How workforce reduction with prudence succeeds in SMEs

The middle class shines in many ways with sympathy. This includes the smaller teams that usually work together for years and know and appreciate each other. However, so much cohesion increases the emotional pressure if the company gets into trouble. For those responsible for the company, the situation is particularly stressful because they want to protect employees but must keep their company afloat. After all, it means: Either a few have to go - or all. Quite apart from the financial loss that depends on the company's economic situation.

Small is fine

Bosses generally try to at least maintain their existing company size. Downsizing is economic nonsense - or is it? No, because smaller teams often work much more efficiently than large teams: Everyone feels responsible for the company and its products and supports each other. Even if the tasks do not belong to their actual job specification. Does sales need support with ad placement? Maybe the back office can help. Does an employee in production notice something that could develop into a problem? The step to development is not far and is appreciated. Knowledge from different disciplines combined for a better product and as a secret recipe for innovation - this only succeeds without separate departments. And smaller teams excel at this!

Larger companies cannot avoid creating individual departments, but they can take a cue from the way smaller ones operate and benefit from their flexibility. If larger companies need to downsize, this opportunity can be used to implement these positive effects in a smaller team. Business leaders often overlook the impacts that downsizing brings. It's time to bring this to the forefront and encourage those in charge.

How do those in charge proceed?

Employees quickly notice when something is wrong in the company. Especially in smaller firms, negative news spreads like wildfire. The generally tense economic situation also causes constant sensitivity. Companies of all sizes rely on the expertise of their employees. Even though all employees are important, it is crucial to retain specialists with particular expertise. If they become nervous because management does not communicate the situation, they pull the ripcord and quickly find a new job. This must not happen under any circumstances!

Therefore, proper internal communication is the kingmaker: respectfully, trustfully, confidently, and honestly, bosses address the company's difficult situation with the employees. The enemy of orderly downsizing is panic.

Once bosses have informed the employees they absolutely do not want to lose, they quickly make a decision on which positions to cut. A mistake many make in this situation: focusing on low-level jobs. A compulsive downsizing is intended to save money. The lower the salary of the positions in question, the more employees have to go. It is more efficient to look at the higher hierarchy levels. If several employees have to leave, the number of people the management has to oversee usually decreases as well. This way, the company can also reduce management positions.

The same work on fewer shoulders

After the significant cut in company culture and the introduction of a new way of working, the question arises: How do SMEs distribute the workload from many shoulders to a few without overloading the remaining employees?

The golden rule: they consistently focus on the most important projects and tasks. What brings the highest customer benefit and thus the highest business value? Executives must set the direction here and possibly motivate employees to implement the clear line in their way of working.

They clearly prioritize projects from one to x and fill them with the available capacities. A 100 percent allocation of employees to the projects, managing a maximum of two projects in parallel, should be the norm here. Very specific subject matter experts with little time spent per project are an exception.

The management stops all projects with a lower rating. Experience shows that parallelizing too many tasks slows down all projects and thus delays market entry. Successful manufacturers first develop the initial momentum and then catch up with full capacity on the next projects.

Important: Prioritization also applies to product features! Which ones have the greatest business value because they are attractive to the largest part of the target group? Features that are only relevant to a small portion of the market increase development time, costs, and thus the price at the expense of the majority of customers - which in turn makes sales more difficult. Prioritizing product features means understanding customer benefits while simultaneously reducing employees' workload.

Source: Agileus Consulting