Countering Layoffs with Connection, Belonging and Loyalty

CSR/ECO/ESG


by Gael O’Brien

Is the U.S. economy slowing to a point where we can expect companies to begin laying off more workers?

Maybe, according to an analysis of recent Labor Department data  which shows the average number of hours worked a week by private-sector employees declined in May to below the 2019 average and down from a peak of 35 hours in January 2021.

“This could be ominous,” suggests The Wall Street Journal. “With growth now slowing—and by one measure, negative—some employers might be responding by cutting hours, perhaps in preparation for recession.”

The tech sector has already been hard hit, with nearly 200,000 tech employees laid off in the first five months of this year, by one estimate. The cuts follow a hiring boon over the last several years. Seven major tech companies grew larger, between 53% and 106%, during the pandemic. Meta and Amazon doubled their number of employees between 2019 and 2022.

Mass layoffs aren’t new. They’re a wrenching processes with long-term negative impacts on those laid off, those remaining, and a company’s culture. Mass layoffs are neither inevitable nor the best way to cut costs. They take companies off track.

For example, at one company mentioned in the Journal’s analysis – American Fleet, a Springfield, Mo. maker of diesel engines – sales manager Mark Patterson says: “There’s such a shortage of labor we’ll do everything we can to keep everybody because you’re afraid you won’t get them back. The labor situation is the hardest we’ve ever faced, and we’ve been in business 35 years.”

How do businesses manage amidst such seemingly contradictory trends? In challenging times, there is hope in effective leadership, the genuineness that builds trust, and the impact of people working together supporting goals and purpose. These three questions support getting back on track:

  • “Why would anyone want to be led by you?”
  • How can you avoid overestimating your trust? and
  • What will it take to begin to feel “we’re in this together?”

Why would anyone want to be led by you?”

In a 2000 Harvard Business Review article, two business school professors and consultants asked a question to help leaders clarify  their own leadership. They asked: “Why would anyone want to be led by you?”

It’s not a question most leaders think to ask themselves. It requires looking through a reflective and more self-aware lens to be clear about one’s impact and capacity to inspire. Instead of focusing on a list of achievements, the purpose is identifying insights and takeaways that recognize strengths or can increase effectiveness.

Meta’s CEO Mark Zuckerberg  was asked a similar question in March 2023 during a company town hall meeting. An employee reportedly asked him why employees should have confidence in his leadership. The CEO  replied, “That’s a completely fair question.” If he elaborated on his response, the article didn’t include it.

Meta employees’ anger was triggered by more layoffs occurring than they’d initially understood. In November 2022 (after 11,000 layoffs) Zuckerberg had told employees that he didn’t anticipate further layoffs. By the end of May 2023, the total number of layoffs had risen to 21,000 people.

 Leaders should answer the question, “why would anyone want to be led by you?” They will see how they show up through their strengths, blind spots and what trust means to them.

 How can you avoid overestimating your trust?

PricewaterhouseCoopers’ 2023 Trust-in-Business survey found that trust improves the bottom line. The study also identified that business executives overestimate how much they’re trusted. Their unverified  assumptions can easily mislead and work against building trust. The findings are a red flag to revisit how confident executives are about their companies’ attention to trust.

For example, 84% of businesses executives surveyed believe customers highly trust their company. The reality is that only 27% do. In that gap, issues with products and services are being missed, trust opportunities lost, and reputations put at risk. Solutions can only help when leaders reexamine how they are verifying the accuracy of their attention to trust.

The survey asked business executives and employees “whether or not company leadership gives appropriate attention to earning trust in business.” Less than half (45%) of business executives  “strongly agree firm leadership gives appropriate attention….” Employees weighed in with only 34% strongly agreeing. The survey information exposes a flaw in how leaders evaluated their information about trust – but that can be corrected.

Training in measuring trust supports greater awareness. The current bias of executives can be addressed through training and surveys that speak for themselves. Executives can also do routine interviews with customers and employees for reports. The more trust employees and customers feel, and executives help build, the more likely a company can create another step toward deepening community.

 “What will it take to begin to feel “we’re in this together?”

We’re living in an era of disruption. The layoffs of the last six months – and the possibility of more layoffs  – remind employees that their job could be lost in a direction change. Disengaging is easy in that mindset. That’s how companies addressing ways to strengthen their culture and sense of community support getting back on track.

A company culture is a backdrop for how employees show up with their talents. The elements of connection and belonging feed into each other and loyalty is an emotion that makes its own choices. This is the right time to consider what it will take to feel like “we’re in this together.”

Consider:

  • Bringing company values and purpose into meetings and work discussions creates a connection each person shares. Pairing up and supporting each other fuels being “in this together.” Adding 10-15 minute-social time to a meeting encourages learning from each other, developing friendships and supporting business outcomes.
  • Belonging. Belonging grows out of the ways individuals and teams connect. Leaders at every level can support it by how they engage with, encourage, and treat employees. Being recognized and acknowledged for good work encourages belonging; it fuels a desire to see the bigger picture and what can be contributed.
  • Loyalty. Trust helps establish loyalty. It grows through exposure and seeing a culture of people doing what they say they’ll do. Feeling loyal to what the company stands for depends on the strength of the culture, purpose, and one’s own engagement. When leaders are transparent and communicate the good and the bad, loyalty is reinforced.

When companies are committed to valuing and supporting their employees by their actions , culture flourishes. It opens the door to “we’re in this together.” Executive and company pay cuts were a strategy many companies used to avoid layoffs in the last several months.

In addition, retail companies including Target, Lowe’s, Walmart, and Home Depot  have been focused on investing in their employees to avoid labor shortages. These companies, others, and nearly 90% of small businesses are part of the trend of “Labor Hoarding.”

Loyalty is a powerful emotion when it operates both ways. It’s what can inspire workers and leaders to do their best work and in the process find “we’re in this together.” Zoho CEO and co-founder Sridhar Vembu takes loyalty to heart.

“We understand that times are tough,” he said, “but we have made a commitment to the employees that layoffs would be the absolute last thing we will ever think about because it kind of destroys loyalty,”  He continued, “If we want our employees to be loyal, we have to be loyal to them. Even when times are tough, with a strong balance sheet and strong unit economics, we need to retain our talent here,”

We shouldn’t ever underestimate connection, belonging and loyalty.

Gael O’Brien is a catalyst in leaders leading with purpose and impact through clarity, presence and connection. She is an executive coach, culture coach, speech coach and presenter. She publishes The Week in Ethics and is also a Business Ethics Magazine columnist, on the Advisory Board of the Hoffman Center for Business Ethics at Bentley University, and a Senior Fellow at The Institute for Social Innovation at Babson College.

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