Over the past five years, layoffs have become an undeniable fact of life for millions of Americans, and even today as we slowly recover from the great recession, layoffs continue. For example, in June, there were 4.3 million total separations, according to the Bureau of Labor Statistics.
And as painful as they may be, layoffs are sometimes necessary to allow a business to reorganize or restructure to remain viable. If they are not handled correctly, however, a reduction in force could be devastating to the future of a company. Research done after the economic downturn in the 1990s found layoff survivors had high levels of distrust and lower levels of motivation. In addition, absenteeism increased and productivity decreased.
“The keys to effectively managing a layoff are planning, communication and treating people with dignity,” says Jerry Miller, vice president, marketing, at Executive Career Services. “Your goals should be to preserve morale and the intellectual capital of the organization and to avoid litigation.”
Smart Business spoke with Miller about how employers can mitigate the negative effects of layoffs when they become necessary.
What role should planning play with managing layoffs?
Planning encompasses numerous areas, so you need to first understand the reasons for having the layoff in the first place. What do you hope to accomplish? You need to determine what the company will look like going forward — post-layoff.
Then you’ll need to decide which positions are going to be eliminated and why. Also, how much notice will be given and what type of severance packages and other benefits will be provided, including outplacement assistance? While you don’t want the legal department to drive the layoff, you need to know the relevant laws and understand all the legal ramifications. Some of the more important laws to be concerned with include The Worker Adjustment and Retraining Notification Act (WARN) and laws dealing with age and other forms of discrimination.
Finally, and very importantly, you’ll want to formulate your communication strategy, both during and after the layoff. Once the planning process is complete, move swiftly. Don’t drag things out. Word travels fast in an organization and you want to stay ahead of rumors.
How does a good communication strategy look during a reduction in force?
Once the implementation phase begins, communication should be wide and frequent. A critical component of this phase is the notification meetings, which should be conducted by the immediate supervisor or department head, and if the meeting is expected to be especially sensitive, a representative from human resources. This is not a time to delegate. It is critical that these managers, particularly if they have never delivered a layoff notice, be coached in how to conduct the notification meetings. If you are using an outplacement firm, it will be able to provide this type of coaching.
What do managers and department heads need to keep in mind during a notification meeting?
Information packets should be prepared in advance with all the necessary information. Expect that impacted employees will likely be in a state of shock after learning of the job loss and much of what is said afterward will not be heard or understood. They need information to take with them to read when they are finally able to process the bad news. Notification meetings should be private and take place as early in the workday as possible on a day that is not immediately prior to a weekend, a holiday or a planned vacation.
The impacted employees must be treated with dignity and respect. They will share their experience with survivors, and if they are not treated appropriately, it could have a very negative impact on those remaining. Managers should imagine themselves on the other side of that table and treat their exiting employees as they themselves would like to be treated. Be brief and direct in the notification meeting. Anticipate emotional reactions and be prepared to deal with them. Don’t engage in small talk or allow your anxiety to cause you to say something to ease the immediate situation that can’t be lived up to. Explain that positions, not people, are being eliminated. You want to be sensitive to the employee’s situation but direct and firm, making sure he or she knows the decision is final and non-negotiable. Tell employees how much you appreciate their work and thank them for their contributions. Finally, direct them to the next step in the process.
How should an employer handle the remaining employees?
Oftentimes a company is so focused on the layoff itself that it loses sight of the impact on the survivors, but doing so can cause significant problems later. This is where leaders need to lead. Meet with the remaining employees to discuss the layoffs in an honest and forthright manner. Share the latest company news with them and commit to keeping them informed. Acknowledge their emotions and give them time to deal with them, but not too much time — don’t allow them to engage in endless carping or complaining. Work must go on. Managers should lead by example. Be positive but also realistic. Discuss the workload and how it will be distributed, perhaps even asking the team what they would recommend. Keep lines of communication open and check in regularly with individuals. Above all, be available to remaining employees. Don’t spend time in your office with the door closed.
Remember, how you treat people matters, to those impacted as well as to those who remain. If you plan effectively, communicate openly and often, and treat people with dignity and respect, a layoff can be done with minimal disruption and little or no negative impact on the organization going forward.
