For business and HR leaders who must carry out layoffs or downsizing actions, the conversation inevitably turns to talent management. During the ongoing economic downturn, many company leaders recognize that while their recruiting strategies might be strong, they don't have a good method to determine which individuals to lay off. They aren't sure which people have the most potential -- and this lack of knowledge inhibits corporate success.  

Make smart choices during a workforce reduction

For business and HR leaders who must carry out layoffs or downsizing actions, the conversation inevitably turns to talent management. During the ongoing economic downturn, many company leaders recognize that while their recruiting strategies might be strong, they don't have a good method to determine which individuals to lay off. They aren't sure which people have the most potential -- and this lack of knowledge inhibits corporate success. 

If your company doesn't have a quantifiable method to determine who to keep and who to let go when conditions warrant a reduction in force, read on. New performance management strategies can help your organization become smarter and more agile. 

To make smarter choices, find systematic ways to evaluate people 
"One of the challenges of downsizing is that it highlights any deficiencies in your company's ability to systematically and objectively evaluate people," says Paul Carlson, Ceridian yice president, Product Management. "With no well-defined process, you might be letting the wrong people go. And your legal and public relations teams will tell you that any reduction-in-force, by its very nature, presents risk as well. You need to be able to explain why you workforce reduced some people and kept others." 

Dr. Steven Hunt, director, Business Transformation Services at Ceridian partner SuccessFactors, agrees. "Employers that don't have a strong process in place to gauge the performance of their people can experience some anxiety as they prepare for downsizing," he says. "A systematic, meaningful method of employee evaluation is the foundation of success in these situations. You want to feel confident that the decisions you're making are both fair and consistent. You need to know that the decision about who to workforce reduce is based on data, not personal opinion." 

Best practices in performance management 
Even top-performing companies struggle with the sluggish economy -- but industry leaders exhibit a true knowledge of the individuals who make up their workforce. "Everyone says that their people are important," says Hunt. "But when we look at the must successful companies, we see a big difference: Leaders who really believe it. They take action to ensure that they have the people who are capable of getting the company where it needs to go. They can tell exactly who is working on business-critical projects and how well each person is performing. These leaders are very rigorous about talent management processes." 

Many of these business leaders use a new breed of performance management solutions such as Ceridian Performance Management Express to help them make the smartest choices about their people. With the best solutions, companies have a way to easily and cost-effectively manage employee goal setting and performance reviews. 

"When performance reviews are effective," says Carlson, "everyone wins. The employer transforms a manual review process into an automated one that all but ensures 100 percent participation. Employees understand where they stand -- and how they can improve. Managers and supervisors embrace a system that makes the process easy for them. HR and business leaders gain a fresh perspective about individual talent. Rich, meaningful information about employee performance builds upon itself, right from the start." 

These Ceridian experts feel strongly that employers should have a performance management system in place before workforce reductions are undertaken. "That way," Hunt says, "Everyone knows which skills and goals are important. People know how their personal performance is assessed. And that lays the groundwork for smarter decisions about downsizing activities, which after all are focused on fully maximizing workforce productivity. 

"You can do that much more intelligently when you gain insight into the current performance and future potential of individuals. Employers who don't know their people find themselves at a disadvantage during a downsizing situation. Some end up simply focusing their efforts on mitigating risk." 

A surprising benefit of systematic process: Positive impact on survivors 
Effective performance management also affects the workers who survive a workforce reduction. "People understand that workforce reductions are a fact of life," Carlson says. "But it's the process by which the decision was made that is important to them. Consider the impact of a workforce reduction on the employees who are retained: How did you treat my friends? they wonder. And am I next? Strong motivational factors area at play. It's important for people to understand the decisions were not capricious but were based on meaningful analysis." 

Hunt concurs. "With a strong talent management system in place," he says, "Your actions are explainable and justifiable, because you've based your decisions upon relevant information. You can explain your actions to those who are left -- which helps them feel reasonably comfortable and safe. This sets your organization on a trajectory of maximum productivity even in the aftermath of downsizing."