This article appeared in Smart Business Magazine.
Over the past five years, layoffs have become an undeniable fact of life for millions of Americans, and even today as we slowly recover from the great recession, layoffs continue. For example, in June, there were 4.3 million total separations, according to the Bureau of Labor Statistics.
And as painful as they may be, layoffs are sometimes necessary to allow a business to reorganize or restructure to remain viable. If they are not handled correctly, however, a reduction in force could be devastating to the future of a company. Research done after the economic downturn in the 1990s found layoff survivors had high levels of distrust and lower levels of motivation. In addition, absenteeism increased and productivity decreased.
“The keys to effectively managing a layoff are planning, communication and treating people with dignity,” says Jerry Miller, vice president, marketing, at Executive Career Services. “Your goals should be to preserve morale and the intellectual capital of the organization and to avoid litigation.”
Smart Business spoke with Miller about how employers can mitigate the negative effects of layoffs when they become necessary.
What role should planning play with managing layoffs?
Planning encompasses numerous areas, so you need to first understand the reasons for having the layoff in the first place. What do you hope to accomplish? You need to determine what the company will look like going forward — post-layoff.
Then you’ll need to decide which positions are going to be eliminated and why. Also, how much notice will be given and what type of severance packages and other benefits will be provided, including outplacement assistance? While you don’t want the legal department to drive the layoff, you need to know the relevant laws and understand all the legal ramifications. Some of the more important laws to be concerned with include The Worker Adjustment and Retraining Notification Act (WARN) and laws dealing with age and other forms of discrimination.
Finally, and very importantly, you’ll want to formulate your communication strategy, both during and after the layoff. Once the planning process is complete, move swiftly. Don’t drag things out. Word travels fast in an organization and you want to stay ahead of rumors.
How does a good communication strategy look during a reduction in force?
Once the implementation phase begins, communication should be wide and frequent. A critical component of this phase is the notification meetings, which should be conducted by the immediate supervisor or department head, and if the meeting is expected to be especially sensitive, a representative from human resources. This is not a time to delegate. It is critical that these managers, particularly if they have never delivered a layoff notice, be coached in how to conduct the notification meetings. If you are using an outplacement firm, it will be able to provide this type of coaching.
What do managers and department heads need to keep in mind during a notification meeting?
Information packets should be prepared in advance with all the necessary information. Expect that impacted employees will likely be in a state of shock after learning of the job loss and much of what is said afterward will not be heard or understood. They need information to take with them to read when they are finally able to process the bad news. Notification meetings should be private and take place as early in the workday as possible on a day that is not immediately prior to a weekend, a holiday or a planned vacation.
The impacted employees must be treated with dignity and respect. They will share their experience with survivors, and if they are not treated appropriately, it could have a very negative impact on those remaining. Managers should imagine themselves on the other side of that table and treat their exiting employees as they themselves would like to be treated. Be brief and direct in the notification meeting. Anticipate emotional reactions and be prepared to deal with them. Don’t engage in small talk or allow your anxiety to cause you to say something to ease the immediate situation that can’t be lived up to. Explain that positions, not people, are being eliminated. You want to be sensitive to the employee’s situation but direct and firm, making sure he or she knows the decision is final and non-negotiable. Tell employees how much you appreciate their work and thank them for their contributions. Finally, direct them to the next step in the process.
How should an employer handle the remaining employees?
Oftentimes a company is so focused on the layoff itself that it loses sight of the impact on the survivors, but doing so can cause significant problems later. This is where leaders need to lead. Meet with the remaining employees to discuss the layoffs in an honest and forthright manner. Share the latest company news with them and commit to keeping them informed. Acknowledge their emotions and give them time to deal with them, but not too much time — don’t allow them to engage in endless carping or complaining. Work must go on. Managers should lead by example. Be positive but also realistic. Discuss the workload and how it will be distributed, perhaps even asking the team what they would recommend. Keep lines of communication open and check in regularly with individuals. Above all, be available to remaining employees. Don’t spend time in your office with the door closed.
Remember, how you treat people matters, to those impacted as well as to those who remain. If you plan effectively, communicate openly and often, and treat people with dignity and respect, a layoff can be done with minimal disruption and little or no negative impact on the organization going forward.