Don't Let Layoffs Make Your Firm Stupid

The smarter way to let people go without losing institutional memory

Written by Derek Gagne

Consider this common scenario. As part of a round of downsizing, you’ve had to lay off Susan, a research analyst in charge of competitive intelligence. Much of what she has done for your company, how she has done it and who she knows resides in her head. Susan’s last day at your firm has come and gone, and you’ve asked her former co-worker Brian to handle her former responsibilities. And it has gone badly.

During Brian’s first two weeks in his newly expanded role, he has had to redo the intelligence reports three times, miscalculated your competitor’s market share and sent incorrect information to your board of advisors. Suddenly, you’re in full damage-control mode. Brian needs to be retrained and coached to learn his new job, and will have a learning curve of eight to 12 months just to get to where Susan was.

You should draw two conclusions from this. One is that you should always explore alternatives to layoffs, because they can prove an expensive way to try to cut costs. The other is that if you do have to let staff go, you should also take steps to minimize the resulting loss of institutional memory. The consequences of failing to do so can include:

  • Having to reinvent the wheel
  • Repeating past mistakes
  • Failing to repeat past successes
  • Suffering a loss in productivity, money and time

To avoid these sorts of problems, you need to introduce processes to capture and share critical knowledge held by departing employees. I know this sounds like a daunting project, especially if the layoffs are imminent. But the sooner you implement a knowledge management (KM) strategy and the more extensive it is, the more you’ll limit the damage to your firm of future layoffsۉ‚¬and voluntary staff departures.

Developing a longer-term KM strategy means that the next time you need to make a round of layoffs, you won’t be left scrambling to capture critical knowledge from those you’re letting go. But even if all you manage is to apply some band-aid solutions, such as conducting thorough exit interviews, you’ll still have significantly reduced the knowledge lost from shrinking your workforce.

There’s no “one size fits all” KM template. But you can choose from the following list of short- and long-term initiatives to craft a strategy right for your company:

  • Conduct comprehensive exit interviews: An effective exit interview can take up to two hours. But asking a departing employee to share key knowledge about his job, processes and contacts is time well spent, yielding a blueprint for those who will need to pick up the pieces.
  • Create an alumni of former employees: If you treat people well on their way out the door, most will agree to help you in the future. Make it clear that the layoff was a business decision and one you would rather have avoided, and that you still value the departing employee’s knowledge and contributions to the company. Ask her during the exit interview “can we keep in touch with you?” If she still cares about your firm and her colleagues there, she’ll likely agree that you can call her when you get stuck on a task that she used to handle. And if you keep her in your orbit, you might even wind up rehiring her when business picks up again.
  • Harness cheap Web tools to help instill a knowledge-sharing culture: Use simple Web-based project-management tools such as Basecamp (www.basecamphq.com) to share files, centralize feedback and track lessons learned during project debriefings. They cost a pittance; Basecamp, for example, starts at just US$24 per month. You can also use a wiki, blogs or online discussion forums to share information and tap into your workforce’s collective knowledge. This will capture key knowledge online so it’s searchable by your entire team.
  • Have your staff document how they do their jobs: Get your employees to draft job descriptions backed by step-by-step descriptions of how they do the work, why they do it that way and who they need to contact to get it done. They’ll likely grumble at this chore. But explain to them that doing so will create a reference guide they’ll find helpful in their current jobs. As well, make it clear that you’ll be more inclined to promote someone if you have a document you can use to train his successor. These documents will over time become outdated, so you should review them at least once a year, perhaps at the same time as performance reviews.
  • Identify key knowledge gaps in your team: Conduct a workforce-planning exercise to identify where your company has current key knowledge gaps and the people you’ll need to hire to fill those gaps when business picks up. In your haste to save a buck today, don’t make the mistake of laying off anyone you think will be impossible to replace once you need them again.
  • Get your veterans to bring your newbies up to speed: Implement mentoring programs to transfer hands-on experience and knowledge. This can be a simple yet effective buddy system in which you pair up a new hire with a senior team member to share knowledge about “how we do things here.”
  • Communicate the importance of knowledge management: Make sure your company culture is one that rewards knowledge sharingۉ‚¬and punishes knowledge hoarding. Highlight and celebrate cases in which the company has achieved wins thanks to employees sharing knowledge. Make it clear that you consider those who exhibit such behaviour as more valuable team members. And point out cases in which knowledge hoarding has resulted in missed opportunities.
Originally appeared on PROFITguide.com