Volume 7: Business Edition
How to Do an Effective Cost Reduction and Lay-off

If you’re facing a lay-off or cost reduction, you are well aware of the pain. No doubt you are struggling with thoughts of fear, failure, self-doubt, hopelessness, and indecision. Most of us can’t imagine that we can dramatically improve our organization’s chance for survival and long-lasting success by changing the way we think. Yet we can—by powerfully thinking through and planning the process. This Forward Thinking™ Gentle Reminder – Business Edition offers some practical guidance on how to do an effective lay-off or cost reduction, move forward powerfully, and achieve long-lasting success.
Lay-offs and cost reductions are painful. So we tend to put off thinking about the process until it’s imminent. We wait until we can wait no longer, and then hurry the process to get it over with. I often say that infinite patience brings immediate results. It could take a week, maybe two, for you and your management team to plan an effective lay-off or cost reduction that takes into account the impact on all parties involved. Trust me, the investment you make in forward thinking brings returns to you and your organization a thousand fold. You have a tremendous opportunity to cement your culture, focus on what truly matters, improve performance and achieve greatness.
Here are some thoughts to help you think through the process.
Focus On What You Want, Not What You Don’t Want.
Before a lay-off or cost-reduction, re-invoke the power of self-awareness and think about what you want as an organization, what truly matters to each of your constituents – your customers, suppliers, employees, and investors. Think about what you do, how you do it, how the organization can be of highest and best service and richly rewarded. Think about what resources, human and otherwise, are required to execute this vision. Be sure to think in the short-term and long-term.
Sort everything – strategies, goals, and action plan items based on what is critical/significant, important and then nice. Critical/Significant means – if we don’t do this, we won’t survive three years, or we’ll miss an incredible opportunity for significant growth. Important means – this is important, yet not significant or critical. Nice means just that – nice – these are the things we might do to make something absolutely perfect. (It’s time for a new definition of perfect – i.e. accomplishing what truly matters.) Step back and look at your lists, noticing what’s inter-related. You may notice that some important items show up on the lists for all of your constituents, which in the grand scheme of things, may call for a re-classification to significant/critical. Or it may not. Focus your time, energy, and money first on the critical/significant, then the important. (We rarely ever get to the nice.)
When we know what we want and what truly matters with respect to all our constituents, it’s easy to see which functions, processes, and people do not fit and we can take the opportunity to weed. While it may seem contrary to the advice we receive to cut this, slash that, and do it across the board, this is also the time to invest in resources to implement your strategy. While you may find it makes sense to lay-off some of your employee base, it may also make sense to invest in human resources, equipment and training that keeps every human resource as productive and on purpose as possible.
Plan Your Lay-Off Carefully and Thoughtfully
If a lay-off is required, again, focus on what you want. If we want the company to survive and thrive, then what we want is for those employees who remain with the company to see that you, the management team and the organization remain true to your values - that those who are being let go are treated with respect and dignity and thanked for their contribution and service. After all, they are thinking it could have been them.
What you want is for your employees to see you as a caring human being and a leader. During the lay-off process, do not be afraid to show your sadness or even cry. Give your employees the space to grieve the loss of what once was. It helps everyone to know you’re suffering too, that you care about each and every employee, and that you’re all in this together.
What you also want is for the remaining employees to be inspired and innovative, to ask questions, to clearly understand the goals of the company and how what they do (individually and as a team) contributes to the achievement of these goals. As a leader, your role is to listen, to inspire, and to point them in the right direction. Give them the tools and information to help them be effective, innovative, and inspired. In times of crisis, people accomplish amazing things. With your guidance, your people can too.
So take the time do some forward thinking and do the best you can to effect a lay-off that accomplishes what you want.
Before the lay-off, have someone in your organization learn how the unemployment process works in your state and unions with the idea of helping your employees to easily navigate the process and maximize the benefits they can collect. Before the lay-off, think through the severance package. For many families, health care benefits are more important. It may actually be less expensive for the organization and more valuable to the laid-off employee to receive more months of health care premiums, than weeks of severance pay. Be sure to think through any legal requirements for your state or region, as well as any computer access, safety and security issues.
Before the lay-off, prepare exactly what you intend to say to the lay-off group, to your managers and to the remaining employees. Practice it out loud so you can feel it and own it. When you say it loud, you have the opportunity to discover if what you are saying is clear and sincere, and make adjustments until you feel true to yourself and inspired.
Before the lay-off, think through and prepare any press releases you may want to issue including releases in trade publications. Prepare written drafts for your employees to refer to so that they feel prepared when asked about the lay-off by customers, suppliers, or family members. Or when they are introducing themselves to third parties as the replacement of a laid-off employee. Your people are relieved to have something to refer to help them know the right thing to say in uncomfortable moments. Prepare a few sentences describing the lay-off or cost reduction, the vision, and the tasks at hand.
