In some circumstances a company will resort to laying people off after many attempts to save money through cost cutting measures, delaying capital investments, and implementing a hiring freeze. But sometimes, in spite of best efforts, a company needs to choose laying people off or going out of business, and reducing its staff to only essential roles might be its only option. Then there are other times when a change in the economic climate is sudden, and cost cutting is not drastic enough to save a company, and the layoffs happen quickly and on a massive scale. No matter why your organization has to lay off employees, it’s not fun for anyone involved. Losing a job is generally listed as one of the 10 most stressful things an adult can go through. However, believe it or not, there are things the leadership of an organization involved in a layoff can do to make it easier for everyone.
Offer Severance
If finances are in really terrible shape, offering a severance package to departing employees might not be an option. However, if the organization is in any position to offer at least a month’s salary to each person they’re laying off, it can soften the blow for the employee. Losing your job is tough enough, but losing your job when you least expect it and can’t afford it is enough to cause nearly anyone the kind of stress that leads to behavior that makes headlines, and not the good kind. The more severance you can offer, the less stress your employees will experience with having to find a new job. The more time they have to find a job, the less likely they are to take something that doesn’t fit their background, but offers a paycheck. If offering severance is not a financially viable option for the company, make an effort to do one or both of the next two suggestions.
Offer References
Not all employees are created equal. Some of your employees you might not want to be a reference for, or give any sort of glowing recommendation, and that’s okay. However, you should consider putting a letter together to distribute to all your employees affected by the lay off that states their employment is ending through no fault of their own, and they are part of a large scale layoff for your organization that involves x number of workers. This can be a common practice for companies when the financial status of the organization drives the need to unexpectedly let go a portion of its staff. It can ease the burden of answering the question from a potential employer about the reason they’re looking for a new role, and gives legitimacy to the employee’s explanation about their layoff. Being laid off can sting just as badly as being fired, but it doesn’t carry the sometimes negative connotation that can accompany being fired.
Offer a Re-Structuring Option
Sometimes simply offering employees the option to re-structure their roles or work part time to conserve cash through a lean time can be enough to ride out the difficulties. Employers can overlook the option to re-structure for fear that their employees will leave when a new position at a more stable company becomes available, or just simple uncertainty about how long the employee would need to maintain part-time status to get through the difficult time. Employers can also be fearful that re-structuring will show favoritism to those employees who aren’t asked to alter their status or pay. However, one way to avoid potential favoritism is by asking all your employees to take a day or two a month off unpaid. While it might feel drastic to make an ask that affects all of your employees, it’s likely a more accelerated plan to reduce expenditures and quickly recover needed capital without resorting to laying off employees. Every situation is different, and there certainly is not just one “right” way to re-structure an organization to make it profitable again. However, it can pay to get “creative” instead of opting to cut ties with your staff.
We know that being in the position of having to decide how to save a company can be even more stressful than being the employee losing a job. However, you do have options at your disposal to make this undesirable situation a little less painful for both you and your employees. Offer severance if you can afford it, offer a reference/ lay off letter if it is appropriate, and determine if re-structuring would be an option before deciding that laying people off is the only option. It can feel like nothing you do for exiting employees will be enough, but making an effort to soften the stress of a layoff can go a long way with your existing employees, departing employees, and any news outlets covering the change in your company’s team.