The amount of turbulence we’ve experienced in the business world these past years is pretty insane. It increasingly feels like ‘People and Culture’ should be called ‘People and Change’. This piece is about lay-offs, their impact on company culture, and what you can do as a people professional to influence a positive outcome.
🌊 If you are in the fortunate situation that your company is still riding the wave of growth, good for you! You might still get a few good tips from this piece, as it’s also about building culture in general.
We generally are a pretty upbeat bunch 😇. So why are we addressing the layoffs and their negative cultural impact? Because it’s become our reality this year. We’re currently doing our 5th re-org project for clients this year, and becoming experts dare we say.
The past years it was all about growth for most companies. Recruitment teams couldn’t keep up, as organizations were looking to get as many people in the door, as quickly as possible. But now see the painful results of this hypergrowth everyone was so focused on.
We’ve seen strong differences in approach of redundancies and the results of each approach. Fortunately, we don’t live in the US and we’ve not seen anyone pull an Elon Musk on their people here. It is clear that lay-offs which are executed thoughtfully, result in less negative impact on company culture. And it’s not about offering the biggest redundancy package. It’s about approaching the communication and aftermath with kindness and empathy.
Most HR teams and leaders we work with have not gone through this process before, so here are some of our thoughts and lessons:
Cultural impact 🦄🐴
Lay-offs are not just numbers on a balance sheet; they are the outcome of the rapid growth many companies chased relentlessly. This growth attracted a type of employee who was ambitious, driven and adventurous. When the tide changes, so does the culture. All of a sudden people are hearing about ‘operational efficiency’ and bottom line costs. They were lured in with amazing benefits and dreams of becoming the next unicorn. When these the reality becomes clear, and people are spoken about as a cost, the dream ends.
Motivation and engagement will plummet. Leaders often don’t realise this. They’ve failed in the eyes of their ambitious employees, and keeping a positive culture going will take a lot of work.
Lay-offs and emotional toll
Re-organising sucks, also for those who are not laid-off. There employees are not necessarily the ‘lucky’ ones. The leaders we work with don’t always understand why employees who are not heavily impacted (read - not let go) get so upset.
They were once part of a close-knit community of colleagues who often became friends. They contributed to building a great product and company together, they contributed to the unique culture.
And then, mostly without proper warning or enough context, you find out your colleague-friends are being fired. Apparently your company is not doing so well. It’s a huge disillusion and it’s demotivating. It causes stress, also when it’s not you who has to go.
Lay-offs result in a loss of trust in the leadership team responsible for these unexpected negative outcomes. In the end, the ones who caused the layoffs are rarely the ones who have to go. This is rarely addressed though. Leaders tend to position it as ‘doing what’s best for the company’ and don’t come across as emotional as the individuals.
This is because the management team has known about this upcoming restructure a bit longer, has made the decisions on who is being let go, and in their minds are probably already working on the OKRs of ‘24 with a leaner team. They’ve had more time and context to get through this process.
Losing your colleagues and re-forming teams you start all over with building. It’s new dynamics, forming again… and after forming comes storming. This Storming phase can last long when you don’t address it quickly. Storming can also be a bit ‘Smelly’.
(Read more about Tuckman's Model for Nurturing a Team to High Performance)
The Smell of The Place
What happens when you go through times of turbulence, is that it can get smelly. It’s like something died and it’s rotting. It’s perhaps a somewhat strong metaphor, but we are not the first ones to talk about ‘smell’ in relation to ‘culture’. And it makes a lot of sense.
This video ‘The Smell of the Place’ is one of our absolute favourites when explaining Culture. (It’s pretty old and relatively poor quality, but we recommend you watch it until the end.) The professor explains it so well. Changing the culture is not about changing a person, it’s about reinvigorating the surroundings.
🍀 / 💩 Upon entering an office, you can often sense the culture without a word being spoken. It can feel exciting or off-putting, fresh and healthy or stifling. You can almost feel whether it's an environment of freedom and trust or one of control and hierarchy.
Leadership and management create the environment, but the employees experience it most intensely. To change the culture, or "smell," collaboration with the leadership team is essential to create a rejuvenated and inviting work environment.
TOP TIP: Don't throw glitter on a problem!
Improving culture is not done by throwing lavish parties or forcing people to come back into the office more to work together. High performance is the result of interesting work, inspirational leadership, trust in your team and also…in having a bit of fun together. When the going gets tough, we see managers become stricter and more demanding, but the opposite approach results in better… results.
🐟 Uncover The Stinky Fish 🐟
The stinky fish is a metaphor for issues that we don’t want to talk about. The longer we hide things, the stinkier they get. This canvas (which you can download from Fearless Culture) helps to address stuff that normally remains unspoken.
When you want to rebuild a culture or team after something bad has happened, talking about it is the only way to change things. Try using it!
Turn Over Communication into your Superpower
In times of layoffs, communication is your most powerful tool. Treat lay-offs as a crisis situation and communicate frequently. Think about it, when your ship is sinking and there is panic… do you want updates every 4 hours or do you prefer them every 5 minutes?
In the case of layoffs, and especially afterwards, don’t think the damage is fixed by letting people go. Letting them go is creating the damage. The fixing happens afterwards.
We see that leaders tend to get a bit static, too formal, show little empathy or even ask the people team to handle the communications. You can do this for them, but it’s so much more powerful when the founder/leader handles the tough conversations. When they show they care. It’s our role to help them with what to say.
📈 Transform your quarterly town hall into a monthly update. Turn your monthly meetings into weekly’s. Ensure every employee understands why changes are happening and how they can contribute to the company's success.
It’s amazing how often we talk to employees who do not know anything about the finances of a company. Get your CFO (or CEO) to give a group session on how you make money, how much you are making, how much you need to make, and what your key clients are.
Encourage transparency by having top leadership share financial insights, and connecting employees with the bigger picture.
Transition from Family to Team
Recognize that a company isn't a family. In a family, you don't fire members or put them on performance improvement plans. Instead, start thinking of your organization as a team—a team that can grow and evolve. Embrace the fact that culture changes with every new hire and departure. It's not something to fear but something to celebrate.
Invest in teambuilding. When times get tough, it can be tempting to cut back on team-building activities. It might even feel inappropriate to spend money on having fun together. However, this is precisely when you should be investing in bonding and rebuilding your culture. Don’t cancel the company party - throw one.
Teams that engage in dedicated culture and mission-building activities tend to strengthen connections and improve collaboration. Culture isn’t created overnight, but an overnighter can do magic for your culture 😇.
Culture KPI’s
Last but not least, culture and engagement are not KPI’s or deliverables a people team should own. You cannot be held responsible for these numbers. Because it’s not something 1 person or 1 team can do, and it’s mainly the result of leadership behaviour.
What you can do is measure (turnover, eNPS, exit interviews, polls, etc) and report on it.
You can help with initiatives that improve culture but don’t fall into the trap of owning it.
Be excited though, about the next phase. Because after storming comes norming and then… performing. You’re almost there, you can do this!
Let’s create irresistible organizations!
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