Sooner or later, it happens to every business — layoffs. Though you might be booming now, eventually you will have to dismiss your employees for the sake of success. Even prosperous businesses endure layoffs when they eliminate departments or merge with other companies; it is a truly unavoidable activity, and the sooner you get used to the idea, the better.
Still, there are wrong ways to dismiss your employees. By botching the layoff process, you can cripple your brand and endanger your business’s future. The following stories detail six common mistakes committed during layoffs. By learning from other companies’ errors, you can keep control of your business even during the miserable process of layoffs.
1. Timing
There are dozens of examples of companies laying off employees without consideration of appropriate timing. For example, in 2014, AOL Patch’s COO informed hundreds of employees that their jobs had been cut — over a massive conference call. Later, in 2015, hundreds of Twitter employees discovered they lost their jobs when they could no longer log into their corporate email.
No employee should be blindsided by your decision to let them go. You must announce layoffs in an appropriately formal setting; then, you should inform each laid-off employee individually, giving them time to understand and accept the situation.
2. Offerings
Gazillion Entertainment, a video game production company, was notorious for difficult working conditions — but that isn’t uncommon in the competitive and fast-paced video game industry. What is uncommon was Gazillion’s severance package, or lack thereof. Upon being laid off, not only did Gazillion’s employees fail to receive severance, but they were also refused reimbursement for their accrued PTO.
Many employees give everything to their jobs: their time, their energy, and their passion. The least you can do is provide outplacement services that assist laid-off employees in acquiring new employment after termination. Before you start letting anyone go, you should understand what is most valuable to your employees — cash, connections, etc. — and offer it to those impacted by layoffs.
3. Morale
About a year ago, NerdWallet was one of the most celebrated employers thanks to its amazing benefits and outstanding employee engagement. At the end of 2017, NerdWallet just finished the last phase of a planned three-tier layoff that has taken months. As a result, employee engagement has tanked and morale is at an all-time low.
The sooner you get layoffs over with, the better. By drawing out layoffs, you are only increasing your employees’ worry and stress, which doesn’t make them productive or happy. You can salvage some positive morale by performing swift, decisive terminations and getting on with work.
4. Law
In 2012, a California-based solar panel component manufacturer named Solyndra was forced to perform layoffs due to excessive competition in the industry. Unfortunately, the company failed to recognize California’s Worker Adjustment and Retraining Notification law, stating that laid-off employees must receive a 60-day notice before termination. As a result, the company suffered $3.5 million settlement and ultimately folded.
Almost all workers are employed “at will,” but that doesn’t mean there aren’t regulations for termination. You should know the laws of your area, which should at least include prohibitions for disproportionately firing certain protected groups. Layoffs could cost you more than talent if you break the law.
5. Demeanor
An employer’s demeanor dramatically affects how employees respond to the situation. For example, Microsoft released a memo in 2014 that buried layoffs of more than 12,500 employees in the 11th paragraph. Worse, a semi-conductor company called a meeting and displayed the names of terminated employees on a screen.
It’s easy for large employers to be flippant about individual jobs: When you employ thousands, dismissing a few hundred doesn’t seem like a big deal. However, losing one’s job is a deeply distressing event. You should be sympathetic to your employees’ need to ask questions, express emotions, and otherwise react privately to the news. More importantly, you should respond with authentic, human emotions and offer whatever support you can.
6. Plan
More often than not, employers are caught surprised by the need for layoffs. When the Great Recession hit in 2008, several employers lost significant percentages of their workforce in the worst ways imaginable all because they hadn’t prepared for any kind of mass termination.
Layoffs can hit anyone at any time. By reading this post, you are already better prepared to weather a layoff — but your planning shouldn’t stop here. By forecasting your business’s growth and change as well as paying attention to the economy, you can likely predict your next layoffs. With that knowledge, you can plan every aspect of the layoff and avoid becoming a horror story like these.
