Prolonged economic difficulties are forcing many previously healthy middle market companies to face the question of layoffs. This is an area that is ripe with potential hazards and might have unintended consequences if not handled correctly.
It is critical to understand that in most cases layoffs are best considered actions of last resort. Local human resources experts recommend looking at every possible option before going to the extreme of staff reductions.
Many companies have avoided laying people off by imposing a hiring and salary freeze, shortening the work week and changing the time-off policy, among many others. While these might not be ideal options, they often can help a company weather the storm and retain valued employees.
However, layoffs are sometimes unavoidable, particularly in today’s unprecedented market conditions. If this is the case, middle market companies are well served by carefully planning out the layoff process.
A key starting point is determining who to keep and who to let go.
“Look at the overall business needs today and in the future,” said Angela Hamilton, owner of Columbine Compliance Solutions. “Identify the key skills required to keep the business running. Know what people and jobs are hard to replace due to specialized skills. And, be aware of problems that might arise if someone you layoff goes to work for a competitor.”
Having a solid planning process will help managers stay objective and avoid personal biases as much as possible.
“Personality or value decisions can hurt you,” said Kit Nolan, an H.R. consultant with Colorado Springs ActionCoach business coaching firm. “There needs to be a system of checks and balances in the planning. Look at what people you need to run the organization and then be able to justify it. Have a good reason for keeping one person versus the other in terms of skills and not personality.”
Once you have identified the people you are going to let go, it is time to pay close attention to the way in which you execute on those plans. Be aware of legal issues. For example, the Worker Adjustment and Retraining Act sets out specific time limits and notification requirements for companies with more than 100 employees.
“Make sure you are not setting yourself up for a class action lawsuit which can happen if your lay off adversely impacts a large number of ‘protected class’ individuals,” Hamilton said.
Aside from the legal questions, it is also important to consider the human aspect.
“Always think of dignity and respect for those being laid off and for those who remain,” Nolan said. “I remind managers that it is always easier to give this news than to receive it. And, that they never know when they are going to be sitting in the employee’s seat so think about how they would like to be treated.”
When the layoffs are taking place it is really for management to be present and highly visible. Be available to answer questions and give the people the time they need to process what is happing to them and their families.
If the employees walk in and there are no managers at work that day and rumors of layoffs have been circulating, the level of anxiety, stress and uncertainty will go up for everyone, not just the ones being let go.
Nolan suggests following a pre-planned process.
Always keep it confidential. What is said in the conversation stays between the people in the room.
Have the employee’s direct manager in the room with you when you break the news.
Give them time to say their goodbyes. You don’t have to walk everyone to the door. Offer to help in the packing.
Give the employee the time they need. Sit with them for as long as it takes.
Set up a process and schedule with all departments involved such as IT to avoid embarrassing miscues. For example, make sure IT doesn’t shut the employee out of the system before they have been told they are being laid off.
Provide a phone number for the employee to call once it has all sunk in. They likely won’t hear much after the words “you are being let go” and will have questions the next day.
Too often management forgets about those people left behind. It is critical to communicate with the employees who remain to minimize disruption in business and make sure you keep the remaining employees and keep them happy and productive. Remember that you might have just laid off someone’s best friend or golf buddy.
Holding a day-after meeting is a good way to give employees who are left the chance ask questions and it gives management the chance to address employee issues and outline the new goals and assignments, Hamilton said. Letting employees know what’s going on and the role they play can help the company move forward and succeed.
Also, it doesn’t hurt to let employees know of the sacrifices management is making.
Ann Snortland, principal of Snortland Communications, is the spokeswoman for the Peak Venture Group Middle-Market Entrepreneurs. She can be reached at email@example.com.