With a reduction in government funding, stock market uncertainty limiting philanthropic dollars, and corporate donors facing their own profit constraints, we in the social impact space are facing a very different financial picture for the upcoming season. Is “tough times” the 2025 version of 2020’s “unprecedented?” We are being inundated with a lot of scary stats: reduction in school and district spending to vendors, student enrollment is down, states are revisiting their funding formulas. Major players in our space are reducing staff, and we’re seeing more mergers and acquisitions. So, if you’re in the same spot, we understand!
We know it’s never easy to make a decision to reduce your headcount, but if it is necessary for you and your org, there are some industry-standard best practices to incorporate. This blog is about the decision making and communication process at the org level, not the individual. (Spoiler alert: that comes next week!)
Risk: Organizations wait too long to make the decision to reduce staff, and waste precious resources delaying the tough decision.
Remedy: Be proactive and consider the possibilities. Ask yourselves the following questions:
1. If we do this, what is possible for the organization? How might we be able to serve our clients, partners, students even better because of this decision?
2. If we do this now, what resources are available for impacted staff that won’t be if we wait another 3 or 6 months?
3. What is coming up on our organizational calendar that we need to be specifically aware or sensitive to, like performance management cycles or a large donor event?
Risk: Organizations don’t share organizational health data with staff in direct response to lay off possibilities.
Remedy: Share the data and decision making you are most confident in. For example:
1. Share budget differentials between last year and this year– or, any year where the org was financially very healthy- to show what actions you’ve taken to reduce outgoing dollars and protect incoming funds.
2. Name your goals. If you are at this point, you’ve done the math to figure out what revenue needs to look like heading into your next quarter. Staff are hungry to know where the org needs to be to stay healthy, and that their leaders have an answer to this question.
Risk: Senior leaders share the data without adequately preparing their team leads and managers to follow up.
Remedy: Team-wide meetings are an excellent way to ensure all staff receive the same information at the same time. However, full staff meetings are rarely the right venue to sense-making and processing. Set your people managers up to follow up with their direct reports after the announcement, preparing responses to questions like:
1. What is shareable information?
2. What information do you want people managers to gather and share back?
Making this decision is never easy, but it is a tremendous act of leadership.
Wondering how to enhance your People Practices even further? Schedule a consultation call with our team to see how our experts can best support you and your organization.