Before the lay-off, set the agenda for the entire week. Plan to do the lay-off on a Monday at 10am before lunch. This gives the laid off employees several hours to be by themselves before they have to go home and face their families. The Monday gives them a full week to grieve, plan, and be proactive before a weekend occurs. Monday at 10am gives you the opportunity to have a lunch meeting with the remaining employees to discuss the strategy and mission and how the lay-off is to be communicated to customers and suppliers. It allows for team meetings in the afternoon to discuss specific roles and action plans, fine tune communications with customers and suppliers, and discover any potential problems to be addressed. It gives you and the management team the remaining days of the week to gauge the morale and act accordingly, and gives you the repeated opportunity to empower your team. (You don’t want to do the lay-off on a Friday leaving your remaining people stewing at home over a weekend with no opportunity to communicate with them.) For an Example Agenda for the Day of the Lay-off, click here. (You can print this entire reminder including the Example Agenda by clicking the Print as a PDF button on the upper right of this web page.)
Communicate Your Vision and Your Expectations
If you want your remaining employees to be inspired, focused and innovative, then spend the afternoon of your lay-off sharing your vision and expectations, answering questions, listening and asking for their commitment.
Share with your team that you are thankful for the respect of your customers, suppliers, employees and investors as well as the opportunity to keep the doors open. Share with them the vision, values, and strategy for the organization. If your organization is in a position of completely reinventing itself, share the values and the process you are using to create the vision and strategy. Discuss the changes. Explain that while they may think this is the worst of times, there is an opportunity for success, that you are committed to making this organization one that is exciting and proud to be a part of, that you want each of them to help make the organization the best it can be and ask them for their commitment.
Go over a schedule of meetings for the rest of the day and the next day – meetings that firm up job responsibilities, finalize what customers, suppliers, and investors can be told about the restructure, and to identify any holes or problems to be addressed.
Tell your people what you expect – You want them to be change agents, to empower themselves, keep a powerful attitude, raise the bar, be supportive, tell the truth, communicate, protect quality and customer service, keep a sense of humor and be leaders. Ask them to seize the opportunity.
Take questions. Listen. Ask questions to clarify making sure you understand the question and the purpose of the question. Answer thoughtfully and respectfully. Ask them to restate what they heard you say. If you don’t know the answer, tell them you’ll get back to them and then make sure you do!
The next day and weekly thereafter, get all of the managers of all of the functional areas together to discuss cash flow and make cash outlay decisions as a team. When the managers work together on the cash and understand the inflow and outflow, they decide as group, on what is truly best for the company, even if it means that their department goes without cash. If you do not have the cash, brainstorm. Remember the Apollo 13 crew? You and your team will be surprised at how creative you can be and how much you can accomplish with little or no resources.
Over Communicate
After a lay-off, it’s critical to get the company together for weekly communication meetings keeping them posted on what’s happening and what’s not happening, acknowledging and celebrating progress, and affirming goals and commitments. Allow time for your people to acknowledge themselves and each other for a job well done. Even if you have nothing to report, let them know you have nothing to report.
Use every interaction you have with your employees to reiterate the vision and strategy of the company and tie in how what they just said or did accomplishes the mission. Prepare 30 second, 2 minute, 5 minute and 10 minute versions of the vision and strategy of the company that you deliver as these opportunities arise.
And for those of you who have read the book Managing Thought or attended a workshop, remember to watch your “Buts!” Replace your “buts” with “ands” or separate your sentences and replace “Why?” questions with “How can we…?” questions to help prevent fight or flight responses and keep everyone in a state of high awareness and creativity. Practice listening and asking questions; seek to understand vs. be understood. These practices keep your perspective fresh, your mind open and receptive to new ideas, and enhance your ability to lead and inspire.
It’s Your Job……
When we are faced with the reality of a lay-off, the back of our brains automatically go into fight, flight, or freeze and we find ourselves struggling with thoughts of worry, self-doubt, fear, disbelief, anger and other disempowering thoughts. If you read the Managing Thought book or attended one of the Managing Thought workshops, you know that without self-awareness, we stay in fight, flight, or freeze, completely incapable of prioritizing, innovating, or receiving ideas on what do next.
It’s your job to help yourself and your people to recognize they are in fight, flight or freeze and move from the back of their brains to the front of their brains where we can readily access our highest awareness and creativity. It’s your job to help yourself and your people to recognize that we operate at our best when we are at peace and inspired and we become at peace and inspired when we practice thankfulness, have clarity of purpose and remain flexible, open to new possibilities, and in a state of wonder and curiosity. It’s your job to help your people recognize that this is a journey, a continuous process, and to celebrate each success, no matter how small. It’s your job to serve as the prototype, modeling new powerful ways of thinking and being.
With forward thinking, you can be self-aware during the entire lay-off and cost-reduction process—thinking powerfully and focusing on what is truly significant. You become inspired. Your team becomes inspired. And there is no stopping you and your team as you rise to a high level of awareness, achieve significant results, survive and thrive.
May you achieve long-lasting personal and business success.

Founder and President