Making the Best of a Bad Situation: Taking Some Sting Out of Layoffs

The term "layoff" is not a by feel-good word for anyone, whether it means losing your job or being the person responsible for taking away another’s employment. In many cases, layoffs are among a company’s last resort in an effort to cut back expenses and increase efficiency by resolving organizational issues and removing redundancies.

Typical reasons for layoffs include:

• Change in business needs
• Restructuring
• Acquiring or merging companies
• Losing grants that covered employee salaries
• Requiring fewer employees due to reduced workload
• Downsizing

The toll of layoffs

To employees

Layoffs can affect any employee and are not necessarily the result of poor job performance (like firing) - although positive performance reviews can help employers decide which of their employees are the biggest assets who should be retained for the good of the company. As an employer, it’s important to recognize the impact a layoff can have on employees. While it differs from being fired in that it’s not solely due to the worker’s actions, being laid off otherwise has similar ramifications to the employee who may feel singled out as dispensable. A laid-off employee faces economic insecurity and, if another job is not found within a short timeframe, potential unemployment.

It’s not only the laid off employees who feel the sting. Employees who remain employed may experience a sense of dread, worrying that their own job may not be secure in the future. They may worry about the financial health of the company itself. They may harbor resentment that they’ve lost coworkers or that their workload will increase due to the diminished number of workers.

To employers

While layoffs are obviously bad news for employees, they can be rough on employers as well. You’re human and you don’t want to be the heavy in someone’s life by taking away their source of income. It can also be embarrassing to admit that your company is struggling financially if that’s the reason for the layoff. Finally, the public generally frowns on companies known to be laying off their employees, so it puts a stain on the business’ reputation.

Laying off with grace

Layoffs, unfortunately, are sometimes necessary. When all other cost-cutting measures have been exhausted, it could be the only means left to salvage a company. There are some ways to mitigate the pain of a layoff that can help ease an uncomfortable and emotional experience.

Make a plan of action so things go as smoothly as possible. This is no time to be awkwardly unprepared or hesitant. Include these elements in your plan:

• Choose who to lay off with great consideration by evaluating such criteria as seniority, talent/skills, job performance and value to the company.
• Do it once and be done if possible. Multiple rounds of layoffs can leave your staff on edge, wondering when and if the other shoe will drop and they’ll get the ax as well.
• Give a gracious amount of warning so that employees can search for new employment before losing their present job. Some larger companies fall under the requirements of the Worker Adjustment and Retraining Notification (WARN) Act and must give 60 days’ notice of a layoff.
• Have the termination letter, COBRA paperwork, severance agreement, and information about final paychecks collected before the termination meeting.
• Break the news to affected employees in a one-on-one meeting, in person if that’s how you work; in a private video call if you work remotely. The conversation should be clear and concise. Get right to the point and don’t go off topic. If appropriate, explain why the layoffs are necessary to the well-being of the company and any pertinent information about why they, in particular, were among those being let go. Give them silence and time to process the information; leave the room and allow them to go over the paperwork. Inform them when their last day will be and thank them for their contributions to the company. Remain calm, supportive, and welcome any questions, even if the employee reacts to the news with anger or agitation.
• Announce the layoffs to the rest of the company, with as much transparency as possible, expressing how difficult a decision the layoffs were to come to and that you fully realize how difficult they are to accept. Explain how their roles and/or workload may change considering the streamlined staff. Provide a clear vision of how, moving on, the company will be on track for success, which in the long run will benefit them.

Layoffs are an awful, sometimes necessary reality in business. Being prepared, upfront and open about the situation with your employees - those who are laid off and those who remain in your employ - makes the best of this bad situation.

How would you handle layoffs in your business?