Interested in How to Do Layoffs With Compassion?
Are you interested in best practice tips for how to do layoffs with compassion, empathy, and class? A reader asked these questions about how to do employee layoffs in such a way that employees felt empathy and professionalism.
Are there any standards for a company facing a work slowdown? Last hired/first to go? Also any protocol relative to the timing such as Friday versus any other day of the week? End of pay period? Two weeks' severance? What do you recommend for company layoffs?
Layoffs are never easy and they always create uncertainty and fear in the workplace. But, you can do layoffs in such a way that you win in the court of public opinion. You can do employee layoffs so that the employees who remain are encouraged by your effective, caring handling of the necessary layoffs.
You also want the employees you are laying off to feel as if they were well-served. An employer of choice is cognizant of the needs of all stakeholders—and does their best to meet them.
Your efforts to avoid layoffs are unsuccessful. Use these six tips to limit the damage that layoffs can potentially cause in your organization.
Provide Information—More Than You Think People Need
First, give your employees information about the business problems and provide some sense that layoffs may be necessary as soon as you think they may be necessary. This will increase the trust of the remaining employees. An employer of choice may not always be able to avoid layoffs. But, they always regard the feelings and fears of employees with demonstrated respect and early information.
Before you do layoffs, consider all of the other options that an employer has to save money and produce efficiently. Let your employees know that you are exploring options and share your findings. Your employees will appreciate your efforts, even if they are unsuccessful.
You do need to communicate what you are considering and implementing, however, or employees will never know that you thoughtfully pursued other options before settling on layoffs as the appropriate alternative.
You can consider these eight major alternatives before doing layoffs. In the past, for example, companies have asked all employees to take an unpaid day every two weeks, eliminated part-time and temporary staff and reduced every employees' salary by 5%.
Be creative; layoffs may not be your only answer. But, as you consider alternatives, talk to your key employees. You don't want to see a mass exodus of your best people who see better prospects elsewhere when they experience concern that they will be the people laid off.
Speak With an Employment Law Attorney to Learn Fair, Legal Layoff Practices
Speak with a qualified employment law attorney with experience in layoffs. Since most HR practitioners are only infrequently in a position to have to do layoffs, you will want to start the process by speaking to an attorney to make sure that the company's actions are legal, ethical, and compassionate. It is a learning experience for an HR practitioner and consultation with an attorney is recommended for anyone who is dealing with layoffs for the first time.
Keep in mind that multiple state, federal, and international laws cover how an employer does layoffs. To stay legal and ethical, you need to know which applies in your situation See the Society for Human Resources Management's excellent summary of the applicable laws that apply in a layoff.
With Your Attorney's Assistance, Make a Layoff Plan
Assuming that you have considered all other available options to avoid layoffs and you have concluded that layoffs are your only option to solve your problems, you will want to put in place a layoff plan. The plan must keep you in the ethical, legal, moral, and professional territory. It must take into consideration the needs of the employees you lay off, the needs of the layoff survivors, and the needs of the employer to effectively continue to produce and serve customers.
Your layoff plan should answer these questions.
- What will the considerations be in selecting the employees to lay off? (You need to look at diversity concepts when considering who to lay off.)
- What are your needs as an employer for certain contributions and jobs to be done following the layoff decision?
- Who will be laid off?
- When will you schedule the layoffs?
- How will you inform all stakeholders of the layoffs? (Stakeholders include your current and former employees, vendors, customers, and more.)
- What severance pay and other benefits will you provide for your laid-off workers?
- How will you address the morale issues and fearfulness of your remaining workforce?
- How will you deal with the needs of your laid-off workers on issues such as benefits, government reporting, job references, and so forth?
Make Certain Your Layoff Practices Do Not Discriminate
Non-discriminatory practices are a must in layoffs, so who you lay off must be painstakingly determined. Who you lay off depends on the practices your company has used in the past and on a variety of legal and ethical guidelines. For example, it may serve your interests best to eliminate a complete department. All of the employees are then laid off.
Then, in departments you can't eliminate, the managers will need to decide whom they could most easily afford to lose based on the employee's job description.
You need to be careful that you are not discriminating against any protected classification of employees and that the criteria for layoff selection are practiced equivalently across all departments.
Some companies do use last hired/first to go criteria. This avoids potential charges of discrimination but is not recommended. You are cutting out all of your experienced recent hires or your young, diverse talent. This is one of the worst ways to do a layoff. Instead, ask your managers to make a business case for each recommended layoff.
Some companies eliminate entire shifts. Other companies eliminate a position, such as all clerical employees, and shift the clerical work to the managers and staff.
Some companies practice across the board layoffs that tell each department they must downsize by 10%. Although superficially fair, this is bad for the business because you may be eliminating essential positions. In fact, across the board layoffs are the worst way to downsize.
Finally, in a union-organized workplace, the contract is likely to specify who you must lay off and in what order so work with your union representatives in addition to an attorney.
Do Layoffs Sooner Rather Than Later
Do layoffs as soon as the business need makes them necessary. Layoffs are not a time to punt; preparation will make layoffs less painful for all. Chances are that if your firm is experiencing problems, employees are aware and worrying anyway. So, make the decision and do the necessary layoffs.
When you determine the need for layoffs, do the best you can afford for the soon-to-be-former employees. A healthy severance package, potential outplacement services, and other economic assistance can make layoffs more manageable for employees.
Before you do layoffs, have your severance package ready and write a legal document that releases the employer from liability for the employee to sign in return for the severance. Laws regarding releases of claims differ from state to state so you need to check with your state department of labor and attorney. (The employee generally has a certain number of days to respond to your offer and a certain number of days during which the employee can change his or her mind about signing the release of claims.)
When you consider severance pay, you'll want to devise a formula that provides one to two weeks of pay for each year that the employee has worked for you. You can also consider providing employment assistance or outplacement services. The more generous your severance package, the more likely the employee is to accept it and sign the release from liability.
Depending on your business, and the number of layoffs you are contemplating, the WARN Act provides legal guidance about when employees must be notified of upcoming layoffs.
Employees Will Remember How They Were Treated
Remember that your employees and former employees may not remember why you were forced to do layoffs but they will remember how they were treated. Treat people with dignity.
The Bottom Line
Do the layoffs individually with Human Resources and the employee's manager present. Complete the process on the same day. Do not even consider a mass meeting, telephone conference call, or an email to lay people off. They deserve more than that from you.
Please note that the information provided, while authoritative, is not guaranteed for accuracy and legality. The site is read by a world-wide audience and employment laws and regulations vary from state to state and country to country. Please seek legal assistance, or assistance from State, Federal, or International governmental resources, to make certain your legal interpretation and decisions are correct for your location. This information is for guidance, ideas, and assistance.