Align OKR Methodology with Strategic Downsizing

No company wants to downsize, but sometimes it’s necessary. Maybe revenue is down, investors are tightening their budgets, or the market has changed. Regardless of the reason, strategic downsizing is tough. Not just for the people leaving but also for the ones staying. If done poorly, it can lead to lower morale, lost productivity, and even long-term damage to your business.

The key is to downsize the right way – by focusing on your company’s core mission and making cuts that align OKR. This is where Objectives and Key Results (OKRs) can help. Instead of making random cuts, OKR methodology helps you remove non-essential functions while keeping your most important goals on track.

What Are OKRs and Why Do They Matter in Downsizing?

Objectives and Key Results (OKRs) are a simple way to set and track goals. They work by breaking big goals (Objectives) into smaller, measurable actions (Key Results). For example:

Objective: Improve customer experience.

Key Result 1: Reduce response time from 12 hours to 4 hours.

Key Result 2: Increase positive customer reviews from 80% to 95%.

When downsizing, OKR methodology ensures you cut what’s unnecessary while keeping what matters. Without them, you risk cutting essential departments or functions that drive your business forward.

OKR Methodology: Step-by-Step Guide to Strategic Downsizing

1. Revisit Your Core Mission

Start by asking: What is our company’s main purpose?

• If you run a tech startup, is your priority innovation, customer service, or speed?
• If you’re a SaaS company, is it user growth, product stability, or customer success?

Your core mission should guide your decisions. Any function that doesn’t support this mission might not be essential.

2. Review Your Current OKRs

Look at your company’s existing OKRs and ask:

• Which objectives directly help us survive and grow?
• Which key results are driving real business impact?
• Are there objectives that are no longer relevant?

For example, if you’re focusing on survival, your OKR methodology should prioritize revenue retention, customer satisfaction, and operational efficiency over expansion or experimental projects.

3. Identify Non-Essential Functions

Once you have your OKRs in place, analyze each department to see where cuts can happen with the least damage.

• Low-impact projects: If a project isn’t helping you achieve core objectives, pause or eliminate it.
• Underperforming roles: Identify roles that no longer align with your company’s main goals.
• Redundant processes: Look for inefficiencies where automation or restructuring could save costs.

4. Prioritize Efficiency Over Headcount

Strategic downsizing doesn’t mean only firing people. Look for cost-saving alternatives before reducing your workforce:

• Reduce unnecessary software/tools – Do you need three project management tools?
• Renegotiate vendor contracts – Can you get better deals from suppliers?
• Cross-train employees – Can existing employees take on extra responsibilities instead of hiring externally?

5. Make Informed Cuts, Not Random Ones

Use data, not emotions, to make decisions. Look at performance metrics, revenue contribution, and workload analysis before making cuts. Common mistakes to avoid:

Cutting customer-facing roles – Leads to poor service and lost clients.
Eliminating entire teams without reassigning tasks – Causes operational chaos.
Rushing layoffs without planning transitions – Creates confusion and fear.

6. Support Remaining Employees

After layoffs, your team will be stressed. Some may feel guilty, while others will worry about their own job security. A demoralized team means lower productivity. Here’s how to help:

• Be Transparent: Explain why changes were made and how they benefit the company.
• Offer Support: Provide severance, career counseling, or job placement help for those leaving.
• Boost Morale: Recognize hard work, promote from within, and encourage open communication.

Conclusion: How Target Align Can Help

Downsizing is never easy, but aligning it with objectives and key results ensures you make smart cuts instead of damaging ones. By focusing on your core mission, key objectives, and essential functions, you can reduce costs while keeping your company strong.

If you need help managing OKRs, tracking performance, and making data-driven decisions, Target Align offers the tools to make strategic downsizing smoother and smarter. 

FAQs

1. How do objectives and key results help during downsizing?

OKRs help you focus on what truly matters, ensuring you cut non-essential functions while keeping key goals on track.

2. What’s the biggest mistake companies make when downsizing?

The biggest mistake is making random cuts without considering long-term business impact. This often leads to lower productivity, lost customers, and damaged morale.

3. How can we keep employee morale high after layoffs?

• Communicate openly about why cuts were made.
• Support affected employees with resources.
• Recognize and reward remaining employees.

4. Should startups avoid downsizing at all costs?

Not necessarily. Downsizing can be a strategic move if done correctly. The key is to cut waste, not value.