layoffs

In the United States, 45% of businesses don’t make it past five years. 65% don’t make it past ten years. Yet everyone who ever starts a business backs themselves to beat the odds. Is it possible to predict if a business will be a success or a failure in its future? 

Recently, there have been many layoffs in the US, specifically within technology companies. There are 159 million people currently employed in the US, and in the past month there were 1.3 million layoffs.

“There have been several thousand high-profile layoffs in the tech sector in the past couple of weeks. While this is unfortunate, it is useful to keep in mind that the labor market is significantly larger and has been overall healthy,” Bledi Taska, chief economist at labor market consulting and research firm Lightcast, said.

Today’s economic uncertainties have fueled an unstable job market and created an unsettling environment in the workplace – where the lack of transparency, internal politics, the growing number of siloed departments and hidden agendas have made it more difficult to trust yourself, let alone others. What appears to be an endless path of disorganized chaos is now “the new normal.” As such, we must become mentally tough and learn to anticipate the unexpected. 

Employees must approach the workplace through a lens that can detect potholes of distrust while staying focused on seeing and seizing the next opportunity.

 

There is no one formula that companies use when they need to let go of staff to cut costs. Some organizations may subscribe to the “last one in, first one out” model. Management prefers to keep the long-time staff and pink slip the new employees who just started at the company.

Leadership wants to field the best team. They’ll protect the “A-players” and let go of those who are not top performers. People with highly specialized skills that are hard to replace may be overlooked for dismissal, whereas workers that possess talents that are easily replaced are not safe.

 

            If you are in a revenue-generating division, the odds are high that you’ll be safer than the people working in a cost center. It’s a cold reality that employees and groups that bring in the money generally have more leverage than others who can’t point to adding dollars to the bottom line. In tough times, businesses need people who can ring the register. Those who may be terrific workers, but are not revenue-centric, may have a more challenging time holding onto their job.

            Human resources may weigh in on decisions of who stays and who will be shown the door. They’ll search through personnel records to review performance reviews, look for any recommendations and see if a person committed infractions, violated rules or has a history of causing problems.

            The chief financial officer and accounting team may crunch the numbers and determine that senior employees will be culled. Older workers, on average, tend to earn more than younger staff members because of years of experience. It's not fair, but their higher compensation places a target on their backs. 

It's convenient for the company to say they are just dissolving a unit that has many senior people with sizable pay packages. The business can downsize to fewer highly compensated professionals instead of many mid to junior staff members.

There needs to be a better way for employees to make more strategic evaluations of their employers. From an operational and business perspective, you should be able to predict that your employer will be able to pay your salary, commit to the number of hours per week that you sign on for, and be able to maintain your employment given the success of the company. 

 

 

Even though initiating conversations with current employees might feel a bit awkward at first, the payoff is well worth it. Talking with them is the absolute best way to discover if a company’s branding/messages are accurate and trustworthy. Plus, you’ll get a chance to learn if their interview promises align with their everyday actions.

For example, you might expect your potential employer to provide updated training to any employees affected by automation or innovation.

Don’t just network with your soon-to-be boss or hiring manager. Reach out to potential co-workers. Those who are in the trenches will be able to share if leaders follow through with employee feedback, honor their mission, fulfill promises, etc.

 

Every prospective employer is vying for top talent, which means they’ll try to make the business look as appealing as possible. Many are doing this by expanding their employer brand and focusing on something all candidates agree on, making the world a better place. 

If you browse the company’s social feed or website, you might see stories sharing how they’ve served the local community, or posts featuring employees’ opportunities for volunteering. But it’s important to understand that they’re creating the narrative they want you to see. What’s their true societal impact?

Social media is good at distorting reality. So, turn to Google and do your own digging: Research the company’s title, leaders’ names, etc. to learn if your prospective employer presents accomplishments in an honest, trustworthy manner.

 

3. Compare reviews to the career site 

Piggybacking off the idea that businesses want to appear as appealing as possible, be wary of company career sites. Each one is designed to draw you in and make you feel connected. A prospective employer will share its best features, such as:

 

●       Competitive pay

●       Amazing benefits

●       Flexibility

●       Work-life balance

●       Paid time off

 

But before you get too excited at the thought of having found your dream job, check out a few review sites. Glassdoor, for example, is a great place to find company reviews from current and former employees. Compare those reviews to the career site promises to measure the truth behind employers’ claims.

