1. Money
You can opt-out at any time. Please refer to our privacy policy for contact information.

How to Downsize Without Guilt

Think of Downsizing as a Business Strategy, Not as a Failure


The goal of any business owner should be to achieve long-term success and sometimes that best way to ensure longevity is to scale back. If you need to reduce the number of employees on your payroll (downsize), do so thoughtfully, but without guilt.

If you need to downsize to say in business, keep in mind the following three points:

  1. Downsizing should not be seen as failure, but as a change in business strategies. Even when there is someone to blame, never let it be known to your employees who may lose confidence in your business: Always project “strategy” not “failure.”

  2. The fact is, if your business fails, all your employees (and you) will lose their jobs and income. Downsizing may mean some people lose their jobs, but it also means others will have a greater chance of retaining theirs.

  3. You have no control over the economy, but you do have control over how you choose to run your business. Approach layoffs with a combination of business sense and compassion; that is the best thing you can do for all your employees.

Downsizing is A Difficult Decision

One of the biggest expenses for many business owners are the costs associated with hiring, training, and maintaining employees. When companies are struggling, the first way they usually look to trim costs is by reducing the number of their employees.

Letting employees go is one of the hardest choices a business owner can face. Your employees helped your build your business and sustain your growth. Layoffs become even more complicated when the employees you need to let go are related to you.

Sometimes, job cuts and layoffs are unavoidable, but with careful consideration of all your options you may be able to minimize the number of employees you need to lay off.

Where to Start When you Need to Layoff Employees

Some business experts differentiate between job cuts (permanent employee reduction) and layoffs (temporary staff reductions) when discussing downsizing. But no matter whom you let go it still means the same thing to employees: a loss of income.

Where do you start? Upper management. Chances are fairly good that your lower-level workers did little if anything to directly contribute to the financial decline of your business. If your business is failing due to reasons unrelated to the economy, start by assessing those who make decisions and manage people.

©2014 About.com. All rights reserved.