The Best Way to Handle Layoffs
One of the hardest things anyone can go through and that any organization has to do is to let go of people. It is called many things: “downsizing,” “right-sizing,” “streamlining,” “layoffs,” and so on, but in every case someone loses their job. It has profound effects on those being laid off, those who deliver the news, and even those that survive the layoff. Studies have shown that job loss can be a significant emotional event. Only ranked higher on stress scales are death of a spouse or child, divorce, imprisonment, coping with serious illness, extraordinary debt, and homelessness. It is startling that despite such wide ranging negative impacts, many organizations do this difficult task in such a poor way that the remaining negative effects become exponentially worse. There are better ways to handle layoffs.
According to the US Bureau of Labor Statistics, our most recent national recession has hit its peak. However, that does not mean that businesses, especially in Alaska, will begin to staff up. With our strong reliance on the oil and gas industry and low oil prices, cuts to related industries, education, and state and federal workforces are already being felt, and more reductions are on the way. It is crucial now, more than ever, for companies to create strategies to transition talent during down times, provide programs and opportunities for remaining employees to develop in order to retain them, and attract new talent when the economy rebounds.
Most organizations have core values that state how important their employees are. More and more studies support the link between values-driven organizations and long-term profitability. Yet when tough times come calling, many organizations throw what they said about valuing people out the window and just hand out pink slips. Layoffs need to be strategic and done with compassion or your company will be seen as heartless and will have a difficult time recruiting when the economy does rebound. How you treat people in tough times is the truest measure of what you really value.
Don’t Wait Until the Last Minute
Let’s face it—no one volunteers for the task of telling someone they are getting laid off. Managers often will postpone taking action because it’s unpleasant until they have no other choice. The attitude and approach of managers is, “I am sorry, there is nothing we can do.” The truth is usually that they saw it coming some time ago but avoided taking any action on it or preparing for it. Planning and preparing for layoffs so that affected employees can have a facilitated transition is the first step in reducing the pain of everyone involved. Severance packages and extended benefits go a long way to reducing the pain for all parties. Unless significant pre-planning occurs, exit packages seem to be trending to becoming a thing of the past. They also aren’t always fiscally possible in smaller companies. Still, much can be done with enough pre-planning to soften the sting of losing a job.
Demonstrate Respect and Compassion
Negative reactions to termination can have a lasting effect on a company’s image for years. Employees who receive support and are treated fairly when terminated usually do not speak out publicly about how bad the company was to them. Using outplacement services reinforces a positive view of the company by employees and the community. The way separations are handled can impact productivity, recruitment, and retention. If handled poorly (without compassion), valuable remaining employees are more likely to look for opportunities outside your company. According to the Society for Human Resource Management’s 2015 report “Employee Job Satisfaction and Engagement,” the top five contributors to employee satisfaction and engagement in a 2014 study are:
- Respectful treatment of all employees (74%)
- Trust between employees and senior management (64%)
- Benefits, overall (63%)
- Compensation, pay overall (61%)
- Job security (59%)
Understand Job Loss Can Be a Significant Emotional Event
The first forty-eight hours after being notified of job loss are critical. It feels like a death has occurred and support is critical. Early intervention makes a difference by encouraging employees to look forward to a new future, rather than looking backward angrily at their former employer. Outplacement support of a career coach or similar service enables employees to transition into new jobs more quickly and successfully.
Companies that offer outplacement services to former employees reinforce their commitment to their workforce, even in the midst of financial loss, mergers, acquisitions, or management changes. Commitment has a big impact on employees who remain as they typically accept new responsibilities as members of a leaner team.
Support Individuals during Changing Staffing Needs
Employment downsizing is often implemented during economic downturns as a reactive, tactical action. However, the most successful organizations use downsizing more strategically as part of overall workforce strategy. When organizations decide to take the difficult step of letting people go, outplacement services reflect the organization’s ability to be strategic and commitment to their core values.
Invest in the Survivors
Layoffs also affect those left behind. A lot of the work is still there, but now there are fewer people to do it. Acknowledge the losses of friends and coworkers since the survivors will be experiencing grief on several levels. Supporting survivors means coaching and allowing creativity to come forward in order to keep things going. Investing in employee skill development is usually necessary as well. If you planned well for layoffs then transitioning of job duties occurred before employees were let go.
History of Outplacement
Outplacement as a business service was created in the mid-1960s to support senior executives. Through the 1970s and 1980s the services continued to expand with the 1990s experiencing a flourishing of the practice. In the past decade there have been significant changes across the global outplacement marketplace. Trends include lack of face-to-face meeting with individual coaches/consultants and primary delivery of services through web-based seminars. Technology can provide strong support for strategies but cannot substitute for personal contact and understanding.
Anyone who has ever been laid off or terminated knows the pain that occurs with loss of income and job security. By planning in advance and supporting transitions there is much that can be done to ameliorate this already difficult situation. Done well it assists those affected in preparing for and achieving the next chapter in their success.
Deeta Lonergan, M.Ed., owner of Career Transitions, is a Master Career Counselor, trainer, and facilitator with twenty-five years of experience supporting and guiding individuals and organizations during change and transitions. She is an expert in designing and delivering outplacement programs and services. Contact her by phone 907-274-4500, visit careertransitions.biz, or email email@example.com.
Kevin M. Dee has a master’s degree from Vanderbilt University and is the president of KMD Services & Consulting. He has more than twenty-eight years of experience providing leadership development, organizational development, and human resource services in Alaska and internationally. Contact him at firstname.lastname@example.org.
This article first appeared in the January 2016 print edition of Alaska Business Monthly.