 

The interview isn’t just about proving how well you fit with the company, they also need to prove that they’re a good fit for you. Use the time you have together to let them know that employee-employer trust is a critical factor in your decision-making process.

Be direct in your questions and focus on what’s most important to you. For example, if you want to know you can trust the employer’s promise to deliver career development and opportunities to advance, ask for specific examples of how they’ve done this in the past. Then, take things one step further and ask how they plan to provide the same to you (should you receive an offer).

Trust is a two-way street; be transparent in what you have to offer, and your prospective employer will likely do the same.

With changes occurring in the economy, many companies are laying people off, many times in waves. This can impact the morale of those that are left.

 

When employees are spared, they feel relieved for a little bit before they start thinking and worrying about the next wave: “Will I be next? I better start looking for a job elsewhere; What am I going to do?”

 

Thoughts like these are the symptoms of a syndrome, the survivor syndrome. The effects of this syndrome will cause a sharp decrease in employee engagement and productivity. Recent research through Velas Coaching has shown that after layoffs, employees often report reduced commitment and performance.

 

While some may feel lucky to still be employed, others may experience mixed feelings. They may be relieved to still have a job but simultaneously guilt-ridden about the suffering of former colleagues who were let go. 

 

This type of “survivor guilt” is normally associated with the emotions people experience after facing a traumatic event or accident that looks at the lives of others, but it can also happen after corporate layoffs. 

 

It’s not uncommon for the employees left standing to wonder, “Why did I make it, but they didn’t? or “How am I going to face my friends who were released knowing that they’re in a bad financial situation while I’m still employed?” Survivor guilt may be made worse by a perception that the company failed to recognize or reward trusted colleagues and friends and instead eliminated them.

 

Studies by the Harvard Business Review show that nearly three-quarters (74%) of employees retained after a layoff saw their productivity decline after it, while 69% said that the quality of their company’s product or service deteriorated. When these respondents were asked why they felt that way, they expressed feelings of guilt, anxiety, and anger. 

 

The good news is that workers who felt that their managers were visible, approachable, and open were more than 70% less likely to report a productivity drop, and 65% less likely to report a decline in the quality of their organization’s offerings. These numbers show that leaders can make a big difference in helping retained employees deal with their survivor guilt.

 

As a leader you probably are asking yourself: “what can I do to help my team go through that dreadful layoff cycle?” Here are three suggestions:

 

 

You may have heard the story of Bob Chapman, the former CEO of Barry-Wehmiller, a family owned company. In 2008 at the bottom of the recession, the company was hit very hard, and they lost 30% of their orders very fast. The board decided that they needed to save money and pushed for layoffs. Bob refused, so he came up with an idea, a furloughs program. Everyone was going to take an unpaid vacation so everybody will suffer a little as opposed to a few who suffer a lot. Guess what happened to the morale of the employees? It went through the roof. If you have the chance, protect your team at all costs and make sure they know you are doing it.  

 

 

As employees process the layoff cycle, they start to believe that the company they work for does not care about them, that they are pawns, merely a piece that can be easily sacrificed for the company’s sake. But it doesn’t have to be this way. As a leader, your ability to communicate effectively and regularly with your employees is invaluable in the long term. Much of how employees perceive a layoff depends on how much information is shared, and where it is coming from; it should come from you.

 

●       Listen and acknowledge their fears

●       Ask how your employees are doing and respond with empathy

●       Make sure you validate or dispel the “rumors” out there, fast

●       Make sure you are available, open-door policy

●       Don’t hide the truth

 

 

When you perform a layoff, you’ve probably harbored feelings of regret for having to lose members of your team and feel anxious about the light in which survivors see you. Now you are managing a team of survivors, the lucky ones who didn’t get laid off. Therefore, you need to set a positive tone but also be realistic. Good fortune doesn’t make good performance. 

 

Kick your leadership skills into high gear and focus on transitioning your surviving employees toward a new brighter future. Make employee engagement your number one priority, creating a safe space for your employees to succeed.

