Navigate Layoffs with Integrity: How to Cut Costs While Strengthening Your Mission

When the alarm bell rings on your financial statements, and revenue is not keeping up with expenses, what do you and your leadership team do?

Rather than quick fixes, wise leaders pause to assess the situation and ensure ongoing alignment of current programs with the mission of the organization before acting.

While budget cuts and layoffs may be necessary, making cuts in a thoughtful way demonstrates care for people in your organization and focuses on mission alignment.

Assess the Situation

In times of uncertainty, financial assessments fall into several categories. If there is an immediate shortfall, then you need to consider short-term solutions to fill the gap between expenses and revenue. These short-term measures may differ from actions you need to take in the next six months or year.

While it is tempting to make this assessment only at the senior leader level, collaboration with mid-level managers can provide additional information and input that might change the decisions your top leaders make.

If the revenue shortfall is 10 percent, the simple answer might seem to be a 10 percent cut across all expenses and departments. However, this kind of cut can have unintended consequences. If you cut some high-revenue activities, your decision might exacerbate the problem.

Alignment: Programs, Revenue, and People

Along with your financial assessment, use this challenging time as an opportunity to align programs and activities according to their mission fit and revenue potential. Best Christian Workplaces has a Leadership Toolkit—Stewarding Talent & Mission—to guide you through the process.

Evaluate all of your programs and activities according to their alignment with the mission of your organization. Pair this mission match with an assessment of the revenue generation potential of each program and activity. Use a grid of Mission Match and Revenue Generation to plot all your programs and activities on a Mission Fit Decision Matrix.

Low mission match and low revenue activities are the first place to cut (quadrant 1). High mission match and high revenue areas should be preserved and even enhanced (quadrant 4). Your most difficult decisions are between high mission match/low revenue programs, and low mission match/high revenue programs (quadrants 2 and 3).

Before automatically deciding to lay off people in the programmatic areas slated to be cut, assess your people resources. Do this assessment in an objective way, so that layoff decisions are not discriminatory. Using performance review data and an assessment of skills, initiative, teamwork, and adaptability, score each person to assess their ranking.

Through this analysis, it will become clear that some people will stay in their current roles, some will be transferred to strengthen areas of priority, while others in those areas with lower ranking will be transitioned out.

Consult an employment attorney who is familiar with the laws in your state(s) and countries of operations. They can advise you on particular processes that are required in your jurisdiction. Careful documenting of your assessment process can be important for legal protection. Your attorney can also help you wrestle with challenging decisions, such as when and how to cut off access to organizational systems for people who are being laid off.

Review Your Assessment and Alignment Process

Budget cuts and layoffs are consequential actions for your organization. Take the time for a careful review of your assessment and alignment considerations before acting. Having a thoughtful process will help reduce any perception that your actions are partial or arbitrary, and will increase confidence in your decision-making.

Have your leadership team work through a process review, including the following:

• Revenue and expense gaps are clear and reasonable.
• The areas you will cut are explainable, and you have thought through the ramifications of the changes.
• The staff reductions and transfers are feasible, and you understand who will be impacted by the changes and how you will support them.
• The various components of the plan can be easily understood when explained to others.

Care for People

As you prepare to implement layoffs and budget cuts, make caring for people a top priority. Realize that organizational changes impact people who leave and those who stay, and each person will face personal challenges as a result of this disruption.

This challenging season for your organization calls for humble, compassionate leadership. Even as you make difficult decisions, your posture of authentic care can make a difference for those people who are laid off, and for those who stay with your organization.

Plan a time to honor departing people, so each person can have closure, and the team can affirm their contributions to the organization. And be as generous as possible with severance packages and support.  

Take Action

Before you act on expense cuts and/or layoffs, carefully prepare the rollout of changes with particular attention to your communication plan. Anticipate the questions that people will ask and prepare clear responses. Even if people don’t ask questions directly, you can anticipate the issues that they are not verbalizing and include them in a FAQ document. A time of disruption can fracture trust, so transparent and clear communication is essential.

Best Christian Workplaces’ research and experience show that communication is a key factor in building or keeping engagement during challenges and disruptions. Transparency, along with a leadership posture of humility and listening, will demonstrate care for all of your people.

The Stewarding Talent & Mission Toolkit has worksheets of frequently asked questions about revenue and expense reductions. Equip middle managers and supervisors for difficult conversations with straightforward scripts. Give them all the information they need to answer questions that will inevitably come up. Proactive information will also tamp down speculation and murmuring that can be prevalent during a layoff cycle.

In the days, weeks, and months after layoffs, continue to be intentional about two-way communication. This season of transition will require frequent all-staff communication and a posture of listening to staff input from all levels.

Lead with Encouragement and Compassion

Embrace the role of Chief Encouragement Officer. Pray for the people impacted—both those leaving and those staying. Respond with compassion as people process the changes in your organization. Encourage people to process their emotions, including grief, in healthy ways.

Encourage your team with a hopeful vision of the future. Remind people of the mission of your organization and continue to share stories of impact. Help people connect their specific work assignments to meaningful and important outcomes.

Refocus on the areas you identified in the mission alignment exercise. Pursue effort in the high-mission, high-revenue activities so that revenue can grow and your organization can recover from this disruption. Encourage managers and supervisors to engage their team in collaboratively resetting goals based on priorities.

Through wise decision-making and thoughtful actions, you can steward the people, financial resources, and mission that God has entrusted to you. While budget cuts and layoffs are disruptive, your compassionate leadership can retain and build trust as your organization moves toward financial health and renewed mission focus.

Resources:

• Toolkit: Stewarding Talent & Mission— Use this resource to learn how to continue to make strategic investments in mission and engagement, even during a disruption. The practical templates will facilitate your assessment, alignment, and action steps.
• Podcast: Healing Workplace Hurt: Restoring Trust and Flourishing Again