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How to handle layoffs with compassion -- or possibly avoid them

Handling layoffs with compassion and sensitivity is critical for the employee experience of those who are leaving and staying. Here's advice on how to do so.

In November, 14.8 million people reported they were unable to work because their employer was negatively affected by the COVID-19 pandemic. In the face of that number, compassion may seem like an inconsequential factor, but it's more important now than ever.

Layoffs have a ripple effect, and handling them with empathy and compassion can help to reduce -- at least, somewhat -- their negative effects. Looking to layoff alternatives is also key.

Alternatives to layoffs

Although "perfect solutions" rarely, if ever, exist when layoffs are being considered, alternatives exist that might be overlooked. These are especially important as the world witnesses seismic workforce disruptions that will have lasting effects.

"Automation, in tandem with the COVID-19 recession, is creating a 'double-disruption' scenario for workers," according to "The Future of Jobs Report 2020" published by the World Economic Forum. "In addition to the current disruption from the pandemic-induced lockdowns and economic contraction, technological adoption by companies will transform tasks, jobs and skills by 2025."

Upskilling and reskilling are important potential alternatives to layoffs, as is a solid strategy when it comes to internal mobility more generally.

"[Many leaders] understand that reskilling employees, particularly in industry coalitions and in public-private collaborations, is both cost-effective and has significant mid- to long-term dividends -- not only for their enterprise but also for the benefit of society more broadly," according to the report.

Management is often surprised to learn what employees will voluntarily do to save the company and their co-workers' jobs.
Ken SiegelPresident, The Impact Group

Although current economic reality makes retraining workers more difficult, surveyed companies expect to offer reskilling and upskilling to slightly more than 70% of their employees by 2025, the report said.

Of course, many business and HR leaders must make workforce decisions that address immediate financial difficulties.

A number of alternatives to layoffs beyond internal job reassignments exist, said Dave Gartenberg, HR transformation director at Accenture-Microsoft joint venture Avanade, a global IT consulting and services provider focused on the Microsoft platform, headquartered in Seattle. Here are a few of those alternatives:

  • Eliminate, reduce or postpone some or all bonuses.
  • Help underperformers become productive team members.
  • Create a vacation balance give-back or buy-back program.
  • Cut back on contractors.
  • Temporarily halt pay raises.
  • Temporarily reduce pay -- for example, 5% across the board or, ideally, focused on the most senior leaders -- for a set period of time.

Another idea is to elicit help from employees themselves.

"Explain the problems the company is facing to employees and ask them for ideas on how to solve them," said Ken Siegel, president at The Impact Group, an employee development consultancy, based in Los Angeles. "Management is often surprised to learn what employees will voluntarily do to save the company and their co-workers' jobs. This creates closer bonds, renewed commitments and a feeling of control over one's destiny which makes everyone feel better."

Why layoffs should be a last resort

Although layoffs can cut costs in the short term, companies may likely suffer long-term damage to workforce morale, productivity and brand reputation.

"We always try to treat layoffs not as a first option, but as a last resort when business gets tough," said Muhammad Shabbar, HR and admin manager at Al Manal Development, a Dubai-based company specializing in property development and retail, offices and residential leasing. "We look into other options to avoid layoffs as much as we can because, though it may help the company [in the] short term, it can hurt the company in the long run."

Through the years, various studies have found that layoffs produce a number of negative consequences for organizations that use them as a means of cost-cutting. Just a few: Remaining workers are more likely to experience work overload, reduced morale, lowered loyalty and increased likelihood of leaving the company. Organizations are likely to lose laid-off employees' institutional knowledge, create losses to productivity and innovation, and experience higher retention rates.

The why and how of handling layoffs with compassion

Approaching layoffs with compassion requires shifting a profit-protection mentality to truly giving thought to what employees will experience.

"Laying off employees is always hard," said Kelsey Chan, marketing manager at CocoSign, a digital signature service based in Singapore. "Handling a layoff compassionately not only demonstrates humanism and care, but also affects the mood of the surviving employees and loyalty to your employer brand."

Starting with an understanding of what compassion means is important.

"Compassion is defined as alleviating the suffering," Siegel said. "And that's what a compassionate layoff is: a recognition of the harm it causes and an offering of something that will help relieve the suffering that follows."

So, if layoffs are a necessity and you've checked on all the related legal implications, be sure to approach them in the right way.

"[A compassionate layoff] means doing more than offering a severance package," Siegel said. "It also means taking the time to get it right."

The following tips for compassionate layoffs will help realign layoff goals and spark ideas on offering exiting employees more empathetic exits.

Consider customizing severance packages

Not all employees will want or need the same type of support to ease the difficulty of a layoff. For example, some employees don't need health insurance because their spouses can cover them under theirs. That person may benefit more from childcare while looking for a new job or transitioning to a new work-from-home position. Other employees may benefit more from help with job placement, resume services or training for a different type of job.

"Don't offer a one-size-fits-all severance package -- ask the employees what they need instead," Siegel said. "While there are financial restraints so you can't offer everything, offer what you can in a form that's most meaningful to the person being laid off."

Suggesting some options to laid-off employees is important because they may be too hurt or shocked to think clearly in the moment. Your suggestions may help them focus on their priorities and feel less vulnerable to the situation.

"Help create soft landings for the employee," Gartenberg said.

Besides severance, a health insurance stipend, outplacement coaching, and LinkedIn connections and introductions are some potential options, Gartenberg said.

Remember messaging is key

Understanding how best to notify the company is important.

"Imagine the agony of hearing all morning long that many of your co-workers got the ax, one after another, and you have to keep working while wondering if you'll be next," said Carol MacKinlay, chief people officer at UserTesting, a company that offers a customer experience user research platform

But beyond the announcement, don't herd newly laid-off employees through the process or treat them as if they have done something wrong.

"At one of the companies I was laid off from, they positioned a gun-carrying security guard in the lobby to discourage the newly fired from making any trouble, I guess," MacKinlay said. "Look, at 9 a.m., the person being let go was an employee with good intentions, a friend. At 11, they don't suddenly become a criminal."

If newly laid-off employees are taking the news in stride, trust them to say goodbye in a professional manner, she said.

Be transparent about what is happening to the employee's access to email, other computer systems and applications, and even the facility. The fewer the surprises, the better.

Care for remaining employees

Don't forget that the remaining employees are also feeling the loss of friends and co-workers, and fear for their own futures, too. Rolling layoffs are likely to exacerbate these issues.

"Do not do rolling cuts -- the variable nature will inhibit the remaining people's security, focus and productivity," Gartenberg said. "Communicate clearly to your remaining workforce -- be transparent about why the decisions were made and they are now done."

Also, be careful to avoid further damaging morale by doubling up the workloads on remaining employees.

"Make sure you have rightsized the work expectations to the level of resourcing," Gartenberg said. "Do not cut 15% of your people and expect the precut level of output."

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