5 Ways to Properly Downsize a Small Business

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Contributed by Tina Samuels

While no small businesses like to downsize, there are many times when it is a necessary evil.

Doing it the right way will help keep your remaining team members focused and motivated, while creating the planned result of the downsize.

Here are five ways to properly downsize your small business in 2013:

1.      Do It Legally

Make sure you know, before laying anyone off, if you are required to give them notice about the layoff and if you are responsible for compensating them for the layoff. Downsizing legally means that you conform to every aspect of the law.

2.      Check for Volunteers

When faced with a downsizing company, you may want to see if any of your employees want to do a voluntary termination. In this, it offers a buy-out for those employees that will leave on their own. This keeps you from having to pick employees, gives a better overall mood to the rest of your employees, and keeps the fear levels low.

3.      Do It Evenly

When it comes time when you have to pick people for downsizing, you may want to do it as an across-the-board cut. This keeps it looking fairer and balanced than choosing people only from one section of the company.

4.      Select by a Funnel Method

Another good strategy for downsizing employees is by using a funnel approach. To do this, choose people by skill set first, job performance second, number of disciplinary actions third, and seniority fourth. This also puts it on a more even, performance-based structure, and keeps the look of selecting favorites at bay.

5.      Planning and Preparation

Take account of all the projects you have going at the time you want to downsize the company. You don't want to choose people for a layoff who are in the middle of a critical project, as this may put the project in peril.

Preparing for the layoff process is as simple as making sure that the people you have chosen were chosen fairly and that their leaving doesn't put a crimp in any upcoming projects. If you need to write out a script on what you are going to tell an employee, do.

Another idea is an across-the-board memo on the "why" of the layoff, how the "who" of the downsize effort were chosen, and "when" it will take place.

Downsizing is never a fun time for any small business owner. It is never a purely good thing, for the company and surely not for the employees.

By incorporating some of these tips, you can achieve a more fair and balanced outcome and keep the remaining employees’ morale up.

About the Author

Tina Samuels writes on a variety of small business topics, consumer, and on various gutter styles when considering home maintenance.