What should a PM do when the economy turns down and their employer must lay off workers? Large layoffs change the tone of the working environment and the resources available to the project. It’s also a pretty good indication the strategy of the organization has changed. Recently Microsoft announced they would layoff 5,000 workers. On the same day Sony announced their layoff would affect 8,000. Clearly many of these workers would hold operations or manufacturing positions. We can only speculate how many would be supporting the myriad of ongoing projects in these two organizations. We don’t know how many projects would be affected by the changes although we can expect there would be many.

During the planning stages of large downsizing initiatives, senior management is tasked with assessing the impact of the cuts to active projects, and to projects in the pipeline for future initiation. The PM is not usually asked for the impact on their project prior to the layoff. That is, not unless the project is quite large or has significant implications to the competitive position of the company. Yet there is likely to be an impact and the PM has a responsibility to assess the impact and communicate their findings to senior management.

As a general guide the PM might consider three areas: alignment to strategy, impact on resources and affect on motivation.

In the face of tough economic times, organizational goals and the strategy to achieve these may shift. This would be cause to review the importance of all projects in terms of the value they are expected to deliver and their alignment with the new goals and objectives of the organization. A PM needs to be clear on the value expected from the investment in the project they are responsible for. If this changes so will the project scope.

Resources available to the project include budget for both internal and external spending. Changes in staff and contractors assigned may impact the project scope. Perhaps contributors with unique experience are lost impacting the ability to achieve the product of the project or to do so in previously established timeframes. Given the extent of the economic fallout, there is a good chance that changes at key suppliers will impact the project.

Finally, a significant disruption such as a large layoff can affect the remaining workforce by altering the tone and motivational dynamic of the working environment. Understanding the impact this will have on project activities is important to managing the project through the organizational change.

Whether project managers are asked for an assessment of the impact of a major layoff or not, it is incumbent on them to do so and ensure adjustments in the corporation are properly reflected in the project they are managing.
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