By communicating well and offering practical assistance, companies can maintain positive relationships with workers.
There’s a lot of news lately about layoffs becoming widespread, particularly in the tech industry, but in others, too. As we know from historic trends, layoffs today can result in talent shortages in the not-so-distant future.
Laid-off employees can be a company’s worst nightmare — or its greatest talent opportunity.
While layoffs can never be sugarcoated as a positive strategy, they can be managed in ways that minimize negative effects on departing employees, remaining employees and the company.
Those negative impacts can be significant.
Recognizing the impact of layoffs
Tim Toterhi, chief human resources officer for Plotline Leadership in Raleigh, North Carolina, and a talent specialist, says being laid off affects employees’ “sense of self,” as much as it does their wallets. “Practical matters such as health care and our ability to pay the bills are suddenly jeopardized,” he says. “Employees who define themselves, as least in part, by their profession experience a double loss.”
Jason Leverant, president and chief operating officer for AtWorkGroup, a staffing solutions firm based in Knoxville, Tennessee, agrees. The mental impact, both short term and long term, that a layoff has on an employee is tremendous, according to Leverant. “It’s regarded as one of the most traumatic events in somebody’s life,” he says, noting that he has talked to people who were still terrified of being laid off 20 years after their initial layoff. “That fear stays with us,” he says.
Companies that understand those effects and commit to careful planning and thoughtful communication can help employees move through the process with less emotional trauma, while also helping to maintain relationships with workers.
Leverant believes that employers should do everything possible to avoid layoffs because of the significant negative impacts they can have, not just on employees, but on the company itself. Rarely do companies achieve the results they expected, he says. There may be alternatives to layoffs, he suggests, such as offering voluntary severance packages. Additional options might include cutting back on hours or shifts, shutting down one day a week, hiring freezes, wage freezes or cuts, etc.
When a layoff absolutely must happen, the best way to approach the situation, Leverant says, “is to be very strategic about it.”
“Your workers have helped you build your organization. You owe them explanations, answers and support,” says Anjela Mangrum, founder and president of Mangrum Career Solutions, based in Cincinnati.
Planning and preparation
Most companies know — or should know — about the need for layoffs in time to ensure the process is handled as sensitively and appropriately as possible. “Layoffs are not a knee-jerk thing,” Leverant says. “This is not a situation where you need to make a decision within an hour. You know what’s happening.”
In fact, Mangrum notes that the federal Worker Adjustment and Retraining Notification Act requires U.S. employers to provide advance notice in cases of qualified plant closings and mass layoffs. The number of days of warning and team size that triggers the warning may vary by state, she says. In general, though, the WARN Act applies to most employers with 100 or more employees and requires a 60-day advance notification.
In considering how to approach a layoff, Leverant suggests starting by taking “a look in the mirror” and asking yourself how you want your company to be perceived. Layoffs, he says, “don’t just impact the people you’re laying off. They impact everybody in your organization because it creates this aura of negativity, fear, uncertainty and anxiety for everyone.” Many of those left behind may look for other jobs believing that if another layoff occurs, they could be next. And your best employees are the ones most likely to find new employment.
Part of the planning process needs to focus on which employees will be laid off. The idea of “last in, first out,” is a common one, Leverant says, but “it usually doesn’t happen like that.”
Be mindful of the process you’re using to determine who will be asked to leave. Logical categories include employees working on a product or line that’s being phased out, those who have a poor performance history and, yes, recently hired employees.
“Make sure there’s a clear strategy on who is actually selected,” Leverant recommends. While considering the selection, companies should be cognizant that there are some potential legal risks. Layoffs shouldn’t have a disparate impact on certain groups of employees, such as older workers, minority workers, etc.
Recent research from recruiting platforms Joonko and Wiseful based on an analysis of more than 15,000 laid-off employees found that women and people of color represented a higher proportion of layoffs in the tech industry when compared with their representation in the industry. Some key findings:
- People of color represented 40% of those laid off but make up only 20% of the high-tech workforce, according to data from the U.S. Equal Employment Opportunity Commission.
- Women represented 50% of those laid off but make up only 40% of the high-tech workforce.
- Underrepresented employees (women and people of color combined) made up 71% of the laid-off employees.
Communication is key
In addition to deciding what information needs to be communicated to your workforce, it’s important to think about how and when to communicate, with an eye toward honesty and transparency.
“Open and transparent communication is crucial during this sensitive time,” says Jeff Mains, a business consultant and CEO of Champion Leadership Group in Plano, Texas. “It is of utmost importance to handle the situation empathetically, ensuring transparency when delivering the news and providing comprehensive explanations for the decision.”
Leverant agrees, but acknowledges that this is a challenge. Employers want employees to understand that “it’s not personal, it’s a business necessity.” But for employees, of course, it is personal. And, Leverant says, “it’s hard to decouple that.”
One key part of layoff communications is focusing on the “why,” Leverant says. What events, business conditions or other circumstances caused the company to consider layoffs? What other alternatives did you evaluate? Why did you decide layoffs were necessary?
