While business owners would always prefer to be maintaining or growing a company, there are times when it is necessary to lay off employees because of downsizing efforts or shrinking sales. The way a business handles these layoffs says a lot about them as an organization. No one wants to make headlines for firing their employees callously over Zoom like the Better.com CEO or for failing to mention to their employees that branches would be closing and having them show up to locked doors.
No one wants to hear that they’ve been laid off, making it a tricky situation. The question is how can layoffs be managed in the best possible way?
How to Manage Unavoidable Layoffs
There are several things that employers can do to avoid damaging their reputation as an employer, even when they have to lay off employees.
1. Don’t hide information about the state of the company
It never works to withhold information about how the company is performing or if plans are being made to merge or downsize a business. Rumors will spread and questions will come flooding in anyway. That’s why it is very important to be honest and open with your employees about the state of the business and possible changes coming that may impact their jobs. If you keep employees in the dark, layoffs will likely be received as a betrayal and it will be hard to earn their trust back.
2. Set up one on one meetings to deliver the news
Mass or digital layoffs are not a great idea. They are impersonal and do not allow space for the employee to ask questions in private. Show respect for your employees by scheduling a one-on-one meeting to tell them the bad news. Listen to their questions and answer them honestly; offer empathy if they become upset.
3. Schedule a meeting with the employees who are still there
Layoffs inevitably shake up the work environment and can make the remaining employees feel insecure about their jobs at the company. Once layoffs are communicated to outgoing employees, schedule a meeting with all remaining team members to explain why the layoffs were necessary and express the company’s commitment to keeping the rest of the workforce in place or what the current state of the company is now that this round of layoffs has happened. In one-on-one meetings, managers should explain how each employee’s job will be affected by the layoffs. Listen to their questions and answer them honestly; offer empathy if they become upset.
4. The CEO or owner should be on-site and available
While employees have a more personal relationship with their managers, it is important for the CEO or owner of a company to be on-site and available to offer support and further information about the layoffs and the state of the company. Employees may want to ask tough questions of the CEO and they shouldn’t shy away.
5. Support employees on their way out
Part of showing compassion to laid off workers is offering practical support. Do they need help connecting to job retraining? Resume writing? Unemployment benefits? Ask them how you can support them.
When layoffs are handled with care, companies can minimize the potential damage that can arise such as reduced employee morale and loss of trust.
Partnering with Makai HR
Need HR support? We’ve got you covered through HR outsourcing! When you partner with Makai HR you can get on with the business you are trying to grow while we take care of your employee needs from payroll to taxes, health insurance/benefits and worker’s compensation. You also gain peace of mind that you are compliant with all of Hawaii’s employer laws (if you’ve ever looked you know that the list is very long and changes happen). When choosing a PEO to partner with, there are many things to consider including cost, services, and technology solutions.
With the cost of doing business in Hawaii at record highs, we know how important it is to keep labor costs in line with revenue. Our plans are priced competitively and include value-added services like time-in/time-out systems. Our three tiers of PEO service plans are tailored to the size of your business and specific needs. We offer a 100% paperless solution which means that your employees can manage their needs through a computer, tablet, or phone. We can truly improve your employees’ work benefits while freeing you up to run your business.
What are you waiting for? Companies that partner with a PEO benefit from 7-9% faster growth, 10-14% lower employee turnover; and they are 50% less likely to go out of business. Contact us today to get started!