Who stays, who goes, who decides.

The news is full of financial woes, failing companies and bailouts. Many of the company recovery plans include layoffs, in the thousands – and representing 5-10% of many companies.

So far the focus has been on the “big picture”, and as the decisions are being made we’re starting to see the effects – on our colleagues. For most it sucks, for a few – a very few – it’s a welcome relief and they can fund a big change.

But how is the decision made?

1. First in, first out
   It has the advantage of being easy to decide, but may be expensive;
   – long service people will receive higher redundancy packages
   – your company loses valuable experience
   – you may put the company at risk of an age discrimination case
2. Last in, first out
   Again this is relatively easy to decide, but also has some costs;
   – some of those new people are talents, and you spent time and money hiring them into key positions, presumably because the skills did not exist within the company.
3. Bottom 10%
   Using the lowest performers based on their recent performance review, it’s seductively simple; but
   – good managers will retrain, change roles or remove the worst performers every year so by removing 10% across the board you may punish efficient (and money making) business units more than inefficient ones.
4. Who wants to go
   Making those redundant who do want to go has the advantage of removing a lot of personal anguish for both managers and employees however
   – it’s unlikely to be in large enough numbers to meet cost cutting goals (and if it is you may have other, unconsidered problems.
   – if the “volunteers” are in key positions you may struggle to find a replacement internally, or make a case for external recruitment
5. Anyone the boss doesn’t like
   While I suspect that this is a factor on occasion – perhaps when distinguishing between two otherwise equal candidates for a layoff- it’s not a useful, fair or legal strategy.
6. Structural
   By analysing the work done in the department/business unit or company, including prioritising tasks you can assess which roles are less critical and make a decision on that. This has the added advantage of removing the analysis of performance or personalities for at least the first steps.

So what is the best answer?

I think a combination; the structual approach to make the high level decisions, possibly inline with any strategy changes that are also required. This will generate a list of positions that need to be removed. Then within each position chose the person who must leave based on a combination of “who wants to go?” and performance analysis.

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