Jerry Miller is a vice president, marketing, at Executive Career Services. Reach him at (949) 251-5600 or email@example.com.
Insights Human Capital Solutions is brought to you by Executive Career Services
Nick Fortine had to face a 40 percent drop in business as the retail sector put on its capital expenditure brakes in 2009.
Fortine, the president of CSC Worldwide’s Retail Specialty Group, which makes fixtures such as fitting rooms, display walls and cash register stands, was startled, but he knew he had to act soon.
“I was particularly surprised by the level at which capital expenditures stopped in the specialty retail sector,” Fortine says. “We had to create a strategy rather quickly based upon our new reality.”
Once Fortine examined the landscape, he made a bold decision to downsize personnel but to invest ? by adding people ? to the sales team. The company hired a handful of sales associates at the time it was laying off an equal number on the operations side.
“At the beginning of ’09, we knew the future was far from certain,” he says.
“We also knew that if we took our foot off the gas on our selling efforts, our pipeline would quickly dry up.”
Fortine knew that in many businesses, including fixture manufacturing, relationships with prospects and opportunities to sell usually take from several quarters to years to develop.
“So when spending picks back up, you need to have new opportunities queued up,” Fortine says.
In the meantime, when the dust is settling, it’s time to get started with your new strategy.
“As a leader during periods like these, first of all, your team needs to know you have a plan,” Fortine says. “Then they need to understand the plan, believe in the plan and buy in to the plan. They need to know that you are a part of a plan. You are there to support and assist them and to successfully execute that plan.
“A natural result of adversarial times in a workforce is tension, fear, doubt and uncertainty about the future,” he says. “During periods like those, open and frequent communication about the state of the business, the strategy, the goals and measurements against those goals is really critical. In fact, it’s always critical in a business, in good times or bad.”
A key factor is to make sure that everyone understands the steps you are taking to move the business forward given the environment.
“People are much more effective at doing their jobs when they know that they are aligned with the overall goals of the company,” Fortine says. “People perform much more effectively when they are not running scared but rather when they feel like they are empowered to go make a difference in the business. That is the biggest challenge and how you overcome it is by making sure that the people left truly understand what their role is in turning this situation around.”
You need to be positioned to find and win new opportunities all the time.
“While the economic environment is still unpredictable, you have to keep selling throughout,” he says. “You need to be positioned to find and win new opportunities all the time. When the market experiences the inevitable upswing that will come in the future, and those levels of spending return, you will be very confident in your position to take advantage of that.”
While the new sales representatives were getting their feet wet, Fortine was coaching the remaining employees on the new strategy to keep selling and to do more with less. It was critical for them to understand their new roles.
“We needed to explain that if we wanted to sustain our business long term, you don’t do that by laying off sales people,” he says. “You’ve got to always be selling.”
While this wasn’t a company culture makeover, Fortine felt it added a new dimension to the culture.
“I really believe it changed us culturally,” he says. “Your associates should really learn to think creatively about new approaches to managing the business. You have to continually ask yourselves and challenge each other, ‘What can we do to make this better?’ and ‘What can we do to make this easier, more economical, take less time?’”
How to reach: CSC Worldwide, (614) 850-1460 or www.cscww.com
Recreating positive sales and service experiences is an effective way to add to your bottom line ? once you know your strengths and weaknesses.
“You grow by continuously finding ways to do what you do more effectively,” says Nick Fortine, president of CSC Worldwide’s Retail Specialty Group. “You become more honed in doing what you do best.”
The best way for you to hone your business performance is to review the customer satisfaction level.
“Your clients will be very clear about how they believe you are doing,” Fortine says. “Continually ask them. If you are growing, if you’re profitable, and if your clients are happy, you know you are doing the right things.”
You should also believe also that your strength is your domain knowledge in the market.
“Knowing what it takes to pull off a world-class product rollout and translating that knowledge into exceptional service and program results ? that’s your differentiation in market,” Fortine says. “Believe that you do that as well as anyone in market.
“Spend all your time trying to recreate those success patterns by finding opportunities and serving more of them. Become really focused at what it is you do well and knowing what it is you don’t do well. Spend your time concentrating on just getting better and better at what you do really well.”