Make layoffs your organisation's strategy of last resort

With unemployment tipped to reach around 7 per cent by first-quarter 2010 and conflicting views on whether our "green shoots" are browning off or not, the reality for many businesses is survival in a shrinking market comprising more demanding customers and more desperate competitors.
It's exactly this environment where firms need every performance advantage they can muster, and while increasing jobless rates suggest headcount has become an obvious target for cost reduction, organisations should think carefully before taking this drastic step.

"Anyone who's worked somewhere where layoffs and redundancies have taken place will tell you just how damaging this can be to the morale of those left behind, and to levels of trust generally _ it can take years to recover," says JRA general manager Heather King. "That's not to say some reduction in headcount may not be necessary _ but it's a step that should only be taken once every other cost-reduction initiative has been exhausted, and even then it needs to be managed well.

"Managed poorly, the impact on productivity and customer service can be disastrous, putting even more pressure on the organisation and creating a deteriorating cycle of performance that can be hard to stop."

A far better approach is to start by looking at how your organisation can become the 'last one standing'.

"In a tough market you need to stand out from the crowd, either by offering a better product, superior service, or a more competitive price.

"This is where our best workplaces have a big advantage. By definition they have a much sharper focus on what they are trying to achieve and people who are much clearer about their contribution to this. They have also created a strong `we're all in this together' feeling that draws people together and encourages a joint effort.

"And because they have invested in their people's development, they have a skilled group of people who really want the organisation to succeed _ people who are more than willing to `go the extra mile', who look to improve the way things are done, and who treat customers like VIPs."

JRA's research bears this out. Organisations with high levels of employee engagement report return on assets twice as high, and sales per employee 40 per cent higher than those with a disengaged workforce.

The JRA Best Workplaces Survey in association with the Herald, and sponsored by HainesAttract and the Auckland Chamber of Commerce, runs until August 31.

Already more than 110 organisation are taking part.