Laying Off Employees Who Don’t Expect It: consider the alternatives & don’t destroy morale

Question:

            Our employees don’t realize our company is in financial trouble, but we are. We’re over-staffed, and it’s my fault. I kept planning on the future and was too optimistic. Our management team has pored over our sales and financial projections, and it’s time to admit the truth. We must thin our ranks and lay off nearly 30 employees.

We’ve talked about staggering the layoffs over the next eight weeks and have decided to instead rip the bandage off. Most of those we’ll lay off are remote workers, however, the empty offices of our regular employees will be painful for us all to walk by.

How do we tell the remote employees we’re laying off? We’ve talked about a Zoom meeting, telling everyone at the same time. We’ve discussed bringing them into the offices, but we’d like to minimize the disruption that might cause.

Also, the last time we laid off employees, early in the pandemic, morale took a nose-dive. We can’t afford another productivity hit, as it would force us to lay off more employees. But we don’t want to say this and scare everyone.

Answer:

            Have you considered the alternatives to layoffs?

            It sounds like these layoffs will shock your workforce. Have you considered all the alternatives your company has to layoffs? Could you reduce hours or salaries for a larger number of employees? If you transition from a five-day workweek to a four-day workweek, you can cut payroll by twenty percent. If you offer employees five weeks of vacation annually, of which two are paid, many of your employees may see this as a perk and that can thin your ranks. Have you asked your employees for cost-cutting ideas? Or, it is too late, and layoffs are your only solution? If so, review how you chose who to lay off. Was it last-in, first out? Merit-based? Or the skills you’ve determined your company most needs for the future? You’ll need to explain your selection criteria if your decisions get challenged.

The layoff meeting

            To the extent possible, conduct layoff meetings in a private office, in person and individually. Treat each employee with respect and empathy. For your remote employees, have your HR officer or the manager closest to the employee videoconference the employee individually. You’ll say something such as, “I’m sorry to tell you we’ve made the difficult decision to eliminate your position. Because we don’t have another position to offer you, we need to lay you off.”

            Don’t wing these meetings but prepare for each one with a list of talking points so you don’t forget to provide crucial information your employee needs. Direct, employee-centered communication works best. Let each employee know the amount of severance you plan to provide and give them details about their insurance—whether it’s to the end of the month or available to them via Cobra. Because your employee is the one losing their job, don’t talk about how difficult the meeting is for you, and don’t discuss the employee’s negative performance if the reason for the layoff is downsizing.

            Prepare for any questions your employee might have and hand them an individualized letter of reference, along with information on any outplacement assistance you’ll offer. For example, some organizations allow employees resume writing and job-hunting coaching. Give your employee a written notice of layoff, along with enough time to read it during the meeting. Thank each employee for their service. Each laid off employee will remember how you treat them, and many will tell their former coworkers their views of you.

            Prepare as well for your employee’s emotions. Some employees cry, others get angry. Allow your employee to express their emotions. They’ve seen your recent growth and now you’re throwing them a curve ball. If you lay off long-term employees, you’ll stun them. If you lay off those you’ve recently hired, who left secure positions to join you, they’ll believe you should have seen this coming. Listen, have compassion, and don’t react.  

            Retained employees

            From what you’ve said, these layoffs will shock your workforce and make them wonder what might happen to them or your company. Let your employees know why you made the layoff decisions during an all-hands meeting, but don’t discuss why you laid off one employee and not another.

Allow your employees to ask questions, so you can give them as much reassurance as possible. If you straight-forwardly communicate your company’s financial position, you’ll squelch rumors.

            In the next four weeks, communicate individually with each retained employee. Layoff survivors have emotions. Listen. You’ll likely be relying on them to take on more work and not immediately search for new jobs. Recognize their efforts and thank them. Let your employees know the future you envision, your company’s progress toward it, and invite them to ask questions and offer suggestions. In other words, invite your employees to be part of the solution. You need them.

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3 thoughts on “Laying Off Employees Who Don’t Expect It: consider the alternatives & don’t destroy morale

  1. Nice answer and process. I agree the key issue is whether it’s too late to engage employees. If it is, one of the elephants in the room is the process of planning and earlier decision making that resulted in the situation that needs review. I was also pondering how the current crunch for employees plays into this… assuming a few more leave because of the layoff… I’d be trying to keep as many as I could handle and not just right-size for the moment. On the other hand perhaps the owner has contacts with others in the industry and can help with placement at firms anxious for good employees.

  2. Working on construction, I never had a “permanent” job. Layoffs were expected when the project was finished. I preferred a “remote” job that paid room and board. Frequently, my current employer didn’t have another remote project on the horizon.

    My “solution” was to plan ahead using the likely duration of the project as a yardstick. I would search for remote projects that would be kicking off during that time frame. Especially now, no job is 100% secure. This is no time to get complacent with one’s position in the workforce and economically, the worst time to wake up unemployed. It wouldn’t be a stretch for employees to continually keep an eye on positions that they are qualified to fill. Doing this, should lessen the angst of the “l” word.

  3. These are tough actions, and the suggestions of how to deal with them–in private with empathy asking employees for cost-cutting ideas, making some smaller reductions, as in workweeks or extent of vacation, are wise but still hard ones. Best wishes to employers and their employees who face these.

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