- Put standard HR policies in place now -- even if they seem too "corporate." If a company may be on the cusp of cutbacks, now is not the time to neglect HR policies: It's the time to put them in place. Standard attendance, vacation, performance review and benefits structures, for instance, will actually make employees feel more secure in a rocky environment. And, if a cutback is necessary, there's a procedure in place for it.
- Know who's performing and who's not: Establish a formal employee evaluation process -- to serve management in the near- and long-term. "Many small businesses are now faced for the first time with having to make downsizing decisions. Prepare to do this intelligently by getting a handle on true performance -- and ensuring regular performance management reviews take place going forward. That way, decisions can be based on performance rather than relationships or tenure," Ms. Kerge says.
- Don't hide: Stay in touch with the staff, and be visible. In tough times, leaders tend to retreat, act secretive and "change their tune" in communications. This kind of behavior switch can be especially negative in a small-company environment: Key employees might be prompted to "check out" mentally or look for jobs elsewhere.
- Be a "real" person -- honest and inclusive. If there are business concerns, such as a client loss, communicate about them in an honest, non-panicky way. "Most important, make sure you make employees feel they are -- and actually make them -- a part of finding a solution. A good way to begin to do that is to step up one-on-one interactions with staff members," Ms. Kerge says.
- Don't throw the baby out with the bath water: Take advantage of the company's smaller size and flexibility to cut back with a scalpel rather than a hatchet. Hiring freelancers instead of full-timers -- and even changing some employees' status to freelance -- can add flexibility and save money, including payroll taxes. "Being creative may help companies retain good talent in lean times, and avoid unwanted layoffs," Ms. Kerge says.
- When downsizing is inevitable, take the time to do it right. "Layoffs are uncharted territory for many small companies. It's always difficult and usually sad, but thinking in advance about logistics, intelligent severance packages and how management will implement the action will mitigate the pain -- and pay off. If handled correctly, hard feelings and fallout from those who have to be discharged will be minimized, and the effect on remaining employees can be managed and minimized. It's a hard, unpleasant action, but it deserves extra time and attention," she says.
Contact Information: Contact: Katarina Wenk-Bodenmiller Sommerfield Communications, Inc. 212-255-8386 katarina@sommerfield.com