The Art Of Handling Layoffs: What To Do When Layoff Are Inevitable
July 27, 2022
During economic downturns, employee downsizing is not simply a matter of cutting operation costs. More importantly, it is a reactive and tactical action representing business leaders' human resource (HR) and crisis management mindset. Conducting this in a manner that respects employees' contributions while keeping the remaining workforce's morale up has always been a huge challenge for companies.
1. A layoff decision is never easy but sometimes necessary
Automation and fierce global competitions are among the key factors driving an enterprise’s business transformation and HR strategy restructuring, thereby facilitating businesses to make breakthrough decisions. However, the decision-making can be difficult and comes with a price. Particularly, in light of the current global economic crisis and sluggish business growth, the rising labor cost has caused many business owners to scale down to save expenses. For example, top companies in several industries, such as Tesla, Netflix, Coinbase,… have conducted mass layoffs, with thousands of employees being forced to quit. Asia is not an exception as, according to DealStreetAsia, Shopee had a large-scale staff reduction in many countries, from Spain to Indonesia, Thailand, and Vietnam.
Nevertheless, mass layoffs are not the optimal solution to overcome difficulties due to the risk of damaging business’s reputation. No one is willing to work for a company with the constant fear of getting fired one day. The Harvard Business Review demonstrated that 41% of “survivors” after the company’s layoff experience a decline in job satisfaction with a 20% decrease in productivity. For this reason, businesses will confront plenty of problems in employee engagement, followed by difficulties in reaping profits in the long run.
“Layoff should be regarded as the last resort when businesses have no other choice. No matter how sensible a layoff is conducted, the act of restructuring the workforce will always be met with complaints from those forced to leave. This jeopardizes the company’s image in the perception of the remaining employees, increasing their aversion to the company. In the worst-case scenario, companies may face legal problems if the layoff is not well-prepared. Therefore, any decision made by the HR department needs to be considered thoroughly with preparation for possible situations, procedures to compensate employees, and provide support for employees after leaving.” – said Ms. Nguyen Thi An Ha, Head of Marketing and Strategic Partnership of Talentnet.
2. Soothing the laid-off employees, reassuring the survivors
HR restructuring strategy requires detailed preparation due to its direct impacts on various business parties, especially employees – the most disadvantaged and vulnerable group in these decisions. Therefore, the HR department plays a pivotal role in tackling these workforce problems, which require them to optimize business resources while simultaneously ensuring benefits for those who leave and reassuring those who stay.
According to Ms. Nguyen Thi An Ha, HR managers need to take notice of the following factors in order to implement a layoff decision in the right way:
2.2 Make layoff announcements with all due respect:
It is worth mentioning that every employee has been attached and made efforts for the common development of the company. Hence, if there is a decision to terminate an employee, employers need to inform and discuss with that person with mutual respect and empathy. They also need to truly listen to the expectations of their employees to come up with solutions that placate both the laid-off and the remaining staff.
2.3 Assist the affected employees in finding new jobs:
One of the most effective ways to support affected employees is to assist them in finding new jobs. Outplacement services provided by professional HR companies such as Talentnet are well-designed to help laid-off employees make the career transition easier. This is considered the most practical benefit as it facilitates employees to move on with new stable jobs while at the same time demonstrating the companies’ care and support even in difficult times.
There is no doubt that conducting layoffs is a tough decision for any firm at any time. However, as long as they bear in mind the principle of putting employees’ interests first, firms will figure out proper methods to manage the situation, ensuring mutual benefits for all parties and moving forward to achieve the goal of sustainable development.