 

Organizations that invest time, money, and attention helping the remaining employees stay engaged are much more likely to succeed after a layoff than see diminished productivity. How your remaining employees perceive you are handling the process will set the tone for renewed trust in the relationship. If you handle it with integrity and empathy, you will minimize and perhaps eliminate adverse impacts of the survivor syndrome on your team.

The word “layoff” is a word that sparks unease in any workplace. After all, it’s associated with a loss of income for the worker, as well as a sign that doesn’t bode well for a company. While a layoff is primarily a defensive management move, it is important for a manager to understand how to properly lay a set of workers or an individual worker off. 

 A layoff is not the same as termination of an employee. It is an involuntary separation from work initiated by an employer or manager. It is through no fault of the employee, and keeps them eligible for unemployment insurance, but losing other benefits. Most of the time, laid-off workers also still get to keep their investments in a company retirement plan such as their 401k. 

  A layoff differs from a furlough as well, in the sense that it is generally permanent. A furlough is when workers are idled for a time as a result of repairs, or another event requiring a temporary work halt, while also continuing to receive their benefits with the expectation that they will eventually return to work. Layoffs are genuinely utilized to remove groups of people at a time, ranging from several individuals, or even thousands. They are generally prompted by bankruptcy, financial hardships, or even being bought out by a larger company. 

 Layoffs often correspond with significant economic events. In the U.S, employers laid off employees en masse due to the drastic downturn in demand during the COVID-19 Pandemic, as many areas closed down travel, dining, and service. According to the U.S Bureau of Labor Statistics, over 20 million jobs were cut in April 2020 alone.

 Understanding what makes a layoff is critical to being able to conduct one. But there are a few steps to take before signing the final papers to let go of a series of workers, including a meeting, as well as several other steps.

Before the meeting, a gameplan needs to be established. To start this gameplan, what positions are slated to be cut? Is there any alternative besides completely laying off these positions? In addition to this, finances of a layoff need to be considered. 

Removing workers with a layoff requires a severance payment, and sometimes also advance notice. It is extremely important to consult human resources or any form of legal department to determine if legal advance notice is required. Violating this can result in serious fines.

Determining if some employees will be needed for a transitional period can be critical for the business. Not every layoff conversation will be identical, since some employees may have information that would be valuable towards the rest of the company. For example, if you are removing about a quarter of an operations team, the remaining three-quarters might not necessarily have had the removed’s responsibilities.  Therefore, keeping that quarter temporarily  to train the remainder of the team, with compensation of course, would be very valuable.   

As stated before, meetings need to be scheduled with any staff members potentially being laid off. The amount of members in a business could qualify it for the Worker Adjustment and Retraining Notification Act, which legally mandates that employees laid off receive at least two months’ notice. Therefore, the date of this meeting may be flexible depending on when the business is obligated to give notice.  

When scheduling the meeting, consider days before a weekend or a holiday to give the employee time to cope afterward. Being laid off is a painful experience, and understanding how to alleviate some of the pain associated with this can be valuable. Remember the following- for the manager, this is just less people to pay, but for the individuals being cut, this means the end of a regular income, no 401k, and no other perks, such as health insurance. All in all, this is a very stressful time. 

When actually meeting with the employee, there are a few things to consider. Pick a time and place that is both private and neutral, such as a conference room. This time should also allow for an employee to leave the building privately. Layoff meetings might also need to include other people, such as an HR representative, or potentially security as well. 

 Have any paperwork or materials needed for this meeting before the employee gets to the meeting. This allows it to be as concise as possible. This often includes termination letters, COBRA papers, a final paycheck, severance paperwork, and other items related to the severance packet. 

 Remember what the objectives to this meeting are. For the manager, as well as the company, the goals are the following:

While keeping these goals in mind, deliver the message as quickly as possible, while still being kind. Have a box of tissues on hand as well. Praising previous accomplishments can help the employee’s ego. If the company has the ability to do so, provide outplacement services and job counseling. Outplacement services can help with job-searching and resume writing, as well as consulting. This shows that the company can truly care about the employee.  

At no point should there be anger or disappointment displayed towards the employee. This is a painful time already for the employee, and it doesn’t need to be further compounded by adding more negative sentiment into the meeting. Be ready to address questions and objections to your statement. Always provide some form of support for the employee. After all, you may be able to hire them in the future, so avoid burning a bridge with them. Finally, don’t hesitate to offer to write a letter of recommendation for their next job, or act as a reference. Being laid off can put someone into a stupor. Understanding how to care for them can really make a difference. 

