6 Tips For Managing Employee Layoffs
Estimated reading time: 4 minutes
What a difference a few short weeks can make.
Just a month ago, the Coronavirus was a concern (not a crisis), the stock market was breaking records, and it was difficult to fill open employee positions.
Fast forward to today. The stock market is on an unstoppable dose dive, and businesses are being forced to close their doors to help slow this pandemic.
Businesses have gone from record profits to being forced to make the difficult decision to lay employees off.
These are unprecedented times, and everyone is feeling the impact of this Coronavirus – Covid-19.
These times of uncertainty result in high levels of stress for all employees.
Employees who are let go experience the trauma of an unexpected job transition, while the employees who remain live in constant fear that they will be next on the chopping block.
While layoffs are never easy or fun to manage, this is an inevitable reality for many small businesses that have been forced to shut down operations.
Businesses that have been forced to close their doors have stopped their income streams.
Layoffs ultimately occur because of a business decision to reduce costs.
Since most costs associated with any business are in the area of salary and benefits, reducing the number of employees is a quick way to reduce fixed overhead costs.
Layoffs that are triggered by the current economic downturn will be difficult for employees.
Managing the layoff process is critical to ensuring a successful transition for all involved.
Having a strategy and plan can help minimize the negative impact on employees, former employees, and the public perception of the organization.
No one knows how long this pandemic will last or how severe this business shutdown will impact our economy.
The situation changes daily.
As a business owner, you need to look at today and make decisions based on your current situation.
Washington is working on a stimulus plan that will help workers who qualify. However, it is unknown how soon those relief funds will be available.
6 Tips to Help Manage Employee Layoffs
1. Do The Right Thing
Organizations should exhaust all other cost-cutting avenues before deciding to lay off employees.
Explore all possible cost-cutting measures.
For instance, determine if there are opportunities for attrition or early retirement.
Ask employees to take voluntary vacation, unpaid leave, or early retirement.
All of these measures should be looked at to see if significant costs can be identified and reduced.
2. Identify The Layoff List
Once the decision is made to reduce the workforce, identifying who gets laid off can be a daunting task.
When determining who will be let go, make sure there is an unbiased group that reviews possible candidates and uses objective data to make the determination.
Make a list of employees and their job titles.
Prioritize those jobs based on the need for labor during this crisis.
For instance, if you own a restaurant with a closed dining room but offers take-out orders, you may prioritize cooks over waiters.
If everything is equal, prioritize employees by looking at performance data based on historical performance appraisals.
3. Consider The Law
When identifying who will be put on the layoff list, make sure all legal considerations are taken into account.
There should be no discriminatory decisions made, and all decisions should be made objectively.
For instance, consider age discrimination laws and make sure you are not targeting someone because of their age.
Make sure there is supporting documentation for all layoff decisions.
4. Communication Plan
It is important to develop a communication plan that identifies the stakeholders and who needs to be informed of the layoffs.
The plan should then be put into a timeline that communicates in the order of personal impact.
For example, an employee would be communicated with before the employee’s coworkers are informed of the layoff.
Being sensitive to what is communicated and the timing of the communication is critical in minimizing the personal impact it has on all employees.
5. Offer Transitional Help
Develop a generous transitional plan for those being let go. This may include updating a noncompete agreement.
A good severance package can ease the burden and help make a positive transition for laid-off employees.
This should include a severance package that can include extended health benefits, outplacement services, and pay for an extended period of time.
6. Pay Attention to Those Who Remain
Don’t pay so much attention to the ones that are let go that the employees who remain are forgotten about.
Make sure there is continuous, factual communication with employees who remain.
Honesty is always the best policy. Engage the remaining employees in helping to identify ways to reduce costs in other areas of the organization.
Share vision about the future and offer hope when possible.
Layoffs and downsizing is the last thing any business wishes to partake in.
Being sensitive to the timing and communication can greatly impact how the layoffs are perceived by employees.
Finally, we have all been thrown a curve ball with this Covid-19 pandemic.
Access governmental help for small businesses, communicate often with employees, and hopefully, we will all see this pandemic in the rearview mirror sooner than later.
