Building Trust While Cutting Costs

During a restructuring, rumors spread and fear takes hold. You can reduce the turmoil by finding ways to inform, empower, and inspire employees.

- Vinay Couto, Deniz Caglar, and John Plansky

"EVERYTHING WENT QUIET.” That’s how one manager described the workplace immediately after his company announced a large-scale restructuring — and it’s an all-too-familiar story to employees whose companies have engaged in a cost reduction initiative. Decisions are being made at the highest level of management, but little is known outside that inner circle. Employees still need to do their jobs: serving their external and internal clients, meeting deadlines, and moving existing projects and plans forward. But that’s easier said than done in the face of uncertainty. Worse still, no one can be sure that a slash-and-burn cost-cutting exercise will accomplish its intended result. Often, these efforts weaken a company instead of positioning it to grow effectively.

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.