We've all had to implement downsizing at some time during our career. It's difficult and emotionally draining - there is no way else to feel about it. But as leaders and stewards of our businesses, it is our responsibility to keep the size and composition of our workforce in sync with the present and probable scale of our business. But, how can we downsize with respect?

First and foremost, we, as leaders, need to be candid with our followers (employees).

If we are doing our job effectively, our communication link with the employees should be ongoing - connecting them to the business by explaining our vision, and subsequently, earning their dedication to that vision. If we are having difficulty achieving our intermediary goals on the long road toward that vision-and this difficulty has been well communicated-employees should not be surprised when a scale back is necessary.

The steps of scaling back differ from company to company, but the effort always starts at the top and filters down. In my career, I have found one practice that continually causes unnecessary strife when lay-offs occur. Attempting to act with compassion, companies often move non-performing employees into other positions within the company to avoid releasing them. The employees bounce between positions, never really contributing to the company and usually never feeling good about their work. In an economic downturn, these "parked" individuals are the first to go-and all once. This process is ineffective and far from compassionate as everyone knows why such employees were released. Scuttlebutt becomes rampant and progress slows. Instead of allowing this situation to occur, treat the non-performing employees respectively from the start. Help them find a position at another company before lay-offs force them all out of the company at once.

Clearly, as leaders we can't always be completely open with employees. Such complete openness would only cause stress-stress that we're paid to handle, not employees. But, you might be surprised how far honesty can get you.

Recently I had the privilege of working with a young start-up company. The company was in its second round of funding, but was caught in the abyss of not having any customers yet offering great promise. Securing capital was proving problematic.

It was extraordinary to watch the company's CEO demonstrate integrity and honesty with his employees. Each week, and then ultimately each day, he would share exactly the funding prospects for the company. When the final day came, there was no surprise to anyone that his or her employment was being terminated. In fact, at his closing remarks to the 30 affected individuals - as they were receiving their final check, without severance - he received three rounds of applause.

As one director at the final board meeting said, "Last one out, don't forget to turn off the lights." Who do you think was the last one out? You're right, the CEO.

Now ask yourself... Am I a Leader?