As economic uncertainty looms over the U.S., many employers have been left to make challenging budgeting decisions. There are a variety of reasons an organization may downsize its workforce, including cost-cutting, economic declines, mergers, and more. Regardless of the reason, there are proper steps employers and management teams must take.
Before considering employee layoffs, an employer must evaluate the risk of properly managing federal and state regulations. Discharging a single employee can expose an employer to legal claims such as class action or collective action lawsuits. Employers may experience ongoing communication with former employees in terms of benefits administration, reference requests, verification of employment, and possibly responding to lawsuits.
Why Layoff Employees?
Layoffs often are the result of cutting organizational costs. According to SHRM, cutting compensation and benefits typically represent half of a company's total operating expenses. As a result, organizations looking to reduce expenses tend and tend to look towards removing employees.
Layoff Alternatives
Employers who are considering layoffs must understand the importance of considering every alternative. Finding and implementing workplace alternatives rather than cutting employees can be done with a proper human resource management team. Alternatives to layoffs include:
- Reducing hours worked
- Adopting a Voluntary Separation Program (VSP)
- Identifying and removing wasteful practices
Selection Criteria
It is important to carefully consider why you are laying off that employee. By using the proper criteria, employers may use this as a defense against any legal or discrimination allegations. When conducting a layoff, employers must be transparent about the criteria.
The following are examples of selection criteria:
- Seniority-based selection
- Employee status-based (full-time, part-time, contingent status) selection
- Performance-based selection
- Skills-based selection
Best Practices
Once it has been decided that employee layoffs are the best option for your organization, consider the following steps to begin to process.
Planning
Careful planning is required to complete layoffs properly. From the beginning, employers should be considering alternatives to communicating the layoff. Planning must also go into post-layoff reactions and considerations.
Team selection
When it comes to choosing a team to dive into the criteria set, you want a diverse team. This will maintain employees from experiencing bias and allow them to focus strictly on the task at hand.
Keep it professional
When tasked with implementing a layoff, employers must allow their employees to know why this is happening and the decision process behind it. Developing a clear message and a united front will show that the decision was thoroughly considered.
Emotional impact
While this is a challenging time for the employer and employees, there are new challenges to consider. When delivering the news, treat your employee with kindness and compassion. It is important to consider the compounding effect on their family and future. Retained employees may have new responsibilities that may take time to implement.
Show Your Support
There are many ways to ease the impact of the layoff on employees. Offering a separation package is one way that businesses can provide employees with financial benefits. Reach out to other local employers and see if they would consider hiring any lost employees.
Employment Assistance Programs (EAP) can help manage employment separations. Implementing an EAP provides a confidential source that your employees can use to find support and resources for certain challenges they face.
Re-recruit Your Staff
During this time, you want to put emphasis on communication with your employees. This is the time to re-recruit your remaining employees. It is not only vital to show support, but also your commitment to the current staff. Reassure your team and let them know that you are invested in them. Place an emphasis on the organization’s mission to ensure your business continues to thrive.
GMS’ Support
Employee layoffs can leave a lasting impact that goes beyond the employee and employer. When you experience setbacks within your business, allow GMS to step in. Our team of HR experts can help you find and weigh your options. Ultimately, if you decide employee layoffs are what is best for your business, our team will ensure the layoffs are completed properly. When you partner with GMS, any setback can be turned into a comeback. Contact GMS today to learn more.