Communicating layoffs to employees is a tough situation that requires considerable thought and compassion. Layoffs can have a dramatic effect on the organization and steps must be taken to help preserve workplace culture when relaying such changes. When informing employees about these difficult decisions, creating a strong communication plan can assist in lessening the emotional turmoil resulting from layoffs. 

Here are 4 steps to developing a strong initial communication plan: 

Employee response to layoffs is largely determined by the perceived fairness and transparency utilized throughout the decision-making and communication processes. Clear messaging regarding why the decision was made, alternative solutions considered, and the future of the organization will help prevent employees from creating their assumptions. Increased transparency works to build trust with employees and reduces damage to company morale. 

2. Include Employees in the Process

During the process of determining layoffs, all possible solutions are often exhausted prior to reaching a decision. However, if appropriate include employees from all levels in identifying solutions. Motivations for layoffs are most often to take cost cutting measures.  Engaging with employees to gather feedback and consider alternative areas to reduce costs can help empower employees and increase collaboration. Inclusion within the problem-solving process also helps to gain a better understanding of the process that was utilized to come to the solution of laying off employees. 

3. Consider Word Choice

An important, but often overlooked, consideration is word choice. Being sensitive to nuances will avoid a negative tone. Phrases that sound voluntary such as “leaving” or euphemisms like “restructuring” detract from the situation at hand and can diminish the hard work contributed by the employees who are laid off. Consider the feelings of the employees who are being let go and develop a tone that is sensitive to these emotions. 

4. Consistent Messaging

Regardless of whether a message is intended solely for employees, information may get leaked to media outlets or other outside sources. When developing internal and external messages, messaging should be consistent. Conflicting information will increase confusion and cause distrust among stakeholders. All messages should be crafted with the idea that any stakeholder may see the information. Additionally, all stakeholders should be addressed when communicating the news of layoffs. Since, likely, all stakeholders will eventually hear about the layoffs, creating specific content for each audience can ensure that no group of stakeholders is left out of the loop

Transparency, inclusion, word choice consideration, and consistency are key elements that can guide the communication process across all stakeholders. Since employees are personally being impacted by layoffs, increased consideration of how to approach communication with this group of stakeholders is vital. Whether the employee is being laid off or one of their peers is being let go, all employees will feel the effects of the organizational change.  

When communicating with laid-off employees and remaining employees, here are some important considerations to best support both groups: 

Conducting one-on-one meetings with laid-off individuals is an empathetic approach to communicating the difficult news. Individual meetings communicate respect for the employees who are laid off and serve as an opportunity to support their emotional needs. During this time, laid-off employees can feel heard and ask questions that will help them get a better understanding of reasoning and future steps. 

When initially receiving the news that they are laid off, employees may not fully process the news and may have questions they fail to ask during the individual meeting. Providing additional support resources for employees following these meetings is a key way to address concerns and continue to demonstrate empathy. Support resources may include a contact within the company that can be used to answer further questions regarding the layoffs or details about benefits and severance packages.  

While layoffs are particularly difficult for employees losing their jobs, the remaining employees also endure emotional hardship. The remaining employees are tasked with the ramifications of the layoffs and will need to navigate the new environment. Providing specific operational changes that will be implemented can help to reduce the uncertainty for remaining employees. 

 

Following layoffs, it is common for teams to work at a lower capacity. This lower productivity can result from increased workloads for remaining employees as well as the emotional toll from losing team members. While it may seem effective to continue to motivate employees to work at 100% efficiency, allowing employees time and space to grieve these changes will provide more significant benefits. Allowing time for positive adjustments to change will work to strengthen employee morale and engagement as they will be able to better process these changes. 

When undergoing layoffs, there will be increased fear of future layoffs for the organization. While assuring there won’t be future layoffs certainly shouldn’t be done if there are plans for continued layoffs, if there aren’t plans for additional layoffs that should be communicated to the remaining employees. It is natural for employees to stress about their jobs when they see peers losing their jobs. Offering support to team members through open communication and availability for questions can help ease the minds of remaining employees. 

