My latest trip to visit my 88 year-old mother coincides with the spring equinox. So I take full advantage of a blustery Sunday morning and make my way over to Coast Guard Beach in Eastham. A balmy 29 degrees when I begin my brisk walk with nary a person or dog in sight. It is church time for this New Englander who hears music in the wind and surf and feels love from the warmth of the mid-morning sun.

Yet there are signs all around that point to a raging tempest over the past 24 hours. Overnight gale-force winds stirred up the ocean this morning and 4- to 6-foot breakers crash the shoreline fueled by sustained 35 mph winds from the Northeast. The winds spewed seaweed, driftwood, rocks, shells, and even fishing nets everywhere. Hopefully no flotsam or jetsam in this carnage. And for a jolt of adrenaline, in one small stretch of beach I am hopping from driftwood to driftwood as the high water makes my safe and dry passage a morning adventure.

After an hour meandering south along the shoreline, it is time to head back and get warm. So much for a leisurely Sunday stroll. The headwind makes the return leg a full-on workout in the sand. And the sheer volume of debris only increases the degree of difficulty. I am almost to the trailhead when an unexpected but well-known rawness surfaces from the deep. Time and space have done little to change its emotional impact on me. But in this moment of solitude it brings the gifts of distance, perspective, and reflection. And hopefully a little wisdom.

The breach is epic. Layoffs.

Fifteen years later, I am still wading through and learning more about my decision to lay off more than 120 employees at a large nonprofit organization in Washington, DC. In both 2007 and 2008, our organization posted annual operating losses of $4.5 million on $25 million in total revenue. Such results would have been even worse if not for the carry-over impact of outstanding emergency funding provided in 2005. In response to these unsustainable losses, we implemented a major restructuring plan which incorporated new revenues of $1.5 million and major expense reductions to personnel and programs of $3 million. For more on the resulting public debate and intense political scrutiny, I invite you to search online for this story as it is an educational tale for all leaders.

Fast forward to today and the available evidence seems to validate that we implemented the restructuring plan at just the right time. From a mission standpoint, the organization now serves more community members than ever before and is poised to open a transformative project to address health and racial disparities rampant in the community. From a financial perspective, the organization achieved its core business objective—financial viability–at a time when that question had been an open one for far too many years.

Yet upon reflection and with the passage of time, the timing of and the context for the layoffs may seem self-serving with a smattering of rationalization. With hindsight, the layoffs look and feel like the right decision now because it works out in the end for the organization. Closer to home, as the architect of the turnaround, I benefited from more influence within the organization and enhanced standing in the community. And I received too much credit for the turnaround. The real kudos extend to a village of dedicated leaders—notably the board of directors—who had the courage, fortitude, and tenacity to back the restructuring plan and then their embattled CEO.

Now on the Outer Cape I am still wrestling with meaty questions about the 2008 layoffs and their lasting impact on the organization. That’s right plural–as in two rounds of layoffs implemented 11 months apart. More than 60 individuals affected by each round. And many represented by a major health and human services union. On this day and maybe for the rest of my life, I ponder these questions:

  • Did the organization exhaust all other funding initiatives, programmatic reductions, and administrative efficiencies before resorting to employee layoffs?
  • Could the organization then extend employees a formal role, voice, or vote in the decision-making process for restructuring?
  • Once the decision was made to include layoffs in the final restructuring plan, could the organization provide impacted employees with sufficient time to prepare for this unanticipated change in their lives?
  • And finally, given the financial health of the organization at that moment, could we offer the maximum severance practical to ease the financial burden on impacted employees?

I am not raising these questions nor writing about my decisions now to seek personal or professional absolution. I simply wish to create space for honest, thoughtful debate among organizations, boards of directors, and leaders about the future. Space is needed for those leaders who want to privately talk about the possibility of greater mission impact through restructuring. Such discussions are gaining momentum now due to the dark clouds on the horizon—the potential for reduced government funding for our core programs over the next 5-10 years. For many organizations, weathering this impending storm will necessitate that all options including layoffs be on the table.

The concept of growing mission impact through restructuring is not a new business strategy, especially during times of organizational crisis or financial distress. Yet for some leaders it may sound foreign or counterintuitive. So let’s simplify things here. Think of this strategy as an organization affirmatively choosing to offer a smaller number of programs but on a larger scale and at a higher quality while respectfully letting go of other programs and initiatives that do not advance its mission. The operational priority then shifts to realign workforce, programs, facilities, technology, and partnerships towards to a clear and achievable strategic purpose and with an unwavering commitment to the organization’s core values. And in some instances, this realignment may include programmatic reductions, facility closings, and/or employee layoffs—all of which could ignite a firestorm among our teams and in the community.

Let me be clear about my views about employee layoffs out of an abundance of transparency. I believe that layoffs should be thoughtfully debated as part of any restructuring conversation but selected as a last resort. Why? Because layoffs negatively impact culture (employee morale, recruitment and retention, and trust in leadership) and operations (lower productivity and performance) in the short term in exchange for the promise of improved financial health and strategic value in the long run. The strategic calculation is short-term pain for long-term gain. Yet for most employees, the pain is guaranteed while the gain is nothing more than a promise. Then there is the obvious question from remaining employees about what will happen to them if the restructuring does not improve the organization’s financial health.

For many employees, layoffs represent a breach of trust by leadership. They can trigger anger, pain and loss within our teams like few other business decisions do. And when those emotions surface, the human response is powerful, raw, and swift. In the immediate aftermath, individual employees may choose to generate public attention or political scrutiny with the goal of reversing the layoffs. Others may reach out to support now-former colleagues in their hour of need. A vocal group may even publicly demand for an immediate change in leadership on social media or in community protests because of their collective sense of betrayal and now distrust in leadership. Time may lessen the sting, kindness and forgiveness may lighten the burden, but employees never truly forget a round of layoffs at their organization.

Now I fully appreciate that some leaders may not share my perspectives about the L-word. These leaders may believe that layoffs are a bridge too far during these turbulent times. For example, layoffs may conflict with progressive policies that leaders seek to advance within their community or in society at large. Others are quick to reference the risks to their own organizational culture as well as the enhanced benefits of COVID-induced workplace policies for their employees. And nearly all leaders express a keen interest ensuring that their internal teams view them as pro-employee and demonstrating an unwavering commitment to empathy.

But do these perspectives change when leaders must respond to a financial crisis that could threaten the organization’s very existence? How do leaders cope with their fears—especially the fear of failure–that are triggered by such crisis? And even more important how do leaders maintain employee trust in leadership as we develop and implement a restructuring plan?

Leaders would do well to reflect on these questions because life favors the prepared. With every crisis, leaders must address the central tension between fulfilling the organization’s mission of service to current and future clients and ensuring the overall well-being of its workforce. The tension will be palpable throughout the restructuring process from options analysis to decision-making to implementation. In the end, the client versus employee tradeoff inherent in restructuring must be navigated with more than just empathy.