EXECUTIVE IMPACT

Layoffs Are Coming: How to Handle a Workforce Reduction Correctly

Photo Credit: Mek Frinchaboy

By Lindsey Galloway

After years of grow-at-all-costs mandates from Silicon Valley investors and rapid-fire hiring post-pandemic, an era of layoffs has arrived. One-time tech darlings like Cameo, Netflix, and Peloton have recently laid off large parts of their staff in an effort to re-organize and curb revenue losses as their stock prices tumbled with the fickle pandemic market. And while few executives ever want to terminate employees for financial reasons, it's all too often a part of the job, especially now.

There's definitely a graceful way to handle them, and a way to really screw it up, which can affect both your employees well-being and your company's brand image. Better.com, a digital mortgage company, learned this the hard way when its CEO laid off 900 employees in a company-wide Zoom call, right before the holiday season. He later apologized to employees for failing to show the "appropriate amount of respect and appreciation." Investment platform Robinhood also recently laid off 9% of its staff in a virtual meeting, during an all-hands.

Whether well or poorly handled, layoffs affect real lives and real families. While not all leaders can be expected to run a company with 100% foresight, when in the situation to reduce the workforce en masse, the key is delivery.

Managing Growth Effectively

When a company enters a hyper-growth period, it can be tempting to think that they will never hit a ceiling, as with Netflix. But even the highest-flying companies will discover that all good things must come to an end. Endless growth isn't realistic or sustainable, and businesses should always be strategizing for the long-term.

"Although it may be tempting to take on an abundance of new recruits when business is booming, I would always recommend focusing on the future and on sustainability for your business," said Renee Rosales, M.Ed., Founder and CEO of neurodiversity education platform Theara. "Before you hire, ask yourself: Are there ways that you can streamline your processes to make them more manageable for existing employees?"

Changes like adjusting schedules and work patterns can help create a more sustainable environment for your staff so that new hires aren't necessarily needed right away. If the viability of a possible long-term position is in question, Rosales recommends considering creating something more short-term, like an internship program. A hiring freeze can also preserve cash and normalize new role growth when business slows down, or a slow period might be anticipated.

Personal Business

Though layoffs are ideally a last resort, sometimes they're necessary for the sustainability of the business and to keep as many other employees hired for as long as possible. And even though a layoff is a business decision, leaders must take an empathetic approach.

"You know the expression ‘It's not personal, it's just business? Well, it's all personal. We're human," reminds Dr. Candace Steele Flippin, author of Get Your Career in SHAPE. "If you try to dehumanize it and depersonalize it and just make it about business, you risk hurting people you care about and leaving people in your wake." Instead, you can find a compromise between your obligations to the business and treating a person or people you're letting go with dignity, gracefully letting them know that their time with the organization has come to an end.

That said, it's also not the time to focus too heavily on your emotions or the difficulty you are facing as a leader. Many pointed out how Better.com's CEO spoke about how layoffs were hard for him during his call, but expressing how the layoff was impacting you can minimize what the employees themselves might be feeling as they are the ones left to worry about their finances, their health insurance, and their next job. Be prepared to spend as much time as possible with each employee to ensure their questions are answered as thoroughly as you can.

Though the era of remote work has made remote layoffs more a reality than ever, most experts agree that in-person is still the most humane approach when possible. If remote is necessary, a one-on-one conversation is the way to go over a mass meeting. If the person is a solid worker, you can offer to be a reference — or even better, reach out to your network to see if you might land them an interview elsewhere.

Speaking About Benefits

A thoughtful severance package can also go a long way into easing an employee's transition out of a company, and continued salary payments shouldn't be the only consideration. Better.com originally only offered to cover three months of COBRA health insurance, even though the layoffs included many pregnant women. After one former employee called out the company on LinkedIn, the CEO agreed to cover health insurance through their pregnancies and for 36 months following.

Severance packages should ideally be planned out long before the need for layoffs, and include payments tied to years of service, unemployment resources, and thorough healthcare considerations.

While you may need employees to sign release forms in order to obtain severance, avoid pressuring anyone to sign on the same day as the layoff. Not only are employees likely to be overwhelmed with all the information coming at them, but employees aged 40 and above have the legal right to have 21 days to review before signing due to the Age Discrimination in Employment Act.

Tucking in the Staff You Have

Layoffs can also be challenging for employees who still have their jobs, and they'll likely have lots of questions about what's next for the company and their own careers.

"Don't leave the remaining employees in the dark," said Roberta Matuson, President of Matuson Consulting and author of Can We Talk? Seven Principles for Managing Difficult Conversations at Work. "After the layoff is over, pull the team together to inform them of what has transpired and provide them with reassurances as to their future."

Continuing to check in with existing employees in the coming weeks is vital, as they may need time to process what occurred. They may experience changes in the workplace culture or in their own jobs, and offering the necessary support can go a long way in helping them stay engaged in their roles.

Learning to Live With a Layoff

In many cases, layoffs can be a step toward maintaining the long-term solvency of a company, helping it get back to growth and creating an environment where current and future employees can thrive. Though layoffs are never easy, leaders who act with compassion, integrity, and respect are more likely to maintain positive relationships moving forward.

"Being a leader means showing up and being fully present and engaged," says Rosales. "Even, perhaps especially, during the toughest times."

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