Conducting Layoffs Soon? Careful Planning And A Gentle Touch Make For The Best Long-Term Results
Layoffs are likely to continue in these changing markets and times of economic uncertainty. And while layoffs may be inevitable and difficult to conduct, we have the opportunity to be more intentional about the way we implement them.
Here are some things to keep in mind if you’re left with no better options:
Does your firm use a transactional or relational leadership model?
Depending on your company and industry, you might end up with a different approach to layoffs.
Let’s say you run an agricultural business where you pay people to pick produce by weight. Your view of employee performance is primarily transactional. Additional effort or output equals more pay. In general, the business relationship ends if there is no need for an employee’s output.
There are benefits to this approach. The system is:
• Seen as fair and transparent
• Delivers immediate feedback
• Incurs low implementation costs
This approach has a simple social contract: Each employee is responsible for themselves, there is no direct benefit to helping other employees and competition is favored over cooperation. In this environment, layoffs can occur quickly.
For many of our clients, their businesses require a more relational-based approach to leadership. These firms expect their employees to be more dedicated to the firm's mission, with an implicit understanding that as the firm thrives, so will its employees. The social contract is more complicated, as not only does the quality of the work matter but so does a cooperative, relationship-centered approach.
Some of the benefits of this approach include:
• Investing more money in training and retaining your employees, which can increase productivity
• Investing more in employee morale
• Lower turnover, which decreases costs to your business
In this environment, layoffs can feel more painful. There are employment improvement plans and severance negotiations. It may feel harder to let employees go when there has been so much invested in them and strong relationships have been built.
In these situations, the process used for layoffs can have massive ramifications on the success and the level of value created by the firm.
Why this matters: Protecting your long-term growth
When you are laying people off, the last thing you might be thinking of is creating an alumni network of your employees, but that is exactly what you are doing.
Assuming they keep doing what they are doing, a former employee is likely to end up with one of three groups: your suppliers, your customers or your competitors. Are your former employees going to promote your brand and encourage the people they know to get a job at your company, or will they send the talented people they know in another direction?
While companies may be slimming down in the short term, they always want to be growing in the long term. Sometimes that growth can come a lot sooner than you think.
Consider the airline industry, which conducted mass buyouts and layoffs as COVID-19 decimated leisure and business travel. When travel recovered more quickly than anyone expected, Ryanair performed better than its peers amid staffing shortages because it shied away from letting its employees go.
While layoffs are often driven by immediate financial or strategic needs, you can improve outcomes by considering these four areas prior to parting with employees:
1. Think about giving your employees a choice
When it comes to the layoff process, some employees would prefer to make the decision to leave themselves. This sort of approach has been most notably seen in the case of Twitter, where employees were given a deadline and a thumbs-up or -down option to stay with the company. This involves the employee in the decision to leave and helps reduce the pain involved in letting people go.
2. Identify what matters most to your employees going forward
You probably have a good idea of your employees’ needs based on your company’s industry and workforce. By considering the specific needs of your employees, you maximize the support to your employees while remaining within your budget.
Some employees prefer severance, while employees in the country on a visa might be better supported with comprehensive reemployment support to help them find a new job as quickly as possible.
Checking in with an employee’s manager to identify any special life circumstances demonstrates a level of care that can help mitigate some of the pain of being laid off.
3. Don’t rely too much on technology
Without spending additional money, you can still maintain a human element in the process. Letting people go via Zoom webinar, email or pre-recorded video message might seem efficient, but it is not ideal in terms of preserving relationships. In the case of Google’s recent automated, email-powered layoffs, some employees expressed regret in not being able to say goodbye to one another face to face.
4. Have a plan to address the survivor exodus
According to one study, survivors of layoffs can experience “lower organizational performance, job security, affective attachment, calculative attachment and had higher turnover intentions.”
Prevent survivor exodus by addressing teams’ division of labor after employees have been let go. A common occurrence is for the work of a laid-off employee to be divided among co-workers. This increases the remaining employees’ workload and companies often neglect to offset that.
Set clear expectations with remaining employees about potential increases in workload and negotiate with them in order to keep them happy while they shoulder any new responsibilities.
There is no one-size-fits-all approach to conducting layoffs, but there is always room for extra time and thought before running head first into letting employees go. Thoughtfulness reaps dividends down the road.