Companies facing employee layoffs experience more success having developed a comprehensive layoff strategy. Here’s what to consider, plan, and do.
Here's what you need to know:
- Exploring all alternatives before resorting to layoffs is essential
- When faced with layoffs, compassion and respect are important for all parties involved
- An honest dialogue will go a long way in protecting the company's reputation and ensuring no future issues if the employee returns to work after the layoff
- In offering support, be mindful not to apologize or agree with the staff member
- Taking the time to organize necessary paperwork and resources for laid-off staff will eliminate additional stress for them
- Provide ongoing support to remaining employees to ensure teams can get back on track
As companies grow and thrive, they hire top talent to contribute to the productivity and viability of the business. However, even organizations enjoying a healthy present may eventually need to decrease their staff during certain (or uncertain) periods. When companies must lay people off for any reason, they’ll need a comprehensive layoff strategy.
This article dives into what a layoff strategy is, the importance of having one, and what to include in it.
What is a layoff strategy?
Restructuring the workforce is a common way for management to slash short-term costs. Some reasons employers opt for layoffs are:
- An economic downturn.
- Reorganization or episodic restructuring of the company.
- Mergers and acquisitions.
- Technological advancements or automation.
- Decreased company profitability.
- Increased labor costs.
The layoff strategy matters for both the laid off employees and the remaining ones. Ideally, the management team and Human Resources department will consider all other alternatives before deciding on staff reductions.
Consider alternatives to employee layoffs
Market conditions will impact business and budgets throughout a company’s lifecycle. During periods of short-term volatility, it’s natural to assess how much trimming labor costs might help. But mass layoffs — or even smaller ones — aren’t always the best, only, or most fiscally sound solution. Options for how to avoid layoffs include alternative cost-cutting measures such as:
- Reducing employee work hours.
- Implementing a hiring freeze.
- Executing salary reductions.
- Offering voluntary unpaid time off or exit packages.
Checking every box before resorting to layoffs is essential. Consult the company’s HR professionals and accountant, and perhaps an employment lawyer, to understand the options and potential consequences. Overlooking the inherent costs of employee turnover could create more trouble in the end.
In the absence of reasonable alternatives, it’s necessary to talk with all staff regarding the company’s issues. Provide any available information to increase the staff’s trust and provide transparency. Then make a plan for the unavoidable.
Planning for layoffs
When faced with layoffs, compassion and respect are important for all parties involved. Conscientious employers and HR pros don’t enjoy letting good staff go. And conscientious employees typically have time invested in hard work, good performance, and other common builders of job security. It’s tough all around, so understanding how to manage layoffs properly helps. A thoughtful layoff plan is the best way to move forward both ethically and professionally.
The plan should address all elements of the entire process, including:
- Identifying the need for a layoff. Succinctly verbalize “why” the layoff is occurring.
- Determining what types of layoffs to implement. Will they be temporary, permanent, furloughs, position elimination, or termination?
- Selecting employees to be laid off. Some companies choose to lay off entire shifts, while others lay off the employees who were hired last.
- Legal considerations. It’s critical to ensure fairness and employment act compliance in the layoff process. Be sure to avoid breaches, such as gender or age discrimination, in your selection.
- Providing severance packages. Decide how much, if any, severance pay each staff member will receive. Also consider maintaining health insurance coverage for a set period.
- Offering support and resources to affected employees. Can you provide them references and other assistance in securing new jobs? What supplemental unemployment benefits might they be able to access?
Plan also for how to handle the remaining employees. Paranoia can take root from any workforce change, especially a layoff. Communicate future plans to help the remaining staff feel comfortable and confident in their job security.
Stakeholder and employee communication
Develop a stakeholder and employee communication plan as well. Among other benefits, communicating layoffs to employees and others before, during, and after layoffs helps maintain stakeholder and employee trust. Communications should include:
- Why layoffs are necessary.
- When they will occur.
- How they will be announced.
- Who to contact with questions and concerns.
- Other details specific to people, processes, and timelines.
Try to depersonalize the event across all communications. Explain the difference between being fired vs. laid off to help everyone keep it in proper perspective. Do your best to address any layoff rumors contributing to fear, anxiety, misunderstandings, and unnecessary concern.
Decide how you’ll work with laid-off employees
How you handle affected employees will matter to them. It may ultimately matter to the entire organization as well, if not so much immediately, possibly down the road.
For example, meeting with laid-off staff individually provides them the opportunity to process the experience and ask questions. If possible, meet face-to-face. Remote layoffs may need extra care due to their detached, virtual nature. This all takes time, but the employee should have that 1-on-1 attention.
Make HR professionals available to offer potential alternative employment solutions or help with paperwork. This can simplify the benefits transition and help staff navigate the change. If the company will offer severance packages or extended benefits, have that documentation ready. Present any other legal paperwork that needs signing before the employee leaves.
How will you handle employee tension?
Being laid off is an emotional event. It can make the employee feel like they’ve lost control and are facing an uncertain future. As a business owner, knowing what to say in situations in which anger might be fueled will be important.
Business leaders should prepare to handle employee tension professionally but sympathetically by:
- Listening. Do not cut the employee off. Give them time to express their feelings.
- Minding their tone. Modulate the volume, but don’t be condescending.
- Avoiding apologies. Apologies can create future difficulty if the staff member continues to feel slighted and pursues legal recourse.
- Having another person in the room during these conversations. This helps protect both the employer and employee if issues arise.
How will you support the remaining staff after layoffs?
Not all surviving staff will necessarily feel confident and at ease with their employment status. The relief that some may feel upon realizing they’re still employed may quickly turn to grief. They may fear being next to be let go, worry about the new workloads, and feel guilty that they remain. Their confidence in job security may be shattered, creating profound anxiety about their own financial future.
Many refer to the most traumatic instances of this experience as career grief. But no matter the extent, these feelings take time to sort through. It’s almost certain that employee morale will take a hit.
Plan to be upfront about the layoffs so the shock has less impact than if they are a surprise. Management should still expect a period of grieving and concern.
Before the layoff occurs, supervisors and HR representatives should prepare to be approachable and available for staff as needed.
Successfully using a layoff strategy to reduce the workforce
There is no easy way to implement workforce change such as layoffs. Creating a plan increases the chances that everyone feels supported throughout the process.
Proper preparation regarding both the laid off and remaining employees is key. Be upfront and honest about the decision and allow time for individuals to ask questions and talk about what happened.
Supervisors should talk with their teams as often as they need to until everything is running smoothly once more.
Rather than push thoughts and feelings under the rug, process them and work on a game plan to progress forward. If done correctly, your team can get on top of the changes and be more successful than ever.
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