Leadership Blog

The downsizing slippy side

Thursday, November 10, 2016 | Category :
    • Avo Vision
    • Leadership

Reducing is never easy. Whether it’s your weight, the clutter on your desk or your to-do list, cutting back, narrowing down or shedding can be exceptionally challenging.

But the tough economy is having a devastating impact on small businesses at the moment, so when that reduction is being is being forced upon you by financial constraints, it can be positively heart breaking. I use that term intentionally, because as a business owner, if you have ever been forced into the position of having to cut back on staff in order to save your business, it is heart-breaking.

A small or medium business is like a family. People fulfill more than just their job description, they go above and beyond the call of duty and when the leader of that little family is called upon to sacrifice some for the greater good of all, the guilt and loss of faith can be devastating. So how do we handle this process with as little ‘blood on the walls’ as possible?

Having gone through this with my own business, a couple of years ago, and facing similar issues now, I can honestly say that I believe the best route ahead in this situation is paved with honesty. It is of the utmost importance that the situation is dealt with, with integrity. Taking your team along with you, keeping them in the loop and making sure they are aware of each and every decision point, will go a long way to ensuring that no feels there is an agenda behind decisions. Although I am painfully aware this is easier said than done.

A quick ‘us and them’ polarisation- which can be exceptionally divisive- can occur if the leader of the team isolates themselves. When we went through this, I was a lot less wise than I am now. I isolated myself, under the mistaken impression that I needed to make all the decisions on my own, and needed to formulate a response plan. All that transpired was that my team began chatting among themselves and coming to conclusions that weren’t necessarily correct. My lack of openness led to a distrust of what I was saying, was happening. And still, some years later, we are mending the wounds inflicted by that time in our business. It still comes up in casual conversation under the Avo tree in our garden, and that is what has made me realise that the best way forward is always to talk, talk and talk!

One of the things I wish I had done at the time was offer my staff the ability to come up with creative solutions to save money, or generate revenue in order for us to continue. I have seen this done successfully, where a business has been open with its staff and asked for help. The teams almost always pull together, where possible, and you will be surprised at some of the options they come up with.

If it’s a short term cash flow issue, offers to take partial salaries and postpone the differences will help to get things on an even keel. Some staff may be in a position to forego a salary entirely, on the basis that they run a loan to the company. But beware of this one. Not all staff are in a position to do this, and it needs to be an offer from the team member. No one should feel pressured into doing anything they can’t, or don’t, want to do.

Your sales teams might be able to identify quick win services or products with a short sales cycle that they will be able to get out to market quickly. Your accounts department may be able to get some of your clients to speed up their payments, by making use of the relationships that they have been forging over time, and conversely discussing a longer payment cycle with your creditors, to extend your terms. The important thing is that you need to get creative to get the company over a short term cash crises.

As a leader of a business in crises, it’s important to understand that some members of the team will blame you. Why didn’t you see this coming? Why didn’t you mitigate the risks? Formulate a response with care. Defensiveness doesn’t help anyone, and getting angry or playing the blame game is going to result in guilt and hurt feelings all round. Realise that part of being the leader of the team is taking responsibility and being cognitive of the reasons behind the anger more than the anger itself. Insecurity, anxiousness, and fear are probably going to be the over-riding emotions of your staff at this point.

Should it come to the point where you have to let staff go, it’s absolutely imperative that this is done humanely. There are many cases where staff have arrived to work, and been retrenched with no warning, within ten minutes. This is devastating to anyone. The process of letting staff go, so that when you are in a strong position you can get them back again, is important. If you have been honest from the beginning it won’t come as such a shock, and will be easier to understand. Offer emotional support as well as practical assistance, such as helping with CV’s, references and introductions to contacts that may be able to assist them with employment. Integrity, respect and care are your touchstones.

For those who stay, the survivor’s guilt can be hard to manage. So as to cement trust in the leadership, assure your team that as soon as the company is able, you will re-employ the fallen comrades. Galvanise the team around the purpose of getting the company back into a strong position again, and remember it takes time to heal, but asking for constant feedback is your key to coming back stronger and better than before.

And Leader, care for yourself through the process. Your resilience and wisdom at this time will be most critical to achieve a sustainable outcome. Eat. Exercise. Sleep. Talk to a friend or shrink. Watch a mind-numbing series. Anything to keep yourself grounded and effective through this time.


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