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How can a company go almost a century without layoffs? Is it witchcraft?

Well, maybe you should ask the people at Torani.

I was struck by a recent article in HR Brew that highlights Torani’s success at navigating headwinds and challenges without a layoff since 1925.

How have they done it? It’s not black magic. Straight from the article:

  • Hiring for exactly the talent you need right now, not for the sake of hiring.
  • Consider the non-financial aspects of your business first–i.e. your employees–and the impact to your bottom line.
  • Include worst-case scenario planning in your financial analysis, identifying approaches to navigating financial constraints without layoffs.

The result? Here’s how they navigated COVID:

“In April 2020, shortly after the onset of the Covid-19 pandemic, Torani’s business dipped by 20%, an outcome for which the organization had planned. To avoid layoffs, Torani made other concessions, cutting travel budgets (an unnecessary expense at the time) and reducing marketing expenses. The company dug through contracts to see what could be terminated or paused without penalties, and made clear to investors that it would be cutting back on or not paying dividends, and that if anyone had to take a pay cut, it would be executives.

What Torani didn’t expect was how quickly things would turn around. In May 2020, Torani’s business began to pick up as its customers reopened. By the end of the year, Torani revenue had increased 15% YOY.”

Layoffs adversely impact engagement and retention, meaning that the short-term solution to financial pain results in long-term implications.

An older (2008) study found that “Layoffs targeting just 1% of the workforce preceded, on average, a 31% increase in turnover.”

And recent research from CultureAmp found a significant negative impact (-13.x%) on future and current commitment to the organization after a layoff.

There has been a rash of layoffs in the past 18 months for a variety of reasons: right-sizing after over-hiring, meeting accelerated EBITDA expectations from funders, and knee-jerk reactions to the economic headline-du-jour are just a few.

Each of these layoffs comes with a very real, and almost never-calculated, long-term cost.

The next time you’re looking at a layoff to solve financial challenges, take a moment to pause and do some long-term cost-benefit analysis. You might still have to do the layoff, but at least you’ll be clear on the ramifications and can plan accordingly.

Or maybe you pause now and learn from a hundred-year-old flavored syrup manufacturer, and take steps to avoid the layoff in the future.

Looking to increase the cohesion, trust, and impact of your leadership team? Reach out and let’s discuss The Compass Team Experience and how I can help.

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