Described the workplace immediately

Restructuring initiatives can have a debilitating effect on the hearts and minds of employees, affecting those who stay as well as those who are let go. In our work with dozens of organizations implementing sweeping cost-cutting programs, we have observed firsthand the turmoil that employees experience — and how frequently their needs are forgotten during the crucial work of planning for the transformation.

But what if the restructuring were more than a slash and burn? What if it appealed to hope instead of fear? What if it not only promised, but actually delivered, a stronger company and a better place to work? Cost management is effective only when it leads to a less sclerotic, more aspirational enterprise — one without suffocating bureaucracy or micromanagement, in which initiative and entrepreneurship are encouraged and rewarded, internal processes serve the customers and employees instead of “the process” itself, and the company outperforms the competition consistently. If the restructuring doesn’t help the company get stronger — if it doesn’t lead to a better way of working for everyone in it — then it probably wasn’t worth conducting the exercise in the first place, because the effects won’t last.

Company leaders embarking on a cost management effort therefore face two challenges. First, they have to make the right sort of promise to employees: that cost reductions will be not only fair, but also productive. This transformation is not intended simply to permit the company to survive a few more years — it is intended to set the company on a path to greater prosperity and thus better jobs for those who remain.

Second, leaders have to deliver. They can’t just embark on a project out of desperation. They have to have a credible way to move the company forward, and to make cuts that will serve that goal. The only way to accomplish this is to start with strategy — to have a clear idea of which activities are truly critical to the company’s success, and which are distractions or merely nice to have — and to follow through by cutting costs to grow stronger.

To be sure, many in your company — not just employees, but some senior executives as well — will remain skeptical throughout the early stages of the process. They know that cost cutting means layoffs, and that these are devastating to both individuals and teams. You can’t convince them in advance that you will handle the process differently in the future than your company has handled it in the past, and few companies have a good track record in this domain.

The feelings stirred up by an announcement of a cost-cutting action are powerful, and to help people see beyond them, you’ll need to enlist the help of your middle and frontline managers. It’s easy to overlook the important role these individuals play as the restructuring unfolds. It falls to them to communicate the rationale for the restructuring, to keep morale as high as possible during the transition, and eventually to lead their part of the organization to working in a different way. They need your support. Empower them to communicate and lead, not to just passively watch their departments be trimmed without a rationale. They can help their people understand the reasons for the particular choices that were made, and realize that the company, and by extension most employees, will ultimately be better off as a result. In so doing, these managers can earn their people’s trust by helping them see that becoming more efficient and effective is both a path for survival and a better way to operate.