There occurred more than 17 million layoffs and discharges in 2022, according to the U.S. Bureau of Labor Statistics.¹ How many of them were handled well?
Knowing how to manage layoffs is critical. Just like promotions and industry change, layoffs are an integral part of the business world. They're bound to affect your workplace, no matter how you manage them. If you handle layoffs badly, it can damage your company's brand, demotivate the remaining employees, and even impact your organization's future success.
Considering layoff alternatives
Before deciding on a layoff, senior executives should seriously consider all facets of the business in search of other options. Setting a hiring freeze, offering early retirement packages, and cutting the budget in other ways may offer a solution that doesn't include job cuts.
Preparing for layoffs
If layoffs are the only path to ensuring the company's future, approach the difficult times ahead with a plan for every stage.
Identifying the need for layoffs
Senior managers are typically the ones who see a layoff coming first. Changes in the industry, budgetary demands, increased competition, and economic slowdowns can all be reasons for a layoff. The management team must be able to pinpoint why this route is necessary if they have any chance of layoff success.
Developing a layoff plan
Decide the criteria for whom to lay off. Will it be an entire department? Will you lay off the last ones hired? Once that decision is made, choose who and how many will be let go. At the next stage, involve Human Resources to help create a change-management and employee communication plan for before, during, and after the layoffs.
Communicating with the affected employees
Handling communication with laid off employees, current employees, and team leaders is absolutely vital if you want to protect employee morale and your company's reputation.
Add these actions to your plan:
Apprise the direct managers beforehand and share the corporate message with them for unity's sake.
Communicate a succinct reason for the layoff.
Meet with each laid off employee individually and explain the details.
Have a member of the Human Resources department explain severance and unemployment benefits.
Promptly and honestly answer employees' questions.
Provide the paperwork needed to complete the layoff. This may include a termination letter, a reference letter, and anything benefits-related.
Complying with legal requirements
Lean heavily on your HR team and employment attorney to ensure the soon-to-be former employees won't have a reason to sue your company. Never base the decision to let an employee go on protected-class information like age or race.
A layoff period typically won't evoke workplace joy. Often it's a dreaded, difficult prospect for employees and managers to overcome. However, being professional, empathetic, and authentic can decrease the negative impact on a company's reputation and the remaining employees' morale.
Conduct layoffs in a respectful and professional manner
Consider how you would want to be laid off, and base your strategy on that. Showcase empathy and understanding that this is a big deal for the employee being let go. Explain the reason for the layoff and how they were chosen. Lay out the information they'll need, like when they can clean out their workspace and when is their last day.
Provide support to affected employees
Plan for any support the company can offer the impacted employee. A severance package and a full explanation of unemployment benefits are the first steps to keeping them financially stable.
Manage emotional reactions
When senior management or HR delivers this news, they should be prepared for an emotional reaction from those being let go. After all, their livelihoods are at stake. Being empathic is essential, but don't give them false hope or waffle on the decision. Those actions would only muddy the waters and draw out the negative situation.
Communicate with remaining employees
Communicating the layoff with all employees is a necessary step in the process. Open communication with the entire company can head off the layoff rumor mill and stifle paranoia and suspicion. It also gives remaining employees the assurance they aren't the next ones to go.
After the layoff, employers can take these actions to assist the laid off employees and maximize the company's remaining success.
Providing assistance to laid-off employees
Helping former employees get through these difficult times is, while not required, a nice thing to do. Writing a reference letter, recommending them to other employers, or paying for outplacement services would all be appreciated.
Reorganizing remaining staff
Keep the company on track and productive by working with team leaders to ensure all the work is covered properly. They should look closely at the responsibilities the laid off employees handled and split them fairly among the remaining employees.
Maintaining morale and productivity
Offer open dialogue to the remaining employees throughout the company. Encourage managers to honestly and thoroughly answer any lingering questions about the layoff. In addition, managers should monitor employee workloads to pinpoint anyone who's overloaded because of the layoffs.
Conducting a post-layoff review
Use an anonymous survey to ask current employees how they feel the layoff was managed. Use this information to handle future layoffs better if the need arises.
Preventing future layoffs
In most cases, layoffs should be avoided if possible. Owners and senior managers should dive into the reason for this layoff in search of how to avoid layoffs altogether in the future.
How to manage layoffs for long-term success
A company's talent is its most valuable asset. How you treat them during hard times can impact your brand, your customers, and the future of your company.
While you can’t always control what is happening in the market and the world outside your company, you can do your part to create a safe, stable, and fair environment for your employees.
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