Off message: Cutting the cuts both ways

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Analysts want bravado and blood lust alongside new data to input into their spreadsheets; staff will be anxious, so the best bet is to invoke the tried and trusted ‘attrition’ approach, writes John Anderson.

Janus-320

Janus: seeing the past and future

Janus, as those of you who didn’t sleep through mythology class may recall, was the Roman God who presided over both beginnings and endings. 

His need to keep an eye on the Alpha and Omega of things was addressed by having two faces pointing in opposite directions.

I would suggest Janus should also be the patron saint of corporate communications executives, particularly as they manage the seemingly contradictory goals when it comes to corporate redundancy programmes – something that we seem to be engulfed with at the moment, witness events at any number of big global banks.

What makes the communications management of layoffs so interesting is that there are two clear and very different goals – one far more important than the other.

Paramount in announcing a reduction in your workforce is the ability to dazzle the analyst/investor community with the notion that the CEO has the fortitude/resolve/vision/backbone to trim the employment figures as a way to restore or sustain profitability in what are always called at these points 'challenging’ conditions – don’t blame me for the plethora of hackneyed expressions, it comes with the territory.

If I’ve learned one thing about bank analysts in all my years in the industry, it is that the only thing they care about is the proprietary spreadsheets they’ve developed from which they’re convinced they can discern the stock price movement of the bank under review.

The impact of layoffs on strategic direction, talent retention, and response from competitors means nothing compared with being able to put a number and a percentage rise or drop in the costs column of their spreadsheets. The greater the number, the more convinced they are that the bank in question is headed in the right direction – even though that direction may be straight off a cliff.

So how does senior management get the greatest bang for its buck for a decision to cut jobs? The tried and true method is with one of those classic analyst teleconferences in which the CEO speaks for 27.5 seconds before handing over to the earnest CFO who will then brief the audience on the guts of the initiative. It is important that once every 11 words in the CFO’s prepared text they use one of the following words or phrases: 'brave’, 'visionary’, 'resolute’ or 'not afraid to make the tough choices’.

Blood lust

Now that seems straightforward. You take an action and then you seek to get credit for it.

But here’s where things get tricky.

The bravado and blood lust you’ve worn on your sleeve for the sake of the analysts, won’t play particularly well among your staff, whose anxiety levels are increasing exponentially at the thought of being unceremoniously turfed out into the street.

So how then does one achieve those seemingly conflicting aims of being ruthless on the one hand and sensitive on the other?

The key is found in one of the words used in the internal announcement that kicks off the initiative – 'attrition’.

Invoking attrition – the rate at which a workforce normally loses staff due to retirement or changing jobs – is the ultimate legerdemain of the layoff game. It allows a CEO and the HR department to convince their employees that either all, or the bulk of, the layoffs will come at the hands of some natural progression. 

The alternative is to have your staff worked up into a lather over whether or not they’re next for the pink slip/bin bag routine.

If you think it through, attrition is something that might look like it’s fit for purpose, but actually isn’t, for the simple reason that the individual staff members you want to get rid of aren’t necessarily the ones who are retiring or heading off for new jobs. That logic has never stopped a well-oiled HR department from pumping the attrition messaging through the PA system as a way to keep everyone happy.

There is one other element to managing redundancies that can be used for nefarious reasons. Typically no one assigns a timetable to a job reduction programme – they’re the kind of ambiguous things that can stay in effect for as long as they serve a purpose.

If, six months after ABC Investment Bank has achieved its 15% decline in headcount, it decides to fold its left-handed ABS desk, it can still portray the move as part of the previous initiative – again with the idea of not ruffling the other staff.

There is a logical question that springs from all this. Don’t the people who work at banks also read the bank analyst reports? Can’t they find out for themselves just how aggressive the layoffs are? The answer might surprise you. The only people within a bank who read the analysts’ reports outside of the executive suite and investor relations are the people on the trading floor – and they typically aren’t the ones being laid off.

John Anderson is a freelance writer who spent more than 20 years as a senior corporate communications official at a number of leading global financial institutions. He welcomes comments at john.anderson293@googlemail.com.