We're all reading about massive layoffs and cost cutting measures but are companies really getting it right? I don't think so. It seems that HR Leadership (oxymoron?) is still making the "easy" decision regarding their talent inventory, that being Last In First Out (LIFO). Severance packages will be less and they don't have to deal with uncomfortable dismissal discussions with tenured employees. This is very short sighted and while they can stand up in front of their executive team and say "we reached our goal of cutting payroll by X%" and feel good because they were "loyal" to their people they fail to put the business in the best position to succeed in the long run.

I'm a bottom line person and for companies to be successful and keep ahead of the competition they must adopt a new philosophy when dealing with their talent inventory in tough times and that is Best In Worst Out (BIWO). Keep your better performers and remove your lower performers. I'm not talking about the "C" players (that is a no-brainer) but you will need to remove some long standing "B" players in favor of newer "A/A+" players. This is where the decisions get tough and your managers really earn their stripes.

As a business or a specific unit within the business you must first identify the roles that are deemed bsuiness critical and ensure you identify the higher performers and speak with them to let them know how valuable they are to the ongoing future of the business and keep them engaged. This is critical. If your top talent is being let go or see higher performers being let go in favor of tenured employees there is NO WAY you will be able to keep them engaged and performing at their usual level. What is more demoralizing then seeing Betty who has a history of outstanding delivery on customer engagements, even though she has only been on the team for 18 months being packaged out while Johnny, who has no initiatve but has been there 10 years, gets retained. WHAT ARE YOU TELLING YOUR PEOPLE? WE VALUE TIME SERVED AND NOT WHAT YOU DO FOR US.

You should follow this approach with all of your roles and at the end of the day, if you follow the BIFO strategy you will have a leaner organization and one that is positioned to take on the challenges of the tough economy. You also position yourself as an organization that top talent will want to work with and that is never a bad thing.

I guess what I'm trying to say is that HR has the opporutnity to earn that seat at the executive table if they come armed with a plan that meets not only the short term organization goals, but one that also takes a look at the long term success as well.

Views: 25

Comment by Dan Nuroo on March 30, 2009 at 6:15am
As someone who just sat through a whole week of these discussions, let me just say... "well said" "couldn't agree more" LIFO Im afraid, whilst "easier", if it is easy to lay someone off, cannot be best for the company, either short term or long term.

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