Psychology in Business Series 2011: Managing Staff Cuts with Integrity

How to Manage Staff Cuts and Save the Business’s Mental Health

Today we are going to look at the mental health of the business or company in regards to how the business treats its staff when staff cuts become essential! Staff cuts are often one of the first solutions to decreasing expenses in a stressed business. However, whether this is the right decision for a particular business should be looked at very carefully. There may be better ways of changing a business’s productivity than reducing staff. If there are not enough staff or the remaining staff are highly stressed because the expectations on them have significantly and unrealistically increased, then it shows!

How staff cuts are approached is vital to the effectiveness of these changes. If staff cuts are not carried out with fairness, respect and equity then the solutions is often counterproductive. While this solution may cut expenses it may also inadvertently decrease profit. If you loose the morale of the workers then they will not be working as productively and the business will begin to lose quality. Unhappy or stressed staff reflects the state of the business and customers sense this! Therefore, staff changes need to be handled carefully.

As stated last time, a business is like an organism. Its mental health is dependent on the wellbeing of the staff, its owner and the managers and the interpersonal systems within the business. A mentally healthy business is responsive to its staff needs and issues within the boundaries of the business. Likewise, effective staff change in a business needs to be done with appropriate care, respect and value for the staff if the business is to keep its integrity and edge. So when staff cuts are essential for the business’ survival, keep in mind the organic nature of the business and the real effects of those cuts on the productiveness and results of the business.

In a stressed economy there may need to be staff cuts, however the process and how staff are treated is essential to the company’s mental health. Honesty, integrity, transparency, clear communication and timing all play important roles in how these changes are carried out. Even when hard decisions need to be made, how they are carried out will increase or decrease the trust and loyalty of the remaining staff.

Today we have looked at the how important it is to approach staff cuts sensitively and appropriately. Next time we are going to look at how to manage staff and business needs with integrity to advance the business’ mental health.



5 Responses to “Psychology in Business Series 2011: Managing Staff Cuts with Integrity”

  • Helene:

    Great post Vanessa, your connection with how this stressed economy is impacting many. Only this week 3 major challenges in 3 different types of business … the impact of stress is enormous on all concerned.

    The challenge is many fall to victim mode then can’t see any solutions …. Being able to assist business to look from a different view point where they can take in different information can make a world of difference … The question is would they be open to the fact you could come to a different conclusion…


    • Vanessa Bushell:

      Hi Helen, thank you for your comment, your experience in this area is very welcome. “Organisational readiness” is a key component of businesses making stressful change. And like an individual person, some are ready to make changes and some aren’t. However, the way the proposed change is presented is an important part of maximizing the possibility for change.

      In my experience, a top down or an authoritarian approach often does not work as people can feel dis-empowered. Strategies that often do work include:
      – Inclusive methods of change
      – combined with clear methods of carrying out the change
      – transparent processes
      – clear goals
      – examples of business who have used the proposed approach to change and have succeeded

      Another idea of shifting victim thinking is bring awareness to it and help people to over come the style of thinking (this is more classic cognitive behavioural methods of change, which can work for individuals or groups of people).

      I hope this helps
      Kind regards

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