“Maintaining a positive relationship in the most difficult of circumstances requires transparency, trust and an ability to empathize,” Toterhi says. He offers some suggestions for ensuring all three.
- Transparency: Employees want to know “why them and why now,” Toterhi says. “Corporate speak will kill any hope of an ongoing relationship so, where possible, transparently present the actual reason.”
- Trust: “Knowing why helps ease the initial shock, but impacted employees want to believe that the transition out of the organization is fair,” Toterhi says. “This includes everything from severance to placement support. If you want them back — and even if you don’t — treat them well on the way out.”
- Empathy: “Managers who can acknowledge the impacted employees’ feelings, empathize with the individual and follow up on the promise of connection and support are more likely to maintain positive relationships,” Toterhi says. “In the end, people don’t work for companies. They work for managers.”
Preparing managers and supervisors
Communication happens at two levels during a layoff: the organizational level and the managerial or supervisory level. It’s important to be proactive and supportive in helping to prepare managers and supervisors for the important role they will play in the process. They need to understand their role and be trained in how to perform that role effectively. Give them the resources that will help them remain consistent, honest and transparent.
“Supervisors and managers should actively listen to employees, acknowledging their concerns and validating their emotions, while displaying compassion and understanding throughout the entire process,” Mains says. They can also provide feedback to human resources and company leaders regarding what they’re hearing from employees, potentially prompting the need for new or revised communication strategies and tools.
Leverant recommends communication training to ensure that supervisors and managers are conveying the messages the company wants conveyed in a way that’s designed to maintain relationships. The closer to the layoff, the more frequent communication should be.
In addition, Mangrum suggests that company leaders and HR should discuss the best ways to deal with employees’ reactions and prepare candid answers to the questions employees will ask.
It’s hard, Leverant says, to overcommunicate during a layoff. Frequent messaging is important. “If I’m in an environment where I want to bring these folks back, I would be looking at my cadence of communication to create a more frequent cadence,” he says. The communication should also be specific, offering ways to help.
“Throughout the transition period, supervisors and managers should provide regular updates and remain accessible to address any questions or concerns that arise,” Mains says. “For example, offering assistance with job search resources, resume building or networking connections can demonstrate continued support for the employees’ professional growth.”
In fact, perhaps the most useful thing companies can do to preserve relationships with laid-off employees is to help them find another job. The idea, Leverant says, is to provide “laid-off employees with a softer landing.”
Help with finding new employment, Mangrum agrees, can strengthen a company’s relationship with employees who are being let go. This might include everything from providing references to sharing contacts, she says.
Leverant recommends that employers partner with a variety of resources available to help displaced employees. Staffing firms are one possible source of aid, he says.
He points to the potential impact of two different conversations a supervisor might have with a soon-to-be displaced employee:
- Conversation 1: “Here’s your pink slip. I’m sending you home. Your last day is Friday. Thank you for your service.”
- Conversation 2: “Here’s what we tried to do. … Here are the efforts we took. … Unfortunately, your job has to come to a temporary conclusion this Friday. We hope to call you back soon. In the meantime, we’ve already engaged with XYZ staffing firm to coordinate potential positions for you to help fill in the gaps while we’re waiting for our business demand to return so we can bring you back into this job. And we’ll retain your tenure if we are able to bring you back.”
There’s a marked difference between these two conversations, Leverant says.
Mains agrees. “By offering support resources like career counseling or outplacement assistance, employers can demonstrate their dedication to assisting employees in navigating their future paths,” he says.
There are other important practical considerations as well, Mangrum notes. “Extended health benefits, along with a severance package, can help soften the blow to stressed-out, soon-to-be-unemployed professionals,” she says. Mangrum also recommends encouraging employees to take advantage of resources, such as employee assistance programs.
Staying in touch
Your relationship with your workers doesn’t have to end after you lay them off, Mangrum notes. “Reaching out to employees and asking about their health can be a good way to stay in touch,” she says. “Even better is providing tips and updates on whatever job connections have been made with other employers or reminders about resources available to them, such as unemployment insurance.”
This type of follow-up is important and appreciated, Main says. “Maintaining regular communication after the layoffs, such as check-ins or periodic updates, can help employees feel valued and maintain a sense of connection with the company,” he says.
Not all employees will be called back, and employers should be careful not to raise expectations. Even employees who may be called back may not be interested in returning.
Most displaced employees will have ample opportunity to find other jobs, especially in manufacturing environments, Leverant says, pointing to a national unemployment rate of about 3.8%.
He notes that at a recent board meeting of the American Staffing Association he attended, organization President and CEO Richard Wahlquist “mentioned that the reality is we’re seeing headlines on IT layoffs, but IT placements with those same organizations are at all-time highs.” The overarching theme, he says, “is there are more jobs than talent.”
Helping displaced employees find other matches for their talent can go a long way toward maintaining strong relationships and boosting the odds that they may someday return — or, at a minimum, that they will share positive feedback with others about your company and its products.