Anytime a company has to lay off employees there are a lot of hardships. Ultimately, effective communication with all stakeholders is important to best navigate the changing environment. While layoffs have many negative implications on the employees leaving the company, consistency, honesty, and empathy must be utilized through all phases of communication to prevent the company image from being damaged and best guide the company toward future success.  

Sarah is leading a team of 700 talented individuals toward success. However, the winds of change bring a daunting task: she must trim down the team by 300 members, nearly half its size. The question is large: how does one execute such a significant reduction in workforce effectively?

Sarah ponders over various strategies. Does she opt for a series of gradual layoffs, minimizing the shock but prolonging the uncertainty? Or does she choose the bold approach of a single, decisive cut, akin to ripping off a bandaid? Each path presents its challenges, but Sarah knows that communication and trust will be the cornerstones of her approach.

One option is to stagger the layoffs over several months, allowing individuals to prepare emotionally and financially. However, this method risks creating a sense of instability and anxiety among the remaining employees. Sarah worries about the toll it may take on morale and productivity.

On the other hand, a swift and decisive action could minimize prolonged uncertainty and allow the organization to swiftly realign its resources. However, the shockwave from such a move could erode trust and breed resentment among the workforce.

Sarah recognizes the importance of transparency and honesty in navigating this delicate situation. 

First, she starts with identifying what metrics are not being met and what needs to be changed for the organization to right the ship. She realizes that it can be anxiety-inducing if there isn’t a clear goal or metric that everyone is working towards as if there isn’t a clear goal or metric being worked towards, it is unclear whether or not anyone’s job is safe.

By clarifying those metrics and where the team has fallen short, and giving them a few months to try and turn things around, she can start to make the reductions in force.

The reason she chose this mode of decision-making versus just announcing the layoffs was that it gave clarity to her team as to what metrics needed to be hit for the company to succeed. Even if the metrics were vastly different from where they were when she first announced the metrics, there is still clarity as to why a change like a reduction in force is necessary. Essentially, her team felt less blindsided when they knew they were underperforming.

As the months pass, Sarah maintains open lines of communication, offering regular updates on progress and addressing any concerns or questions that arise. She fosters a culture of transparency and inclusivity, inviting feedback and suggestions from her team members.

Throughout the process, Sarah remains steadfast in her commitment to building trust and maintaining morale. She acknowledges the challenges and uncertainties but instills confidence in the team's ability to get through this together.

By the end of the period in which performance is being evaluated, Sarah still needs to lay team members off. She decides to do the layoff in one big bandaid rip-off strategy. She then reinforces that everyone after the layoff is safe and why they are safe - e.g. the metrics they were achieving were aligned with the metrics she set at the beginning.

Being clear is kind and having clear expectations from the very beginning, allowing team members the time to change their behavior and attempt to turn their performance around, and following through on the unfortunate need of laying people off for those that aren’t performing creates the best outcome from a tough situation. By prioritizing the well-being of her team and fostering a culture of transparency, she ensures that even in the face of adversity, they emerge stronger and more resilient than before.

Layoffs are an unfortunate aspect of a business’s lifecycle.

Whether a company over-hired during a period of steep growth in anticipation of potentially continuing that growth.

Or a company had a client that represented a large percentage of their total revenue leave and is trying to figure out where to come up with the revenue to pay for everyone’s salaries.

Or a company has gradually fallen on harder times and has decided that restructuring how the organization looks and operates is critical to being successful in the future.

Or a company could have had an informal layoff where they decide to not backfill positions after someone leaves and just ask those who are left to take on additional work.

They are part of a business’s natural ebbs and flows. One could argue that if a company isn’t putting themselves at risk of having a layoff (e.g. hiring to pursue new opportunities), they aren’t effectively preparing themselves for opportunities for high growth when they present themselves.

But what happens to those who are left?

Those who are left oftentimes feel a sense of survivors guilt – as if they are the lucky ones for not getting fired.

This is oftentimes quickly followed by burnout because they are now being asked to do the work of multiple people after growing accustomed to doing the work they had been doing.

Once burnout occurs, people start to formulate their own assumptions about what is next for them and the business. This narrative people create about their future fate is oftentimes way worse than the reality of the situation because the news of the layoff in the first place was likely a huge surprise and has tarnished their belief in the business long-term.

