<i>Dear Workforce</i> What's The Best Way To Downsize Yet Still Hand Out Raises To Remaining Staff

March 19, 2003
 Dear Caught in a Vise:

Depending on how much downsizing is involved, this may be problematic foryou. I would strongly advise against providing raises to "surviving" staffmembers, particularly in situations where the downsizing is significant -- morethan 10 percent of the workforce.
Many of the remaining employees will react unfavorably to the increases, nomatter how you position things. It will serve to increase the level of confusionand frustration that they feel, and many may think that their colleagues were"sacrificed" to pay for the raises. The best approach would be to separatethe events by at least four to six months. You can provide increases on theregularly scheduled annual review date, assuming you have one. If you use ananniversary system, then freeze all increases (not performance reviews) for thenext four to six months. You can then begin them again when you feel that theshock of the downsizing is past. For those whose increases were delayed due tothis process, provide them with prorated increase amounts. For example, a personwhose increase was delayed four months would get 16/12ths of their increase.
If you absolutely cannot wait to provide salary increases, then the way tohandle things is to be as up front and honest with employees as prudentlypossible. You need to explain the business situation. Be clear as to the reasonsfor the downsizing, and why you feel it is necessary to provide raises to theremaining staff members.
Let's assume for a moment that you are giving the raises to keep pay atcompetitive levels, even during a business downturn. Your message should focusfirst on the company's inability, due to business conditions, to allow stafflevels to remain at current levels. The next message should explain that eventhough you must downsize, the company remains committed to keeping talentedpeople, and paying market-competitive compensation.
Employees need to believe that all of this makes sense from a businessperspective, so you will need to craft these messages carefully. Whether youprovide increases right away, or wait as explained above, communicate via groupmeetings with senior management, as well as personal meetings between managersand employees. Follow these up with e-mails or personal letters. Useface-to-face communication as your primary vehicle for getting the message out.Your goal is to gain understanding, if not acceptance. Make sure you get there.
SOURCE: Robert Fulton, managing director, The Pathfinder'sGroup, Chicago,Illinois, Aug. 13, 2002.
LEARN MORE: Read Thirteen Alternatives toDownsizing.
The information contained in this article is intended to provide usefulinformation on the topic covered, but should not be construed as legal advice ora legal opinion. Also remember that state laws may differ from the federal law.
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