Managing Talent In A Downturn

Presented June 4, 2009

Strategies for Talent Management in a DownturnEA 34

State of the Art in your companies… Best of the Worst Preserving your culture in a downturn Why lay-offs are the first thing you do, and

the last thing to do 4-Buckets exercise for talent sorting The message: People treated differently,

tend to act differently

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What has your company done in a downturn?◦ What is the overall strategy◦ Who is responsible for “carrying it out”◦ Scale of 1 to 10-high rate the effectiveness

compared to the overall strategy◦ How would you like to be treated?


Major Milwaukee company: 5th round of layoffs in 2009 (Cutting the dog’s tail off an inch at a time)

The “waiting room” and paging system Let’s not let them get out of their cars Escort 18 of our 30 year+ veterans out the door—

a Christian based organization Major bank fires a 51-person department, pays 52

weeks of severance, hires 36 back in the next 60 days (still paying the severance)

Fortune 100 CEO says “no more layoffs” 30 days later cuts 2,500


Productivity declines rapidly in layoff culture Studies (Dr. J. Harvey, 2001-2002) suggests

productivity takes years to rebound to pre-layoff levels

Ripple “effect”--layoffs=good staff leave (5% to 8% more) talented staff more interested in recruiter calls

Layoffs tear at the teamwork fabric (everyone for themselves)


When the CEO wants a 10% reduction in staff, it really means the “value of a 10% reduction in staff—lesson is to question the method

Calculate the break even cost of an executive before letting someone go that you’d rather not


The cost of letting go the executive; severance+outplacement+benefits+legal fees+time+turnover plus the costs of acquiring the talent when the economy rebounds + 20% of the base pay

Most calculations indicate that layoffs are not worth it if the economy rebounds in the next 12 to 15 months.


Purpose: Provide you with a confidential quick assessment of your Executive Leadership Team

Please review your Executive Leadership Team and based on the criteria assign each member to one of the “buckets” on the following two pages

You may find that your Executive Leadership Team is as near to perfect as you could hope for or you may determine one or more members may become more valuable to the company with some Mentoring or Coaching

You may determine that the company and the individual may benefit by ending the employment relationship

Being candid and honest with your assessment is best for you, your Executive Leaders, and your company



Stay/Protect(Opportunities)

• Employee is performing at or above expectations and fits the culture and is respected by other staff

• I would hire this employee in their current role from the outside—upgrading would be difficult

• This employee has potential beyond current position and understands the goals of the business

• This employee is at the core of our competencies and needs to be retained to the extent possible

• This employee is adaptable and willingly to take on new challenges

Names of Staff in this bucket___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

My Action Plan______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Stay/Protect(Opportunities)

• Employee is performing at or above expectations and fits the culture and is respected by other staff

• I would hire this employee in their current role from the outside—upgrading would be difficult

• This employee has potential beyond current position and understands the goals of the business

• This employee is at the core of our competencies and needs to be retained to the extent possible

• This employee is adaptable and willingly to take on new challenges

Names of Staff in this bucket___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

My Action Plan______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Mentor/Coach(Retain to tackle problems)

• Fits the culture in general and is respected/trusted in the organization but potential may be yet unproven

• When in over head he/she knows it and is likely to ask for help

• Manager can reassign to another problem/opportunity• These employees have a self deprecating personality

(not overly egotistical) and are generally well liked• Manager /Employee will frame and speak positively

about fulfilling a new and/or different role in the company

• We have little or no documentation of inadequate performance

Names of Staff in this bucket______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

My Action Plan______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Mentor/Coach(Retain to tackle problems)

• Fits the culture in general and is respected/trusted in the organization but potential may be yet unproven

• When in over head he/she knows it and is likely to ask for help

• Manager can reassign to another problem/opportunity• These employees have a self deprecating personality

(not overly egotistical) and are generally well liked• Manager /Employee will frame and speak positively

about fulfilling a new and/or different role in the company

• We have little or no documentation of inadequate performance

Names of Staff in this bucket______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

My Action Plan______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________


Exit/Outplacement/Lay-off(Leave NOW)

• We have strong documentation /cause to support an exit• This employee is causing other good employees to

leave or they are hurting morale• This employee cannot be closely monitored or is not

generally trusted• The relationship between the employee and

Manager/Staff is damaged or lacking trust • This employee can negatively influence current

employees and customers• This employee may be motivated to do harm to others

or the company

Names of Staff in this bucket_______________________________________________________________________________________________________________________________________

My Action Plan___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Exit/Outplacement/Lay-off(Leave NOW)

• We have strong documentation /cause to support an exit• This employee is causing other good employees to

leave or they are hurting morale• This employee cannot be closely monitored or is not

generally trusted• The relationship between the employee and

Manager/Staff is damaged or lacking trust • This employee can negatively influence current

employees and customers• This employee may be motivated to do harm to others

or the company

Names of Staff in this bucket_______________________________________________________________________________________________________________________________________

My Action Plan___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Transition/Teach (Move out when upgrade is possible)

• Does not fit the culture but is reasonably liked in the organization or has significant technical expertise

• Is in over his/her head—but does not know it or ask for help

• Manager cannot easily reassign to another problem/ opportunity, but others may learn from him/her

• Employee is trustworthy or can be closely monitored • Manager can frame and speak about the person to others

outside the company positively & enthusiastically• This employee has skills/abilities/knowledge not easily

found or duplicated• We have a range of documentation for exit from very

little to ample

Names of Staff in this bucket____________________________________________________________________________________________________________________________________________________________________________________

My Action Plan______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Transition/Teach (Move out when upgrade is possible)

• Does not fit the culture but is reasonably liked in the organization or has significant technical expertise

• Is in over his/her head—but does not know it or ask for help

• Manager cannot easily reassign to another problem/ opportunity, but others may learn from him/her

• Employee is trustworthy or can be closely monitored • Manager can frame and speak about the person to others

outside the company positively & enthusiastically• This employee has skills/abilities/knowledge not easily

found or duplicated• We have a range of documentation for exit from very

little to ample

Names of Staff in this bucket____________________________________________________________________________________________________________________________________________________________________________________

My Action Plan______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Layoff ALL in the 4th Bucket at the first sign of a downturn. State: No more layoffs under this financial criteria (sales, profit, EBIT)

Search for Upgrades for Bucket 3/Use transitions instead of firing

Protect Buckets 1 & 2-they are core to financial performance


Transition while still employed in bucket #3 Use a coach to keep them moving along the

plan to exit (Paraclete) in a time line Positions where the person can be trusted

or monitored No SEVERANCE or OUTPLACEMENT! (It is

actually counterproductive) If you treat people differently, even in a

tough time, they tend to act differently


Voluntary Phased Layoffs/Early Retirements ◦ Subscribe them (we need 17 people, i.e.)◦ Timed to meet the needs of the organization◦ Use the phased layoffs/retirements to train◦ Not allowed for certain core employees (sales, i.e.)

Cut salaries (3rd bucket first), but always cut hours

Rotating hourly cuts, unpaid vacation, shutdowns for non-core positions

Cuts of up to 40% (short term)in a scary economy can be maintained if coupled with the right message. 20% cuts for up to a year if perceived as fair

Message: “Keep the Team Together”



Managing Talent In A Downturn

Business