Five Key Considerations For Managing Layoffs

Hard times can strike any business or any organisation, even ones which have been well managed and successful. Sometimes you have to reduce costs and headcount in order to survive. This gives leaders a big challenge. You have recruited and developed a successful team. Now you have to chop it back. What should you do? Here are some key considerations and tips.

1. Plan Carefully

It is much better to make one deep cut than several smaller ones as successive rounds of lay-offs are very demoralising and distressing for staff. Work out how much you have to save, what cost cuts can be made and how many staff you must lose. Then prioritise your key people. Who are the employees who are absolutely essential? It is probably best to let go of the least effective people so carefully discuss with managers and identify the list. Prepare a fair redundancy package and make sure that you are following proper HR procedure.

2. Be There on the Day of Action

Best not to announce lay-offs by email, video or messaging. The people should be told face to face on the day. Treat each person with empathy and respect. It is painful for them. Stress that it is not their fault and offer them what help you can with outplacement.

3. Hold a Town Hall Meeting

All remaining members of staff should be addressed – first in a group meeting and then in one-on-one conversations. The process has to be handled very carefully as many people will initially have feelings of distrust, anxiety and suspicion.

4. Display Honesty and Fairness

Explain clearly the need for the cuts and the broad rationale for the choice off lay-offs. Stress the external circumstances that have brought the pressure and avoid assigning blame. If possible, state that this is the last round of lay-offs. Paint a positive but realistic picture of the future. People will be cautious and even cynical, so listen carefully to their issues and then respond with honesty and not BS.

5. Reassign Workloads

You cannot lay-off X% of the workforce and ask the remaining people to carry out X% more work. It is not seen as reasonable or fair. Key tasks, projects and accounts have to be reallocated but some lower priority work should be dropped. Focus on the key priorities that are needed to turn the situation around.

If the lay-off process is handled badly then it can lead to demotivation and your key people looking for new jobs elsewhere. It is essential that you manage this change with clarity, honesty and meaningful communication.