The economic news has been grim lately: inflation has been rising, stock prices are falling, supply chains continue to experience problems, and the world seems to have more and more problems. Consequently, many businesses are thinking about — and a number have already begun – reducing their workforce. So, how can they do so in a just, equitable, fair, inclusive way?
No manager takes a job with the goal of laying people off, but sometimes – and we seem to be in the midst of one of those times –, it becomes necessary. Like every significant business decision, creating a layoff plan has a major impact on the business in the short and long term.
Being let go is emotionally traumatizing for employees. Managers need to be empathetic and create a feeling, so those impacted feel as if the company feels their pain and tried its best to mitigate it. Here’s how.
Put Yourself in the Place of the Employee
Companies often start out by providing a self-defense of the decision, which widens the chasm between themselves and employees. These individuals do not have a job, will want to find one ASAP, and feel resentment about being the ones suffering the brunt of the pain.
So, what can the company do to help them? They can empower people & culture to aid employees in making the transition to a new job. Employees may need help writing their resumes. A letter of recommendation from their supervisor is helpful. The company may bring in third party specialists to aid individuals in their job search.
The company can even set up a place where employees get career advice, find help searching for open positions, polish their interviewing skills, and network with other professions. Having such a place off site rather than in its facilities creates a sense that they have begun their post layoff career and avoids awkward moments bumping into former coworkers.
Consider All Alternatives
Make sure that layoffs are a last option and not a quick reflex to untenable, unforeseen business conditions. Companies have many ways to reduce personnel expenses and put themselves on firmer financial footing. They can let contract and temporary employees go. Incentivizing employees so they leave via voluntary layoffs, buyouts, and early retirement is another alternative. All three options give employees some control over a process where they often feel powerless.
Enterprises set severance packages policies. Typically, they vary and depend on the length of time that the person served, with established workers gaining more than those who recently arrived.
Health care benefits represent a significant cost and an area of concern for severed employees. Providing them with the option to carry their benefits forward until they find another job eliminates one of their main concerns.
Be Inclusive in Your Decision Making
Recently, companies’ focus centered on building more inclusive, more equitable workplaces, so they must ensure that individuals from all groups are represented in the decision making. Minorities tend to be less represented in the company and in management. As a result, their input can be overlooked as layoff plan takes shape.
Also, the economic gap between blacks and whites is wide (Whites’ median income is 10 times higher than Black’s). Consequently, minorities are often in a more vulnerable position when a reduction occurs and may suffer more from its impact. Therefore, enterprises need to account for those factors as they make their decisions and lessen the impact as much as they can.
Follow the Law
In addition to compassion, corporations must be careful and not discriminate against any protected classification of employees. Multiple state, federal, and international laws cover how the layoff process must unfold. To stay lawful – as well as ethical –, management must know which laws apply to their situation. This expertise is typically beyond their purview, so they need to speak with an employment law attorney, ideally one who specializes in layoffs, as the process begins.
Put Some Skin the Game
Resentment is a common feeling among those laid off. They are the ones without a job and suffer the brunt of the problems. In order to make the change seem more equitable, let them know that everyone in the company is being impacted, and take other measures in place to lower expenses. For instance, companies can cancel any lavish marketing events, lower travel expenses, eliminate bonuses and other special perks, and even freeze everyone’s wages across the board. These steps will not completely assuage the bad feeling from the severed employees, but they will illustrate that managers at least tried to spread the pain out on the entire as much as they could.
Provide Context for Your Decision
Employees do need an explanation for the layoff, so management must be transparent and share financial data. The company must clearly illustrate where revenue shortcomings or increased expenses arose and why they were caught by surprise. They also should outline how the changes will build a stronger business as they move forward.
Here again, a business may run into challenges. Financial transparency comes with regulatory guidelines, especially for public companies. A firm must check with financial and legal experts to be sure about what can and what cannot be shared and stated.
Recognize the Business Challenge
Do not be naïve about the balance that your business faces in making these decisions. Layoffs occur because the immediate outlook does not look promising. Being compassionate can be effective in cutting costs and building up the brand and creating a comforting work environment in the long term, However, they can be expensive and add to the financial challenges in the short term and long term.
Understand that Employees Will Remember How They Were Treated
Remember that employees may not remember all the factors that led to their layoff, but they will remember how they were treated and be willing to freely share their feelings with others via social media and other channels. Treating them empathetically, fairly, and inclusively is not only the right thing to do but also good business.
Running a company has always been quite challenging. Many businesses struggled mightily during the recent upheavals and are now staring at layoffs. In order to mitigate the damage from that step, they must be empathetic, ensure that they do not discriminate, and spread the pain out across the entire organization.
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