As a leader of a company, here are 3 things you can do to help build back morale after a layoff:

1.      Control the narrative

If leaders don’t control the narrative after a layoff, their people will come up with their own narrative. One leader I interviewed 3 months after a layoff her team decided to pursue shared that she heard from one of her team members that the company was about to go through a merger or get acquired. She had no idea where that news came from. As the second largest shareholder in the company, she reassured her team member that a merger or acquisition was not going to happen, but she couldn’t help but wonder where this rumor came from and how many other rumors might be flying around that she has no idea about.

To minimize surprises around a layoff, some leaders will practice open book management or sharing the financials of a business with all of the employees.

The challenge with the assumption that employees who know the financials will be less surprised if a layoff happens is that the employees don’t know how an executive team will react to multiple down revenue months in a row. Multiple down revenue months could mean no bonuses this year or it could mean layoffs. Knowing how an executive team will react to multiple down months in a row is not the job of the employees.

Companies also often face the challenge of leadership happy talk. This is the act of a charismatic leader (oftentimes the founder or CEO) who say things like “we have been around for 25 years and aren’t going anywhere!”

This talk, when times are good, boosts morale and makes people feel secure. But when a layoff happens, it completely tarnishes morale and the trust employees have in the company moving forward is severely tarnished.

Therefore, if leaders are to control the narrative for those employees that are left, they need to explicitly share why their performance justified keeping them and how that helps the business grow into the future. Leaders essentially need to reassure employees why their job is safe or else employees will assume their job isn’t safe and starting looking for jobs elsewhere.

2.      Make people feel heard

There was a prison study in which inmates were to submit feedback on the state of the cafeteria food. This suggestion box had always existed in the cafeteria but the results of the dining experience never seemed to change. Leadership in the prison wanted to get Likert scale feedback on the quality of the dining experience in the prison and to little surprise, their scores were very low.

Eventually, a leader within the prison decided to do something different. He decided to read all of the suggestions out loud in front of all of the inmates. Regardless of how feasible the suggestion was, he read them all out loud in front of everyone.

Then, something interesting happened. The scores for the quality of the dining experience at the prison improved on the Likert scale. The prison didn’t in fact do anything to improve the dining experience for the inmates, but they let them know that they were heard. 

The same holds true for employees.

I am not advocating for gaslighting the employee experience (e.g. listening to what they have to say and doing absolutely nothing about it), but what I am writing is that helping employees feel heard, even if the leader can’t do anything about their concerns, is much better than ignoring employee concerns altogether to avoid the hard conversation. 

3.      Elaborate on the why to the nth degree and repeat, repeat, repeat

Too many leaders assume that all employees are privy to all the information that the leader is and should therefore understand why certain decisions were made.

Too many leaders assume that explaining why a decision was made once is sufficient for employees to fully digest and understand moving forward.

These are toxic assumptions because employees are not aware of the information a leader has at their disposal, and although the leader may have explained the situation once to the employee, the leader needs to go further to explain the why behind the decision.

For example, a leader could share “We have decided to layoff 5% of our workforce. We made this decision because we over-hired the year prior. We were on a major upward trajectory and wanted to be prepared if the market continued to climb. Unfortunately, that didn’t happen and we let go of these employees for the sole fact that we don’t have enough business to justify having them on the team moving forward. Moving forward, we believe we have right-sized our business to be commensurate with where the market is now. As long as we are able to achieve xyz profitability, we should be able to grow a steady growth rate moving forward. When our company is able to achieve xyz profitability, it allows us the freedom and ability to grow our business in a stable way. When we are below that profitability, it puts the business at risk of going under. If the business goes under, nobody has jobs and we won’t be able to work together anymore.”

This may seem like overkill, but by being abundantly clear about how the business operates and the numbers the business needs to achieve to thrive, it empowers employees to know where they stand with the business. 

Then repeat, repeat, and repeat some more. And when you feel like you have shared this message a million times, share it one more time just to be safe. 

Oftentimes, employees will need to hear a message multiple times for them to become conscientiously aware as to what the message means and the ramifications it has on them.

Overall, building back team morale after a layoff is hard. It is the companies that can control the narrative, make people feel heard, and explain the why with enough repetition that are able to achieve success after a layoff.