Communicating the Need for Headcount Reduction as Part of Your Digital Transformation

Written By: Brian Potts
Date: June 15, 2020

We recently discussed the concept of reducing headcount as part of your digital transformation. While not an enjoyable topic for most, it is still a reality in some situations. If you find yourself having to layoff workforce in order to either stay afloat or keep your competitive edge, the most difficult part will likely be the communication of this messaging. When and how do you tell people that your new, exciting technology investment may pose risk to their jobs?

There are conflicting thoughts on this, and what we want to stress most is there is no “one-size fits all” approach here. Ideally you have though long and hard about alternatives to layoffs and how to better utilize staff following the transformation, but in cases where headcount reduction is inevitable, consider some of the following thoughts as part of your organizational change management strategy.

Don’t avoid or hide the messaging

First and foremost, if you are planning to “hide” the fact that headcount reductions are coming, consider two very critical facts:

Employees will figure out what is happening at some point. People have been using technology in their personal lives for years and are aware of what it can do. While they may not immediately draw the connection, they will. And all it takes is one loud-mouth around the water cooler to start spreading fear. We strongly recommend getting ahead of this.

If you are able to mask the changes or muddy the truth and not communicate clearly until layoffs occur, keep in mind that you only have the opportunity to play this card once. Meaning, you will probably never be trusted again. People will consider you dishonest and it could take a long time to recover. We would only recommend this action in cases where the existence of your business rests with this decision.

This video further describes these and other common change management mistakes that organizations often make:

YouTube player

The benefits of proactive communications

If your company recognizes the importance of transparency, you may find some benefit in releasing messaging sooner than later as part of your organizational change management plan.

There may be some people that are simply looking for an excuse to leave. If you share messaging about the coming changes and explain that those that want to be part of the “future state” will have to step up their game, people will get the hint. Sharing that the coming transformation may require some extra hours and effort may prompt some folks to put their resume on the internet, thus reducing the impact of any necessary remaining layoffs.

Early messaging will also help to flush out those individuals that are going to become leaders, change agents and support the change. These people will stand out and become essential during and after the implementation. This, in turn, will serve as another method of narrowing the field for potential reductions.

The risk of too much transparency during your digital transformation communications

One of the biggest concerns with sending early warning signals is people leaving before you have implemented or adopted your new, efficient processes, putting the business at risk. One way around this is to offer some form of bonus or incentive for people to stay through the implementation. Very few people will leave prior to receiving a bonus or while they are earning increased wages.

If increasing wages is not a possibility for your organization, it may help to explain that going through an ERP, HCM or similar digital transformation adds significant credibility to people’s resumes. Even those looking to bolt might see the value in sticking around so they can add this experience to their CV. Another way to state this is they will potentially earn more money in any future job they acquire if they simply stick around to help.

Options for your digital transformation communications plan

One of the more successful approaches we have seen brings a few of the above ideas together. It involves a few key components and can help drive a more positive return on investment for your digital transformation.

Full transparency: Explaining why the coming changes are happening and necessary to for the survival of the business. Also explain, up front, the magnitude of layoffs that may occur.

Explaining that people have options: If managed correctly, your organizational design can come to a natural conclusion. This will include offering some form of incentive for people to voluntarily leave:

  • Financial compensation, either through bonus or pension
  • Educational compensation, offering to pay for certifications or degrees
  • Job support compensation, offering to help them find and transition to a new job

For those considering staying on board, they will need to be educated early on as to what the future looks like, expectations that will be placed on them and the benefits they will receive in the end (also known as “what’s in it for me?”).The end result is you have eliminated people who may not want to stick around for the future state of the business, and you have an entire team of people who have chosen to stay and are ready for what’s to come.

Key takeaways for your digital transformation communications plan

In summary, communicating potential headcount reductions will not be easy and having a plan of attack will be critical for your business. It may also be the case that you do not know if reductions will even be warranted, which suggests you have some process work to do before you move forwards with your transformation.

Stay tuned for more on this, and please contact us if you are struggling with defining or communicating the effects of change across your organization. We are happy to be an informal sounding board for your digital transformation or ERP implementation!

Brian Potts

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