Probably the toughest leadership situation a senior manager has to face is trimming staff in periods of corporate downsizing. This entails firing people, maintaining morale of the 'survivors' and placing the organisation on the right footing for the future. It is also one challenge most managers mishandle, says Jeffrey Gandz, managing director, executive development at Richard Ivey School of Business Asia. A regular visitor to Hong Kong and a lecturer on leadership issues for Richard Ivey's EMBA programme, Professor Gandz says the first step for any manager is to muster up the courage to proactively tackle the problem. If downsizing is inevitable, the manager must firmly move ahead, axe in hand. But before slashing away gladiator-style, management should keep in mind that moving with dignity and a sense of conscience is likely to do more long-term good. Remember staff are a corporation's most important asset. Downsizings are really about changing people's role and readying the organisation for change. 'You do it by making a clear determination of who you want to keep, and who you are prepared to lose,' Professor Gandz says. 'You do it in a way that respects the dignity of those who are going to lose their jobs.' One common mistake is to stop talking about firings. Employees have an intuitive ability to know what is going on, and any 'clamming up' by management will only add fuel to the rumour mill. Being tight-lipped not only damages staff morale, but it risks alienating key people. Those rosy plans of building a new organisation with top talent may be dashed when star performers start resigning. 'During downsizing there is some degree of apprehension,' Professor Gandz says. 'The last thing you want is your best people going off to headhunters and chasing other jobs when in fact you want to keep them.' An antidote for the climate of fear is transparency. Telling staff what is being considered, explaining the business challenges faced by the firm, and letting it be known management finds the process difficult will help calm fears. Leadership lies at the core of Richard Ivey's EMBA programme, with course materials structured on a case study approach that imparts real-life lessons. 'Leadership is determining the right things to do and then executing those right things,' says Professor Gandz. 'It takes vision, enlisting the support of others and empowering them to do the job.' Senior management should also be aware downsizing can be abused by managers who manipulate lay-offs for their own benefit. It is common for a manager to sack people based on personal vendettas, or on the other hand protect those seen as allies. Professor Gandz admits it can be hard to weed out personality conflicts, but setting up a system where all sackings have to be approved by senior levels can make the decisions about who stays and who goes a little more fair. Recognising that employees work for the company, and not individual department heads, is the first step. 'Department managers don't own the people, they are corporate assets,' he says. Corporate restructuring may entail the need to go outside existing staff to recruit capable talent. Watching new employees come into an organisation in place of former colleagues may be hard for the survivors, but senior management should not apologise about it. The long-term goal is the firm's strength. Perhaps the toughest call is being fair. Having to sack loyal employees is never easy, but it can be made a little more bearable if the organisation takes a long look in the mirror. 'Managers must ask themselves what is the best way I can lay off those people with due regard for what they have done for me in the past, and secondly, what is the impact of how I treat them in terms of the survivors,' Professor Gandz says. He advises looking for innovative ways to help those being sacked make a smooth transition. American consumer goods giant Procter & Gamble took the lead with a host of innovative approaches. One was helping laid-off staff with training and educational options.