Based on a NPR/PBS NewsHour/Marist Poll, 1 in 5 households have experienced either a layoff or a reduction of work hours. In the matter of weeks of instituting stay-at-home orders in early March, nearly 20% of the nation’s workforce was either out of work or earning less.
Despite applying for a variety of PPP loans or federal assistance, companies have either closed their doors or continue to struggle while holding on. No one can predict what’s next, but once the PPP money is used up and if nothing changes with getting back to business as usual, more company layoffs will be inevitable.
The Right Approach
If you’re facing making a layoff, how do you know what to do and when? First, a company must decide if conducting a layoff is the best decision in response to the COVID-19 pandemic. Second, the company will have to come up with a plan on delivering the news. The way a company implements these types of decisions will undoubtedly have an impact on employees who leave, but equally on the employees who stay.
Effectively handling a layoff is the difference between preserving your company’s reputation – or destroying it.
Before deciding that this is the right decision for your company, it’s important to ask:
- Are layoffs necessary?
- Is there an alternative solution? For example, reduction in salary, fewer hours, or furloughs?
- Which employees would be laid off?
- How would you deliver the news to your organization?
- How would you help the laid off employees?
When sales and revenue suddenly and rapidly decline, it’s tempting to want to immediately reduce your labor costs to offset the lack of income. However, it’s important to know that layoffs are not the only way to reduce company expense.
Evaluate All Options
Alternatives to conducting a layoff could include voluntary pay reductions. These are often preferred by employees to save jobs within the organization. A second option is to reduce the number of hours assigned to employees which would help reduce payroll expenses. A third alternative is to have a furlough, which would be a temporary layoff from work while keeping their benefits in place. Usually an employee will return to their position once business improved, and provided they did not find another position.
Determining which employees stay versus which employees are let go is not an easy task. Choosing the right individuals to layoff is a lot like choosing who to hire. You have to evaluate critical skills needed for your company to function short-term and long-term when business turns around.
Effective Communication is Key
Communicating With Remaining Staff
Once the decision to move forward with a layoff is made, now you must decide how to communicate the news – both to the affected employees and the remaining employees. Determining what works best for your organization will largely depend on the size and structure of your company. The options could range from holding individual meetings over Zoom, pre-briefing employee’s managers, or meeting with the entire team. One way to help surviving employees handle the news better is seeing how a company is helping the employees who are departing.
Communicating With Departing Employees
Losing a job is never easy. Especially when you consider how much change nearly all of us have undergone with adjusting to working from home, helping your children with e-learning, and more. When HR delivers the news it’s important to be prepared to answer questions employees will have about their departure and to proactively offer information even if they do not ask.
According to Harvard Business Review, there are seven critical questions you should be prepared to answer:
- When will I receive my last paycheck? Will I get paid for my unused vacation time?
- Will I receive severance pay?
- How long will I have to exercise my stock options?
- Is the company offering healthcare coverage after my last day of work, and for how long?
- Will you provide a reference for me?
- How can I get copies of my performance reviews and by when?
- What will happen to my 401(k)?
Focus on Respect and Next Steps
It’s important for employers to communicate that a layoff is not based on the individual’s performance. They need to be reassured that this is solely based on the current economic conditions caused by COVID-19. One way a company can help laid off employees move on with dignity and respect is to provide outplacement services, which offers support to find a new job. Services may include resume and LinkedIn profile reviews, interview coaching and image consulting, professional assessments, career counseling and more.