Let’s be frank, no matter what the state of the economy is, being a part of layoffs is never fun. In fact, it has been the worst part of my career in HR. Downsizing, restructuring, or layoffs can negatively impact your company’s brand. No matter how necessary for your bottom line, it is imperative to have a solid strategy in place to minimize the damage, not just to your product and brand, but also to your recruiting and employment brand.
No-one looks forward to downsizing, which is why so many CEOs and executives handle the process so poorly and why having a clear process and plan is so critical to help you execute layoffs with dignity and grace.
Before and During a Layoff
The critical decisions of who will be laid off, when it will happen, how much severance will be offered, and how much assistance to find a new job will be available is often left to the legal department, for good reason. The problem with that is the legal department’s job is to protect the company from litigation, not boost the morale of the company.
No matter how much notice you have before downsizing, I recommend partnering your HR leadership team with your legal department. Pull employee reports including your employee benefits report if available to aid in the discussion of potential liabilities the layoff could create for your organization.
It’s important to have frequently asked questions and resources handy. Displaced employees should receive a packet of information to help in planning and discussions for themselves and their families. These should include:
- Cobra and benefits information and costs
- Benefits end date including health insurance, dental, vision, and flexible spending account
- Recommended career support and resume writing services
- Outplacement training and resources if available
- Employee information change form (for addresses and other contact information)
Your Human Resources team is an expert when it comes to softening the blow of getting laid off. Keep legal in the background, absolutely protect your company from litigation, but let HR lead the actual layoffs.
Employment Laws Related to Layoffs and Closures
The Worker Adjustment and Retraining Notification Act of 1988 (the “WARN Act”) is a US labor law which protects employees, their families, and communities by requiring most employers with 100 or more employees to provide 60 calendar-day advance notification of plant closings and mass layoffs of employees, as defined in the Act. This is especially important if you are laying off a large number of employees.
Employees are entitled to notice under the WARN Act include managers and supervisors, hourly wage, and salaried workers. The WARN Act requires that notice also is given to employees’ representatives (i.e. a labor union), the local chief elected official (i.e. the mayor), and the state dislocated worker unit. This means you can’t simply announce a layoff or close an office without giving the impacted employees. Otherwise, expect to be fined if you are in violation.
Your state or city might have other laws, which is why I suggest you talk with an attorney.
Work Redistribution and Process Changes
Typically, when a layoff is planned strictly by your legal department, companies tend to lean towards a last hired, first fired (laid off) approach. This is to protect your company from claims that an employee was dismissed for discriminatory reasons. There’s a better way to handle this and remain legally protected.
You will want to work with your legal team to explore options if you choose to layoff employees in a different manner. For example, you might choose to offer certain employees a retirement package or option. You might also consider laying off employees who are poor or average performers. You, along with your legal team will discuss risk, considerations, and options for whatever type of decision your organization chooses.
Outside of the layoff itself, companies also need to consider the redistribution of the work. What key skills, activities, and responsibilities do specific employees or employee roles have within the organization and who within the organization will be able to take over urgent and important tasks and jobs responsibilities? Are new positions being created as work shifts and/or should job descriptions be updated to reflect these new responsibilities? Layoffs have larger implications than the employees who are being let go. They are also impacting employees through work distribution and process changes which could create a productivity bottleneck if organizations don’t think through the implications and the transition time needed to make the restructuring and process change.
This article is part of a two-part series on layoffs and restructuring. Subscribe to our RSS feed to be alerted when the second article is published.