Cube Rules Plan to Avoid Employee Layoffs

By Scot Herrick | Job Performance

Aug 07

Over the course of time, I’ve written a lot about layoffs, being laid off, and how no job is secure. But those are all symptoms of a deeper issue: companies have lost their way in managing their people. The very people, companies always say, that are the most important asset.

My focus, of course, is on the knowledge worker toiling away in the ubiquitous office cubicle. The one that is the most important resource but will be laid off by a company in a brutal minute.

But for this post, I’d like to focus on what management can do to avoid layoffs of those that are considered “the most important asset.”

How to avoid employee layoffs

The Cube Rules plan consists of two points:

  1. 20% of each job title are contractors. This includes the management positions.
  2. All employees are contractors first. You try before you buy for both the employer and the potential employee.

Implementation

All companies have an attrition rate that varies between five and fifteen percent a year. If your company has an attrition rate of 10%, you can implement this plan relatively well over two years. At that point in time, you will have a solid base of workers – who are temporary.

In addition, most companies have growth. You also get to the 20% of your workforce being on contract with new positions filled with contractors.

Once you are at your 20% level, you can hire new employees – from the contract worker base. This way you get an employee that is proven, already knows the company and the culture, and will move directly into the role with minimal transition time.

If you release contractors because business is not so good, you continue to rebuild to 20% contractors in your workforce base by working with attrition to fill the positions.

Benefits

Having 20% of your workforce be contract workers gives you a built in buffer to downturns in your business. Being on contract with a company is a completely different expectation on the part of the person under contract: contracts have ends. When a contract ends, it is a planned, expected ending.

Yet, given a downturn, you preserve the employee base. While letting contractors go would, of course, get the employees somewhat concerned, their concern is far different than if it were employees getting laid off.

In addition, by trying a person on contract before you hire, you are ensuring that the fit is right between the employer and the potential employee. This should give you a more productive employee because the risk of working in the environment is gone – they already are working in the environment.

This model also gives companies and employees a much better shot at true talent management. Employees have a greater commitment from management about their work because the threat of losing their job is lessened. Employees are more likely to be engaged in their work because the distraction of the layoff is lessened.

Conclusion

Corporate management of the workforce is broken. One cannot have a disconnect between engagement in the work and the continuous threat of layoff by corporate management. It hurts companies and the career management of employees.

There would be issues with implementation, of course. But I think it is time we start proposing different models of managing the workforce to corporate executives. What we have is clearly not working.

Cubicle Warriors, of course, can be hired resources if that is the direction companies are taking (and it is). But getting the employee back connected with the company mission would be better.

What would you think of 20% of your job titles as contract workers and being on contract before hired?

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About the Author

Scot Herrick is the author of “I’ve Landed My Dream Job–Now What???” and owner of Cube Rules, LLC. Scot has a long history of management and individual contribution in multiple Fortune 100 corporations.