Big corporate layoffs commonly happen before or after the holiday season; while retailers are frantically increasing and then decreasing their workforce to cope with holiday shopping, other organizations are shedding personnel before the start of the new fiscal year. And if you’re in corporate HR, you’re probably gearing up, if not for layoffs, then another big end of year initiative.
Last week, HP announced that it would let go 30,000 workers. This week, Groupon announced that it would let go 1100. Though HP’s layoffs will have a greater impact on the economy and the tech sector — as Fortune put it, 30,000 people is the size of a small city — both companies have significantly reduced their workforces and signalled the start of a long layoff season.
Layoffs aren’t confined to a single sector — when it comes to end of year right-sizing, they occur across the board. HP and Groupon aren’t the only firms making “corrections” through big layoffs. Caterpillar is set to shed 5000 jobs by the end of 2016, ESPN is cutting hundreds of jobs, and Boeing, after announcing layoffs in its satellite division, is expected by many analysts to announce plant closures in the wake of its deal to open several Chinese plants.
The Bigger Impact of HP’s Layoffs
Fortune counted down the top ten biggest layoffs of the past twenty years and HP’s cuts didn’t quite make the list. The list is a who’s who of recession and financial crisis spurred downsizing: IBM in the 90s, Kmart and Circuit City in the early 00s and Citygroup and GM in the mid 00s. HP’s cuts, expected to be between 28,000 to 33,000, may knock Bank of America’s 2011 30,000 job cut off the list, when all is said and done.
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Of course, HP’s cuts are the result of years of restructuring, and not quite the surprise that the financial crisis was in the mid 00s. In August, CFO Cathy Lesjak was hinting at big layoffs as part of a long term restructuring effort. By Business Insider’s estimates, HP has already laid off 50,000 people since 2012. This new round of layoffs, designed to help the company split up into smaller, more flexible organizations, would see the company eventually top Fortune’s list with 80,000 to 100,000 layoffs over the course of its five year restructuring. If 30,000 was concerning, 100,000 is downright alarming.
Are the HP layoffs a sign of a bigger crisis, or simply of a company in crisis? It’s hard to say. CNN Money has a good timeline of HP’s battle to keep the company together, and its eventual surrender. Although they’re framed as “Carly Fiorina’s” layoffs, the situation is more complicated than one CEO’s record. Current CEO, Meg Whitman, told CNBC that the layoffs were a result of the rapid pace of change in the tech sector: HP as it was, she said, just wasn’t capable of competing. Blackberry and a few other tech giants have been plagued by similar troubles, but the tech sector as a whole is holding strong.
The oil and gas industry hasn’t fared as well. Jana Kasperkevic, writing in the Guardian, reported earlier this month that
“Over the past year, the number of unemployed [Texas] workers in mining, quarrying and oil and gas extraction more than doubled, reaching 79,000 in July. That’s up from 34,000 last July. During that same period, the unemployment rate in the sector climber to 8.1%, up from 3% a year ago. According to Swift, which tracks layoffs in oil and gas industry, 176,162 jobs were lost globally in the field this year. Continental Resources, an Oklahoma oil company that track layoffs, found the US has cut at least 91,000 jobs in the energy industry since last summer.”
Meanwhile, some companies are using furloughs — another HP restructuring tactic — to stave off layoffs. While the unemployment rate has fallen to an encouraging low, “some workers have been let go with a promise of a job weeks or months down the road. Not fired, just furloughed – but no paycheck feels the same, no matter what you call it.” Kasperkevic points out that furloughs, or under-scheduling, are a structural necessity in the retail sector. While September marks the start of workforce increases and and bigger paychecks for workers putting in long hours, January and February will see marked reductions both number of workers and scheduled hours — effectively, the retail version of HP’s “voluntary” furlough. Employment statistics, then, rarely give us the full picture.
Leading During Layoffs
Crisis or no, HR practitioners and other managers still need effective strategies for handling furloughs and layoffs, especially when they’re working for organizations with an uncertain future. According to Tolero Solutions, 45% of workers lack trust in their employer’s leadership. That’s a huge hurdle for HR and middle managers to overcome — especially in companies like HP, that have already seen dramatic layoffs.
“How you handle a termination can determine how painful the event can be,” said Jessica Miller-Merrell, writing about layoffs here on B4J back in 2013. “A manager sets the tone for the termination before it begins. […] Being terminated or laid off is one of the hardest things a person has to face. It’s jolting and oftentimes demoralizing. Be respectful and understand that people are going to be upset when they are laid off.”
Rich Hein, writing in CIO, encourages transparency, honesty and “keeping the focus on the job at hand.” HP executives have had to backtrack on their layoff estimates, each time inching their estimates up higher and higher. But it’s middle management and HR, working on the front lines, who have to deliver the news to employees and at the same time, have to keep those kept on focused work. Transparency and employee engagement are key to preventing the spread of rumours and fear, and to keeping team morale up. Matt Brosseau, CTO at Instant Alliance told Hein that
“The first and most crucial action is open and honest communication with your team. In order to lead effectively you have to be trusted by your team. Share as much information as you can and allow your team to ask questions. This will stop the corporate rumor mill in its tracks and allow you to take control over the message that inevitably comes out regarding the layoffs”
Neither we, nor middle managers at HP, have begun to see the full scope and impact of the company’s layoffs. As far as the final tally of HP layoffs go, we can only wait and see. But in the meantime, we can prepare. Focus now on increasing employee engagement and trust — it’s not enough to start building relationships when your organization is in trouble — and consider how you can help not just team members who remain, but those who have been laid off or are moving on.