July 26, 2023
July 26, 2023
Managing Layoffs as an Employer
Why is it important to talk about how to manage layoffs?
There is barely a week without the news of layoffs happening, which causes anxiety, stress, and pressure on those who are affected, those who are responsible for the business and have to take the hard decisions, and those who are witnessing how their peers are being let go. Layoffs affect everyone.
How to navigate the layoff conversation now and in the future?
Let’s remember that employees have a say in this conversation. When layoffs happen, the call for more transparency is strong - employees are owed to know why the layoffs are happening and are in a good position to ask this question.
Some companies may organise Q&As to clarify questions, others might not. At the end of the day, it is important for employees to understand the employer’s situation and clarify questions on how they can and will be supported:
- Financial support: generally companies pay a full notice and release employees from service. Others may offer an additional severance package which is depending on the employee’s age, length of service, and reason for termination. Thakre (2023) has published an article to describe what this can look like: “Layoffs and Severance Pay in Germany: What You Need to Know”.
- Mental health chats: this is usually a People & Culture initiative to check in with employees who need more support and it has proved to be a very much appreciated initiative by the team.
Which questions should you as an employer be able to answer?
Jobseekers who are looking for their next employer should also remember that they can establish very early on how a company is doing by creating an understanding of how they have been managing past recessions. Thanks to the many layoffs, more candidates started to ask questions that help them understand the business model, business performance, and this. is. good.
People have learned to co-own the discussion and ask during the interviews how the company managed uncertainty in the past. This helps to predict how they will manage ongoing or future uncertainty. Some ideas for questions:
- “Are you profitable as a business? What helped you achieve that?”
- “How did you manage COVID when most companies were laying off employees? Most importantly: How did you manage the layoff process?”
- “How did the management communicate hard decisions in the past?”
How can companies become more responsible?
Decision makers often do not consider enough that cutting their team apart and making it leaner breaks a lot of trust. And broken trust can translate into many things. For example, disengaged behavior at work or even taking the decision to leave on their own.
However, some businesses stay true to their values even amid adversities and put a lot of care and empathy into the process of facilitating the layoff. This, in return, allows them to continue building trust and bonding closer with the team who had to leave and those who stay.
So, what can employers do when resorting to layoffs as their last action to save the business?
Create a safe space as an employer.
- Give the team opportunities to ask questions from the leadership and other teams, leverage Q&A question forms to prepare the leadership to answer questions as transparently as possible and with a clear idea of potential consequences.
Transparency goes a long way
- Clarify regularly: How are we doing as a business? (Financially, growth trajectory-wise) and why?
- Share financial updates in monthly all-hands and explain the plan for moving this into a better place, as well as progress from the last all-hands.
- Host Q&As when finances become critical, present financial goals and gaps, and what it means for the business and the team.
- How much transparency is needed? - well, as much as you are able to explain and justify what happens as a result.
Check-in with each other regularly: The mental health struggle is real. Enforcing the feeling of stability, security, reassurance, and confidence is shared accountability!
- Managers to reserve some time for check-ins in their weekly 1on1s.
- Management to ask the People team to do coffee chats with some team members, and follow suit.
- Use feedback forms or anonymous pulse check surveys integrated with Slack or other tools.
- Organise a Mental Health Day or weekly sessions.
- Host virtual events to connect with the team.
Support affected employees beyond their contract.
- Refer them to your network or other people who can help
- Share a directory listing all employees affected and their details
- When you do see a job, tag people who might be a fit
- Offer CV checks & interview support
- More ideas for companies can be explored here in Rajnikant’s article on “The Consequences of Layoffs: Understanding the Impact on Employees, the Economy, and Company Morale” (2023.
Navigating the difficult terrain of managing layoffs as an employer requires a delicate balance of compassion and practicality. While the decision to downsize can be unavoidable in certain circumstances, it is crucial to prioritise open communication and transparency throughout the process. Treating employees with respect, empathy, and providing them with support, such as severance packages and outplacement assistance, can help ease the burden of this challenging experience.
Utilising this unfortunate situation as an opportunity to reevaluate organisational strategies and foster a culture of adaptability can ultimately help position the company for a stronger, more resilient future.