Nine smart ways to downsize

The economic recession has affected businesses of all kinds, from the little bakery down the street to some of the largest companies in America. An unfortunate aspect of a sluggish economy is downsizing. If you're desperate and need to lay off employees, here are tips from Dr. Clint Chadwick, a business professor at the University of Alabama in Huntsville, about how to go about it smartly.

Determine how you're losing money. Firing employees won't help if your practice prodecures need to be revamped. Figure out how you can improve and bring in more revenue.

Be specific. If you're not honest and consistent with your reasons for letting an employee go, they may make their own, potentially harmful inferences. If they think staff cuts are arbitrary, for instance, they could panic, creating an unproductive workplace.

Notify employees in advance. You'll send the rest of your employees a bad message if you toss people out on the street with no warning. Give laid-off employees time to get their affairs in order.

Help your remaining employees improve. Once you decide to downsize, the only credible guarantee you can offer employees is a promise to keep their skills marketable and fresh. If you say you'll never downsize again, no one will believe you.

Break the news in private. Treating people right has a positive effect on the “survivors.” Don't make the humiliation of being laid off a public spectacle; the rest of your employees are watching.

Assist with outplacement. Show your employees you care about them, even if they're no longer with the practice.

Offer severance pay. You're causing a major disruption in employees' lives by letting them go. Show your remaining employees they can trust you by helping to minimize that disruption.

Gather input from your managers. Involving practice managers or other high-level employees will help make downsizing a smooth transition. After all, they're likely the ones who will implement the plan.

Communicate with your staff. Be even more open and upfront with your team than normal. Otherwise, people will fill in the gaps themselves and rumors could spread, creating an environment of helplessness.