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Tips From HR: How to Downsize the Right Way | AugmentHR

Being forced to downsize is NOT something many companies want to do. It is a sign that something is awry with the business, and it means that cutbacks and layoffs are on the table. There are many reasons why your company may need to consider downsizing – financial issues, lower profitability, outsourcing, or even to maintain a certain level of service.

Downsizing not only impacts the employees who are laid off, it impacts overall morale of the employees who stay with the company after they downsize.  A survey by Sylvia Ann Hewlett, as outlined on Harvard Business Review, revealed just how impactful downsizing can be to your team:

“73 percent felt demoralized, 64 percent felt demotivated, and 74 percent said they shut down and turned off. In other words, just when a company needs its top performers to charge the hill, they retreat to the bunkers.”

“Badly handled downsizings reverberate for years. The talented employees tossed on the scrap heap will be back in the marketplace — as customers, clients and, when business picks up, competitors, eager to lure their former colleagues to their new teams. And if those A-team players are still scarred by a callous layoff, they won’t think twice about leaving,” added Hewlett.

Therefore, you need to downsize the right way for the benefit of your employees and for your company’s future.



Before you begin the actual process of downsizing, it’s important to have a plan in place to do things the right way. Establish criteria for reviewing your current team, and establish timelines.


People are more understanding when you are completely honest with them about what is going on with the company. Employees will figure out what is coming down the pike, and getting in front of the news, and not denying it, while difficult to take, will make it easier in the end.


Your employees are going to have questions about the downsizing and what is going to happen next. This is normal. Make sure you are available to not only listen to their concerns, but to also provide them with reasons why they are being laid off.


How engaged do you think your company would be if you just announced layoffs or cutbacks to employees and the leadership team didn’t cut back? Morale would be in the toilet. Prove to your employees that you are taking a hit with them, and that the downsizing is company-wide and impacts everyone.


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Felicia Smith

Felicia is the manager of human capital solutions at AugmentHR. With over six years of recruitment experience coupled with multi-faceted HR roles, Felicia is an expert in matching people with the right role and environment. She has worked in many different industries, including investment banking, HR consulting firms, medical, and commercial. Understanding people is one of her strengths, and she has recruited at every level, from directors, project managers, and engineers to operators and general labourers. Her ability to network and develop relationships has been a key tool to her success. With approximately two years of experience managing people and creating a positive work environment, Felicia’s diverse skill set makes her a well-rounded individual. Her business education and background help her identify different business needs and human capital solutions.

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