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Blunders made in laying off employees

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Guest Column: Emmanuel Zvada

Laying off workers due to financial reasons or because of a change in how the work gets done within a company is an unavoidable necessity for many businesses. Layoff is difficult for everyone involved in the process, but there are some actions that can make a bad situation worse. As if layoffs are not painful enough, many companies make matters worse by handling them poorly.

Handling layoffs in a humane way is important for the morale of both the impacted and retained employees left in an organisation.

The economic downturn is hitting a lot of companies hard and management is making tough decisions in an effort to reduce costs at the same time maintaining production. In these times, employers tend to make mistakes which, if avoided, would not only save money for the company but also insulate the company from expensive litigation. Here are the biggest mistakes being made by employers when implementing layoffs:

Lack of layoff plan and process

It should be known that all the layoff processes should be in writing and should be consistent and fair. In that sense management should decide which positions, groups, offices or departments need to be reduced but after proper scan of the impact and how again it is going to be done. There should be a written justification of the need for a layoff, a layoff policy, and a written procedure for selecting employees for layoff.

This is important as it reduces ambush style layoffs. This will also avoid practices about companies that use the element of surprise when laying off workers. For example, an unsuspecting employee arrives to work and given a letter of layoff unprepared. Laying off decisions by employers should be communicated in time.

A layoff occurs when there is a genuine business aim to eliminate a position or positions from the corporate structure. Companies who may need to reduce personnel in the near future should begin now with the corrective process, such as interacting with the employees and putting them on notice of the issues, developing a written action plan and giving them a reasonable opportunity to cure the problem. Then, if the company needs to reduce personnel in the future, the poor performers can be let go with much less risk to the company.

Overlooking impact of layoff decisions

When layoff decisions are made, HR should be tasked with conducting an adverse impact analysis. This process includes analysing the protected categories of each potentially affected employee in comparison to each other and to the workforce at large. The goal is to ensure that a protected group of employees is not being targeted, purposefully or not.

Moreso it is also important to note that layoff impacts on those left behind. Some of your employees may also be angry, confrontational, or withdrawn in response to the others who are affected by laying off.

Failure to communicate

Today communication is more important than ever. Have a communication plan in place for employees so that you do not catch them unaware. Call a group meeting or meet with staff one on one to let them know the reasons for the layoffs. Make sure that you allow time for your staff to communicate their concerns and ask questions. Do not forget that your laid off employees as well as those workers that remain in the workplace are the mouthpiece for your business.

Your staff can be your best word of mouth advertising, or your worst nightmare. When you do not treat your employees with respect and dignity; especially during difficult times, they will not be shy about letting others know about how they were treated or, how their co-workers were treated.

Failure to give advance notice

You can lessen the impact of being laid off by giving them as much advance notice whenever possible their job will be ending. Granting your employees advance notice may not always be the best approach based on your business needs and concerns, but it is the ideal and sensitive approach.

Sit down with your employee and briefly summarize the business reason for the layoff. Be prepared to give them a memo that briefly outlines what happens next along with a packet that contains information on their last day of work, the amount of money owed to the employee and of benefits if any.

If companies want to avoid reducing personnel through a layoff, they look to less options to save on costs. The following are the most popular options companies can also consider in an effort to reduce costs and overheads:

Job-sharing and virtual offices

Employment downsizing has become a fact of working life as companies struggle to cut costs at the same time ensuring survival. Job-sharing can also be another alternative where the company let two people share the responsibilities of one full-time position.

It is basically a form of part-time work that provides you with the equivalent of one full-time employee while giving the job-sharing employees the ability to keep their careers on track while allowing more time for other activities. If you can combine the skills of two employees into one position, job-sharing can help both employees keep their jobs, but will cut your hourly wage costs. This may not work for all employees, but for some, reduced hours may be a preferable alternative to losing their job.

You can also consider a virtual office where workers can work even if they are from home. This helps in freeing up office space to rent or downsize by keeping essential staff onsite and sending everybody else home to work remotely.

Hiring freezes and wage freezes

A hiring freeze is when an employer temporarily halts non-essential hiring to reduce costs usually when an organisation is under financial duress. It costs less to retain employees than to replace them, so considering a hiring freeze as an alternative to layoffs is better.

Separately, salary freezes are becoming more common as well. The employer basically informs employees that there will be no raises until further notice given the financial constraints the company is facing.

Cut part-time staff

Sometimes you have to let employees go. It is not because you are rationalizing, but because those employees do not add value to your company. If you have truly bad staff members, start trimming your staff that way. For contract workers it is legally easier and cheaper to end their employment or rehire as necessary.

Offer more unpaid time off

Whether mandatory or voluntary, unpaid time off is a great way for companies to cut costs without eliminating positions. Whether you offer employees the opportunity to skip work on Fridays or give them an extra two weeks of vacation to use or over the holidays, a surprisingly large number of employees will likely accept your proposal.

A layoff, like any other kind of important decision, requires people to think things through. It requires an agreement about your goals for the layoff, your criteria for achieving those goals, a process that clearly defines who’s going to be making decisions and a review of the process to make sure it’s been conducted lawfully. Sometimes, when companies are under a lot of economic pressure, they do not feel they have the time to think through how to conduct a layoff, thus taking shortcuts which can then get them into problems.

 Emmanuel Zvada is a human capital consultant and an international recruitment expert. He writes in his personal capacity.

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