As the COVID-19 pandemic has hit the world economy, many companies have had to make the difficult decision to let some of their employees go.
Handling layoffs can be stressful for everyone involved in the process. The entire workforce, from the employees affected by the reduction in force (RIF) to the HR managers carrying out the tasks, dislikes the layoff process, but in some cases, it can be a necessary evil. For a smooth and easy transition through the layoffs, the companies must understand the layoff process and plan it accordingly to operate the business efficiently and support the employees who are being let go.
What Is a Layoff?
A layoff can be defined as a temporary suspension or permanent employment termination due to various economic reasons. In these cases, the company may choose to let go of an employee.
To handle layoffs, consider these 10 steps to ease the downsizing process.
1. Prepare to communicate the reasons for the layoff: When enacting layoffs, management must have strong reasons for the reduction in force, as the decision will affect the lives of many people. It is wise to carefully communicate the reasons with the workforce, such as the economic impact on the company, revenue or market position. Consistently sharing the business basis for the layoff is essential to protecting the company's credibility and compliance with employment laws.
2. Establish a plan to execute the layoffs: Identify the positions you need to eliminate and formulate a cohesive plan to carry out the layoffs. Decisions such as the number of employees to be retained or required during the transition period, mode of communication with the employees, severance packages, advance notice to employees before the layoff, etc., must be made. It is important to check all the critical and legal implications of layoffs under the state laws before initiating the process. You need to work through all the intricacies before breaking the layoff news in the organization.
3. Identify your strategy: Layoff conversations will differ from person to person and will depend on the company's needs. It is essential for HR to identify which employees will be retained, which will be terminated and which may be furloughed or shifted to contractor status, and plan communications accordingly. You must also establish a systematic procedure with particular criteria for selecting employees to be terminated based on business aims such as performance, job classification, skills, salary or attendance. Also, consider whether it makes more sense to lay off a single employee from every department or perhaps an entire unit instead. You should also decide how long the terminated employees will remain at the company (for instance, two weeks). In addition, other employees would also need to be informed and asked to take on new responsibilities to maintain the workflow.
4. Evaluate and review the team members you’ve selected to let go: After identifying the number of employees or units for layoff, it’s time to analyze and evaluate specific employees based on various parameters such as work dedication, skill sets, cost of pay, etc. In addition to this, the employer can also refer to criteria like how long the employee has been with the company. After all necessary evaluations, it’s time to look inward and make sure you’ve made unbiased selections without regard to race, ethnicity, national origin, marital status, age, disability, gender, or religion, to avoid any legal issues.
5. Handle layoff meetings and talks carefully: The relationship between the employee and employer is the foundation of any company or business. During the cycle of employment, from hiring to onboarding, mutual trust is formed, which results in the success of the company. Similarly, in the same way, trust and relationships should be maintained during layoffs as well. It may be challenging to talk directly with the employees being laid off, but the employer needs to think through and express to the employee that downsizing is needed for the organization and required due to the economic conditions. A proper communication plan is necessary to handle the downsizing process, and is required by the HR and management teams to carefully communicate the news and to safeguard the image of the company and avoid any legal implications.
6. Offer incentives and benefits to transitional staff/employees: After selecting employees and determining the transitional period, help them understand their importance. For this, the company needs to consider providing incentives, retention bonuses and perks to the transitional employees so they’ll continue working efficiently and perform well during the transition period. When the layoffs are announced, many employees leave right away, even if they are required by the company to finish out tasks that remain in the final few weeks. This is why it’s helpful to provide severance to such employees to ensure that they stay and to keep their performance up to your standards during their final run of engagement with the company.
7. Select severance packages: To make layoffs less painful, severance packages are often offered to displaced employees, and this may also reduce the chances of legal actions against the company. In some states, there are mandatory severance criteria, which may include salary continuations, premiums, outplacement aid, continued benefits coverage, vacation pay, and employer-paid COBRA health insurance.
8. Consider the Worker Adjustment and Retraining Notification (WARN) Act regulations: If your company has 100 or more employees and meets qualification standards of the WARN Act, then management may be required to provide a 60-day notice to employees before letting them go. The WARN Act protects the employees and their families from mass layoffs and closings under critical circumstances. Apart from this, the company must check on similar state laws to comply with all rules and regulations.
9. Implement layoffs and inform the rest of the employees: After planning and discussing all the criteria, it’s time to implement the layoffs, explaining reasons to the employees, announcing and reviewing severance packages, and communicating that layoffs are unfortunately a necessary evil for the company to stay in business. Later, inform the rest of the workers about the layoffs to clear the air of anxious workers about the layoff situation. This will also prevent rumors from floating around related to laid-off employees. Encourage remaining employees to commit to work and meet goals, and try to stabilize the work environment after the layoff procedure is completed.
10. Offer support after a layoff: To build professional good will, it can be a good idea to express your sincere appreciation to employees. To keep up a healthy professional relationship, you can provide outplacement help to the employees affected by the layoff through a third-party service provider. Any professional assistance, including career counseling, job search help, or resume writing services, can help them during the layoff period. The company can also issue recommendation letters to the laid-off employees, which enhance their chances of landing new jobs and opportunities.