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Handling layoffs correctly can minimize damage to company morale

Published in the Rochester Business Journal

Every day, it seems, we learn of more victims claimed by economic woes. The airlines announce repeated downsizings. General Motors plans to slash thousands of manufacturing jobs. Here in Rochester, Student Loan Corp. will eliminate one-quarter of its workforce. The list goes on.

Let’s face it: There’s no easy way to lose a job or to deliver the news. But when an employer handles layoffs with respect and attention to protocol, the company may ease employees’ pain, maintain morale among remaining workers, minimize the company’s legal risks and preserve its reputation.

What not to do

Badly handled layoffs have a few things in common, such as:

1. Employer's failure to explain. A recent Wall Street Journal article tells of a high-performing salesperson who is let go after two months – despite exceeding quotas – and is given no reason for the decision.

2. Poor timing. A newspaper executive leaves a good job and moves across the country for a so-called better opportunity – only to see on the television news, his first day in the new city, that his new employer is ceasing operations.

3. Management's insensitivity. Some employees, especially those working a distance from headquarters, learn via email or prerecorded phone messages that they’re out of work. The Journal tells of one high-level employee, the founder of a company that was later acquired, who was asked to travel three hours to a meeting. Upon stepping off the plane, she learned she was being let go.

Best practices

When faced with economic or business issues that require a reduction in workforce, certain practices bear consideration:

1. Ensure the action is prudent. How will a headcount reduction affect the company’s future? Who will choose the individuals to be dismissed, and how will that decision be made? In the early stages, it’s important to maintain confidentiality about any plans to downsize, reorganize or merge.

2. Involve an employment attorney. Because laid-off employees are often angry enough to initiate a lawsuit, a wise employer will take steps to minimize that risk. Any planned layoff that disproportionately affects older workers, long-term employees or those in minority groups may invite legal action. A legal expert will look at the planned layoff in the bigger context and will note any adverse impacts, such as a potential violation of the Age Discrimination in Employment Act, and perhaps advise the employer to alter its selection.

An employment attorney also can provide advice on the use of correct terminology and documents.

3. Develop a communication plan. Once the decision is made that specific employees will be laid off, the company needs a detailed plan for informing those individuals and addressing the remaining staff.

Telling the truth – that the layoff reflects economic or business circumstances, and not any employee’s performance – can go a long way toward easing the blow. Management also must clarify whether the layoff is permanent or temporary – the latter suggesting that the laid-off employees may return when business conditions improve.

A script with bullet points should be prepared and discussed with managers and supervisors, to ensure that all will receive and deliver the same message. Managers will have questions of their own, about the future of their departments or whether additional layoffs are coming. Senior management can say, “Based on what we know now, we hope these layoffs will be enough, but we can’t promise that. We’ll revisit the question as business conditions change.”

4. Coach those who will deliver the message. Careful preparation will help keep a manager or supervisor calm and on message, even in the face of a distraught or angry reaction. Many companies have a more senior manager and/or an HR professional attend the meeting.

5. Deliver the news with compassion and as much honesty as is prudent, but plan for emotional or destructive reactions. Take time to answer the employee’s questions, but don’t explain too much nor apologize for the company’s decision. Offer to provide a letter clarifying that the employee’s performance was not the reason for the layoff.

Many employers will wait until the end of the workday to deliver the news, so that the employee can leave in privacy.

6. Protect company assets. In order to protect proprietary information, the IT department should be instructed to shut down the employee’s computer and network access during the termination meeting.

Who packs up an employee’s desk? Some companies escort the employee out immediately after the meeting, allowing another person to gather his or her belongings. Other companies allow the employee to do his or her own packing, with a neutral person watching.

The employee may express a desire to say good-bye to co-workers. It’s best to acknowledge that wish, but to encourage the employee to make arrangements outside of work.

7. Ensure compliance with federal and state regulations. For any termination, the employer must ensure that paperwork is complete and correct.

8. Don’t use the term “layoff” when you mean “termination for performance issues.” In general, a layoff refers to a job reduction based on economic or business reasons such as a business slowdown, reorganization, merger or other company decision. A firing, on the other hand, involves removing an employee whose performance is inadequate.

While the word “layoff” may seem gentler than “firing,” no one benefits when employees are given conflicting messages about why the action is occurring. Employers must resist the temptation to cover up a failure to terminate a poor employee by waiting until business conditions deteriorate, and then calling that employee’s dismissal a layoff.

9. Prepare for the impact on morale among those remaining. Anytime a worker is suddenly gone, especially one who seemed to be doing well, the remaining employees may experience grief, anger, guilt, depression, fear that more layoffs could be coming, and/or worry about an increased workload.

When layoffs occur, company leaders must rally the remaining troops while acknowledging that these changes are difficult to accept. Managers should provide the team with regular progress updates while keeping an eye out for any employee who may be struggling.

10. Include non-employees in the communication. Business partners, vendors, customers and others may be affected by the layoff. Ensure that they’re informed promptly and reassured that the company’s relationship with them will not suffer.

Conclusion

No employer likes to think about one layoff, never mind a series of them. And yet, because a series of layoffs is always possible, and because the risk of legal action looms, it’s crucial to obtain sound advice and to document the entire process. By designing and adhering to a careful process, an employer can ease the pain for those laid off while preserving employee morale and safeguarding its reputation.

Susan O'Brien, HR Works' Vice President of Outsourcing, contributed to this article.

 

© HR Works, Inc.

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HR Works, Inc., headquartered at 200 WillowBrook Office Park in Fairport (Rochester), New York, with an office in East Syracuse, is a human resource management outsourcing and consulting firm serving clients throughout the United States. HR Works provides scalable strategic human resource management and consulting services, including: affirmative action programs; benefits administration outsourcing; HRIS self-service technology; full-time, part-time and interim on-site HR managers; HR audits; legally reviewed employee handbooks and supervisor manuals; talent management and recruiting services; and training of managers and HR professionals.