One question on the mind of employees as talk of a recession heats up: Are layoffs looming? No one wants to see reductions in force, but with economic volatility, it’s probably a good time for HR managers to brush up on best practices for employee terminations.
The big question for employers over the last year has been how to retain and recruit employees during “the great resignation” but the conversation may be shifting as talk about possible layoffs heats up in response to economic uncertainty. In the tech sector, numerous firms have been experiencing layoffs since the spring. Will this spread to other sectors?
U.S. unemployment is currently at 3.6%, and other economic indicators paint a mixed picture. There’s an uncertainty because we are in unprecedented times that puzzle even experienced economists. We are coming off more than a decade of growth, a once-in-a-century pandemic, global political turmoil, supply chain disruption, and more. Plus, we are experiencing a shift in consumer demands. During the pandemic, many companies grew to meet the unique needs of lock downs: tech services like Zoom and food and grocery delivery services like Door Dash soared, while retail and hospitality services constricted. Now, as we return to a post-vaccine world, consumer demands are changing again, with an impact on the workforce of various sectors.
Leadership analyst and HR expert Josh Bersin makes the case for why you should do everything you can to avoid layoffs and employee terminations in his post and podcast Be Careful With The Layoffs. It is worth your time. He offers several suggestions for how to tighten your belt and weather the economy through. But if your company is already planning layoffs, then take care to do them right. He offers 5 considerations:
- Every time you have a force reduction you damage your internal culture.
- Spend time making sure the process is fair and well communicated.
- Communicate with management clearly.
- Treat every person with respect.
- Don’t do it at all.
If your organization is planning layoffs or reductions in force, it’s essential to ensure compliance with relevant federal and state laws.
- Here is the EEOC on Avoiding Discrimination in Layoffs or Reductions in Force (RIF)
- The Worker Adjustment and Retraining Notification (WARN) Act has certain requirements for employers with 100 or more employees. See The Warn Act Compliance Assistance.
Additional legal compliance resources:
- Bloomberg Law: Federal Laws Affecting Layoffs
- HR.BLR – Layoffs
- State Employment & Labor Laws – Employment Law Handbook
- Planning layoffs? Don’t overlook these 2 key laws – HR Morning
Follow Best Practices
Employee downsizing, layoffs and terminations are one of the least favorite job responsibilities for most human resource professionals, but they are a reality nevertheless. We’re recycling the following tips from a prior post with best practice suggestions from Employco USA for ensuring that any necessary employee terminations are handled in the most compassionate manner possible:
1. Proper Procedure: During the termination, include all documents related to job performance such as work reviews and written warnings to prevent any misunderstandings, and have a witness present to oversee the proceedings. Be sure to explain clearly (yet courteously) as to the grounds for termination, avoiding debate on the issue. Handle the termination with a human element, treating them as a person and not a number, and be sure to keep the termination confidential to maintain the former employee’s privacy.
2. Outplacement Services: Typically hired by larger companies, outplacement firms can offer great assistance to recently laid-off employees. They provide help with resumes, hone interview skills, offer networking workshops and even access to life coaching.
3. Financial Transition Planning: This asset will help the terminated employee understand their economic situation and offer financial advice as to how their accounts should be handled. They can educate the employee on finding a new job that provides the necessary compensation to pay their bills as well as assisting with their 401k and overall retirement plan.
4. Severance Package: Organizations that offer severance packages to downsized employees are providing them with a resource during the transition period. Most companies compute severance payments using a formula that is based on years of service among other factors.
5. Offer Compensation Upfront: At the time of termination, provide the employee’s accrued salary to him/her in person with a paper check to avoid discrepancy. In addition, financially compensate the employee for any remaining vacation days or paid time off days that were left.
6. Resources: While not all companies may have the budget to offer access to an outplacement firm, that doesn’t mean they need to leave terminated employees out in the dark. At the very least, businesses can provide a list of resources and contacts where the terminated employee may seek assistance with their new situation.
Here are more best practices and other resources that might help in planning for layoffs or reductions in force.
- Harvard Business Review: Layoffs That Don’t Break Your Company – Better approaches to workforce transitions – This article looks at better ways to handle changing workforce needs that make sparing use of staff reductions and ensure that if they do happen, the process feels fair and the affected parties have a soft landing. Most successful approaches begin with a philosophy that spells out a firm’s commitments and priorities, establish methods for exploring layoff alternatives (such as furloughs, retraining, and reassignments), and determine options for three scenarios: a healthy present, short-term volatility, and an uncertain future.
- Harvard Business Review: How to Support Your Remaining Employees After a Layoff – Amid layoffs related to the COVID-19 pandemic, it’s imperative to recognize the feelings and accommodate the needs of employees still in the workforce who are dealing not only with seeing colleagues lose their jobs but also with personal challenges that are often invisible, undefined, and complicated. Leaders must show that they care by communicating transparently about the situation and listening while workers process survivor guilt.
- Insperity: Downsizing business: How to manage downsizing employees – So, you’ve made the decision to downsize your workforce. Chances are, this wasn’t an easy decision. But nonetheless, here you are, preparing to lay off a large percentage of your staff. And you know, if this process isn’t handled properly, it could cause a huge disruption to your business. When downsizing a business, you must be proactive – look at the long-term problems and goals. It’s not going to be easy, but with these six tips you can minimize the disruption and negative effects that downsizing can have on your business
- The Balance: What Are the 10 Best Practices If You Must Do Layoffs as an Employer? – Take These Steps Carefully to Protect Your Business and Remaining Employees.
- BLR – 10 Sins of Employee Termination – HR Daily Advisor says, “Terminations are no picnic for anyone, but since they are the genesis of many lawsuits, it’s worth learning how to do them right. Handling them carefully can save cash, calm frayed nerves, and maintain morale and productivity.” Also see the video series of the same name.
- Paychex – Separation of Employment: An Essential Checklist – An essential separation of employment checklist to help you maintain best practices through this complex and challenging task.
- Indeed: What Is Employment Separation? (Definition and Types)
Prior related posts on HR Web Cafe