Leadership swap before a mass layoff

Often, when businesses are in turmoil, the leadership is faced with the task of making some tough choices, and downsizing is one of them. In a few instances, where the leader is unable to execute the decision, there is a swap with a new leader or HR head who can execute the decision with much more ease and objectivity.

Whether it is right or wrong is debatable and we are not getting into it now. Such changes in leadership are seen as necessary by the board because they are critical to the survival of the business. Layoffs are usually the last resort for a company needless to say the exercise requires a tough stance and an objective perspective. In such cases, the existing HR head may not be able to execute the layoffs. Why does this happen?

Familiarity and bonding

Rajesh Padmanabhan, HR specialist, says that such a situation may transpire because of the relationship between the existing leader and the employees. “Leaders tend to form an emotional connection with the people and it is not easy to dissociate or delink during a business downside,” says Padmanabhan.

“A new leader usually does not come with any legacy baggage, and hence, can execute a layoff decision with much more ease.”

After having worked with a team for so long, it is tough for any leader to have a difficult conversation with the employees. Working with one’s colleagues over a long period naturally leads to some form of emotional bond. Moreover, for any HR leader, the people come first. Hence, she or he may disagree with the option of layoffs.

For the business, on the other hand, a layoff may be the most viable option of staying afloat or making progress. In such situations, there is a stalemate and one party inevitably leaves, which is the leader.

Even if the leader agrees to execute the layoffs, a concern remains about the objectivity with which the task will be carried out. This, in the long term, will hamper the company even more. For instance, faced with the uncomfortable task, the leader may end up playing favourites or even asking the wrong person to leave. That is why, a change is seen as a necessary precaution.

Sriharsha Achar, HR specialist, says, “A new leader usually does not come with any legacy baggage, and hence, can execute a layoff decision with much more ease.”

It is not just the HR leader who moves out, but other senior executives too, such as the CEO of the company. For instance, whenever a new CEO comes in, anticipatory anxiety starts building among the workforce about organisational changes, which often translate into layoffs.

When company decisions clash with their own ethics and values, HR leaders may choose to move out of their own volition. Rather than face the stress and struggles of executing a layoff, they think it better to hand over the decision to someone else.

“Leaders tend to form an emotional connection with the people and it is not easy to dissociate or delink during a business downside.”

Change in business objectives

Another reason for leaders to move out is when business objectives undergo a change. For instance, when a new CEO joins the company, she or he may bring in a different set of agendas, which may not align so quickly with the rest of the C-suite members. Similarly, such instances occur during mergers and acquisitions as well when leaders disengage because they do not feel a part of the company anymore or feel their decisions are not valued in the new integrated entity.

For any CHRO, making the decision to downsize in a company they have had a long association with is not an easy task. It requires a bold leadership to go ahead and make such calls, which may be available if brought in from the outside. Companies, which do not see such decisions as a part of their culture, will struggle or take more time to do it.

Padmanbhan adds that such decisions are not necessitated in organisations where the emphasis on culture is more than the revenue. “We have a few tall corporate houses where culture overrides everything and their basic DNA is the promise to be together during good and bad times,” he says.

Rethinking workforce strategies is often painful. HR leaders or CEOs may not be able to take the tough call of having to restructure during a bad phase. They may choose to move out as a show of disagreement with company decisions. In such cases, organisations require an outsider, who can be trusted to carry out the decision with objectivity and as per business needs.