With unexpected economic changes (Steel Tax anyone?) and a finicky consumer base often driven by things that are not 100% in your control (twitter trends taking control of your customers more than your advertising?), it is possible that you will need to reduce your workforce to keep your overall business healthy. While we may be talking about worst case scenarios and something that is far in the future, it is still a good idea to be prepared. So what can you do today, to help protect you (and prepare you) for tomorrow?

One of the most important things that you can do today is to document, document, document. This will help you when (and if) the time comes, that you will need to make some tough choices of who will stay and who will need to go. While some methods of selection, such as seniority, may seem the easy (and safe) choice, they can often lead to problems you didn’t see coming, like inadvertently laying off the diverse workforce you worked so hard over the last several years to build. Read all about Dragonstone Manufacturing's Disparate Impact Analysis after using seniority. A more complicated, yet often safer, method is to lay off your poorest performers. This comes with a HUGE caveat. In order to determine who your worst performing employees are, you need to have consistently documented ALL of the poor performers in your organization. That includes memos to files, disciplinary documentation, reflective performance reviews, managers notes, etc. If you have collected this information on your workforce over the last several years, finding your lowest performing employees can be a series of mathematical equations, backed by facts and (most importantly) documentation.

So what is most important in your cache of documentation?

1. Performance reviews for your entire workforce. If you are relying on the information you have included in a performance review, it is important that every file has a review, for every year they have been employed. But that is the easy part. Many managers would rather be nice than honest. Their performance reviews tend to all hover in the ‘exceptionally exceeds expectations’ zone, even when that is clearly not true. A performance review is often the one time a year we ‘force’ managers to confront their employees, and when that happens, they tend to sugar coat the truth. To truly choose your poor performers, you need to actually have a bell curve representation of performance.
2. Disciplinary documentation for each instance and occurrence across your organization. Disciplinary documentation doesn't count if only Bill gets written up for being 30 minutes late and Sarah never does. Your documentation should include exactly what happened that did not meet your expectations, as well as clearly outline your expectations for future performance.
3. Records of positive performance! This is not all about the negative. It is also important to have documentation of all of your employees’ positive achievements and performance. Ensure that any merit increases you provide are backed up with proper documentation, any awards that you give are documented, even just going above and beyond can be written into an employee's file.

All employees should always know where they stand in your organization, and their status should be well documented. This not only helps the organization should you need to make difficult choices, but it will help with smooth transitions for those impacted. Employees who have a history of disciplinary documentation or negative notes to their file, will be far less likely to argue your choices and more likely to accept your decision.

To ensure that you are on track, take a partner early in the process to look over the documentation that you currently have on file to help guide you in the best direction.