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Downsizing? How to Salvage Your Company’s Morale During & After Layoffs

Most managers will tell you that one of the most difficult tasks they have to do is to layoff employees when the company is reorganizing or downsizing.  Layoffs are often the result of positions being eliminated merely to reduce costs.  The truth is that there is no easy way for a manger to deliver the news; but it is something that must be done.  When an employer and its management team carries out layoffs with respect and attention to protocol, it is likely that the company may lessen employees’ pain, maintain morale among the remaining employees, protect the company’s reputation, and reduce legal risks stemming from the layoffs.

The decision to layoff employees based on downsizing or reorganization is not a decision made overnight.  Hence, an employer’s decisions regarding the actual process to terminate employees cannot be flippantly made.  Employers must take the time in advance to plan the logistics of when and how the termination process will be carried out.  For example, the notification of termination meeting should take place in a private room with a door that can be closed so other employees cannot interrupt.  Employers may choose to hold termination meetings towards the end of the day.  Additionally, employers should plan to have two employer representatives in the termination meeting so one may act as a witness should the need for a witness arise.  This might entail changing schedules.  Further, employers should arrange in advance final paychecks, payout for vacation time accrued but unused, and any paperwork or information required for COBRA or other benefits.  A company’s failure to take these steps in advance can leave the company vulnerable to potential legal liability.

Employers must also choose who will be handling the termination meetings.  Since the responsibility of holding the termination meetings will often fall on managers, employers must inform and prepare managers to handle the layoffs.  Two of the greatest stressors a manager faces when walking into a meeting to inform an employee of his or her termination are (1) the uncertainty of not knowing how an employee will react to the news and (2) not knowing how the manager will respond to the possible reactions.  To reduce these anxieties for the managers delivering the news, managers should be trained to handle different possible outcomes from terminating a worker’s employment.  It is a good idea to develop a script with bullet points managers can use in the meeting and that clearly sets forth what managers should say to remaining employees.  This will ensure that all employees being terminated and all remaining workers will receive the same message.  It is important that the company is truthful when explaining the reason for the layoffs.  Stating that the layoff is the result of the company’s current business or economic circumstances and is not based on the employee’s performance is likely to lessen the pain of the news.

When notifying employees that they are being let go, managers should try their best to quickly get to the point of the meeting.  While it might seem easier to make small talk at the beginning, no amount of small talk will soften the blow.  Mangers should aim to deliver the news succinctly, with compassion and respect.  It is important to explain that the employee’s position is being eliminated and that he or she is being laid off.  Be sure to provide the company’s reason for the layoff, but do not apologize for the company’s decision.  Managers should have an appropriate, thoughtful and consistent message they can convey to employees to help the termination process progress as smoothly as possible.  It is easy confuse the employee if the manager rambles or tries to beat around the bush because the manager is nervous and uncomfortable.  Remember to speak calmly and slowly when delivering the verbal notice and to pay attention to your intonation and body language during this meeting.  The manager’s delivery of the news sets the tone of the meeting and is likely to affect the employee’s response.

Once the manager gives the verbal notification that the employee’s is being let go and explains the reason why, the manager should ask whether the employee has any questions.  Prepare managers with answers to common questions regarding COBRA and benefits information, final paychecks, payouts for accrued but unused vacation time, etc.  Managers should carefully prepare to stay on message and remain calm when answering questions, even when faced with an angry or distraught employee.  Although managers will generally want to avoid explaining why an employee is being let go instead of someone else, managers can explain that the choice of one employee over another is the result of business requirement and that this difficult decision was made after careful review with the understanding that many good people, such as the employee, would be affected.

It is important for managers to understand that this event is dramatically impacting the person’s life and real concerns such as how the person is going to pay his or her bills, find a new job, and take care of his or her family are going to rush through his or her mind during this meeting.  It is likely that the news can trigger the employee to become highly emotional.  Regardless of the kind of reaction the employee has to the news, managers must remain compassionate and empathetic.  Although it is impossible to predict how employees will react to the news of their layoff, it is possible to prepare appropriate responses should the employee’s reaction make it impossible to continue the meeting.  A manager might ask employees if they would like to take a short break before they continue the meeting.

Prior to starting the termination process, employers must also decide who packs up an employee’s belongings from his or her desk?  Will the employee be permitted to say his or her goodbyes?  Some companies employ a one-size-fits-all policy regardless of the reason for the termination.  This may include the immediate escort of the employee out of the building after the meeting and having another person gather his or her belongings.  Or the policy may permit the employee to pack his or her own belongings with a neutral person observing.  Although these types of policies may be required in certain instances, it’s not likely that the policy is appropriate or needed when a good employee is being laid off.  It is important to treat employees with respect during this part of the process since many termination-related cases arise when the employee is most upset about the fact that he or she was treated poorly throughout the termination process.  Employers must also think about the kind of message they want to send to their remaining employees who are watching their colleagues and friends being let go and how that will affect their morale.

Employers must arrange for work redistribution and process changes among the remaining employees.  This entails deciding which employees have the skills and abilities to take on greater responsibilities or how employee roles must evolve to take over urgent tasks assigned to employees who will be let go.  Should the employer create new positions based on the work that is shifted to employees?  Would the shift of work require updates to job descriptions to reflect an employee’s added responsibilities?  Most importantly, the employer must take into consideration how the redistribution of work is going to affect employee morale.  If the employer fails to think through how the work is to be redistributed, the remaining employees will likely feel overwhelmed.  It is also likely that the remaining employees will decide for themselves what work needs to be done which can negatively impact the company’s overall productivity;  if management must make those decisions.

Finally, employers must take into consideration non-employees, such as vendors, partners, customers and others who may be affected by the layoffs.  It is a common mistake for employers to ignore those parties when downsizing or reorganizing because the employer is focused on the termination issues.  To preserve the relationships with those parties, employers should ensure that they’re promptly informed of the layoffs, that their relationship with the company will not be affected the layoffs, and that they are provided with an updated contact of the appropriate manager or employee they can speak with if their usual contact with the company has been let go.

It is no surprise that employers do not like to think about one layoff, let alone a serious of layoffs due to downsizing or reorganization.  However, because layoffs are always possible and can greatly impact employee morale, it is crucial for employers to take the time to make preparations for how the layoffs will occur and to anticipate the after effects of the layoffs.


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