News on Cutting Jobs Ruins the Employer Reputation. How to Neutralise It?

Deutsche Bank said it would cut 18,000 jobs by 2022 to increase profit. Ford will cut 12,000 jobs, closing six factories, to support its struggling business in Europe. IKEA announced plans to slash 7,500 jobs. And Siemens will cut 2,700 jobs in its power generation division. 

The news on job cutting is booming despite the overall proclamation that everyone is struggling with hiring talents. While complaining about the lack of personal and lower unemployment rates, major companies are on the go for scaling down costs and raising profits by using redundancy as a tool. But how this strategy reflects on the image of an ‘employer of choice’?

How bad it can get?

Last year Tesla announced that it will cut approximately 9% of its workforce. The reorganization will affect 4,100 jobs. Elon Musk, Tesla’s CEO, was quick to tell around three key messages: (i) still hiring talents and production staff; (ii) it’s a one-time event; (iii) the go is to be more profitable. 

Eleven months later the reputation of both the company and Musk dropped drastically. On LinkedIn’s Top Companies 2019 list it went down to 16th place, after taking the fifth (2018) and sixth (2017) spots. Tesla’s company rating at Glassdoor fell to 3.2 stars, while in 2017 it was 3.6. And Musk’s rating dropped to 52% from 90% in 2017. 

Since 2008 the tactic to cut costs to keep profits growing has been highly welcomed by shareholders and high management. However, it is a hamper on the economy, since it is not generating growth, marked by stimulating R&D, production and hiring. It also has a negative impact on the image of the company as an employer. 

Let’s face it. A company that struggles to make a profit by providing an added value is presumed to be a sinking ship. And who would like to stay on board? Besides, the idea that today the colleague is sacked and tomorrow it might be me, is very disruptive and anti-engaging. Hence, it is no surprise that talents would rather check another option.

Be Wise and Neutralize It

Bad news is still bad news. You cannot hide it or pretend that everything is well. When cutting cost via redundancy, be wise in creating your messages. The focus should be on the added value for both your employees and your customers.

In the case of Tesla, the messages should include the idea that the company is disrupting the industry, and it is just natural to tackle the bureaucracy to make work more productive.

Think about efficiency and sustainability, but also think about people. Figures are a ‘cold topic’, but human fates are touching our hearts. And we all know that the final decision for ‘buying’ the employer’s offer might be preceded by rational thinking, but it is also an emotional bonding.

Musk’s dream is to make electric cars available to the masses. All the people, who join the company, share the very same vision. Therefore, finding a story in favour of both the major goal and the current tool to achieve it, is a winning strategy.

And finally, say what else you do besides cutting jobs. Redundancy should only support a strategy, which includes at least two other measures. It will signal that the company have investigated carefully all the options and are taking those steps that will be in favour of both customers and employees.