's salary on training within their first two to three years.
Developing a comprehensive and effective learning culture is key to future stability. Showing existing talent that management is devoting energy and resources during tough times to their growth potential has an immediate impact on their decision to remain at, or run from, their organization.
Realize the Value of Learning
Learning is something that almost every business book, guide, blog and management consultant recommends in and after a time of crisis. Why? Because the act of learning and the engagement it creates unlocks the power to change underlying motivators. By stimulating the talent’s perspectives and future opportunities, the company empowers positive change from within.
We should be clear about one very important thing here – we are talking about learning, not training. Training will help one handle the present situation if performed properly. Learning, on the other hand, will equip one not only for the present, but also better prepare for and mitigate future trials. This is the sweet spot for crisis mode companies who aren’t able to fix their way out of the problem with present-day knowledge.
To quote Dale Carnegie, “Life truly is a boomerang. What you give, you get.” Just think of the potential positive returns of investing in one’s workforce during the most unlikely times. By investing in talent, the company showcases its character and interest in realizing the full potential of its people. As an inherent reciprocal, the team garners greater trust in the business and its values.
Dare To Be Great
Crises demand personal and collaborative greatness. It calls on individuals to rise to the occasion and make bold decisions.
If other organizations have experienced great change by following examples of learning-culture companies, such as Google and Intuit, who continue to invest in their workforces’ happiness and development by providing learning tools and programs, why not do the same?
It’s a bold move to invest in your talent when everyone is retreating. However, it’s this foresight perseverance that truly makes the difference in the business surviving or crashing.
- Sh!ft Business Learning - E-learning increases retention rates 25-60% while retention rates of face-to-face training are very low in comparison at 8-10%