BY Kathy Crosett
Businesses across the U.S. are reducing headcount. Whether it is the result of increased AI use or the need to streamline operations, layoffs create employee stress. To maintain trust, leaders must manage a layoff properly.
Employment Market Conditions
The unemployment rate has been slowly ticking up. And reports indicate that white-collar tech jobs, in particular, are disappearing. Employees are paying attention to the market changes and fear they could lose their jobs.
The Current Employee Mindset
Your business may be doing well in the current economic climate, but that doesn’t stop your employees from obsessing about the future. Intoo, in its “Culture in the Balance: Leading Through Layoffs Without Losing Trust” report, found that 50% of U.S. employees “are worried about getting laid off in the next 12 months.”
Employees are taking steps to prove their value to their bosses. Our research shows that 30% of sales reps are taking courses to improve their skills. And 26% have recently attended a sales-related webinar. Despite keeping their skills sharp, around 14% of sales reps fear they will lose their jobs to AI in the next five years.
When a Layoff Looms
If you’re forced to perform a layoff, you’ll want to do so with the greatest amount of sensitivity possible. Ask your HR team for help with this process. In determining where to reduce headcount, relevant factors range from performance, role or seniority. You may also need to consider the limits of any union contracts.
While you attempt to be as fair as possible when cutting positions, know that employees have strong reactions to layoffs. Around 62% say they no longer trust their employer after an event like this.
While management may try to keep upcoming layoffs a secret, that strategy doesn’t always work. The WARN Act requires that employers with plans to lay off more than 100 people must give a 60-day notice.
As employees speculate about exactly what will happen, loyalty and productivity plunge. In addition, more than half of employees don’t expect layoffs will be handled “compassionately and ethically.”
During the Layoff
If a layoff is unavoidable, the experts recommend showing respect. It may be necessary to cut off the terminated employees’ internet access but give them access to another site. There, they can connect with HR reps who will guide them through the offboarding process.
Because many employees will not have enough financial resources to support themselves for long, they’ll need another job as soon as possible. Providing outplacement services can help the terminated employees put together resumes and begin a new job search. Offering coaching designed to help them with the interview process can be invaluable.
These efforts will reduce the number of complaints posted about the termination process and your ability to manage a layoff. The experts recommend letting remaining employees know about the level of outplacement support that is provided. With this information, they’ll understand that you’re trying to assist their former co-workers.
Rebuilding After the Layoff
Even when layoffs are skillfully conducted, remaining workers will be nervous. A significant majority, 71%, will start looking for a new job. Their productivity falls and they may “quiet quit.” They’ll do this because they fear being laid-off in the future. In this line of thinking, they’ve decided that their good performance won’t help them in the event of the next layoff.
Companies also face a reputation hit following a layoff. Around 20% of laid off employees will post online complaints about their previous employer.
Show Transparency and Empathy
To minimize these problems, treat employees with respect. Acknowledge the loss they are feeling and lead with a commitment to the company’s goals.
Invest in the Team
Keeping employees’ skills up to date should be a priority. Employees want to stay current with changing technology. If you invest in them or provide the means to help them acquire new skills, they’ll work more efficiently. With that strategy, you may be able to avoid or limit the extent of any future reductions in force.
Monitor Employee Stress
Even without the stress of layoffs, employees are experiencing more stress these days. Nearly 40% of sales reps report feeling stressed in the past year. In addition, around 22% felt they couldn’t take time off. This situation increases the likelihood of additional stress if you ask current employees to pick up the work that was previously done by the people you terminated.
Develop a plan for how to transition workloads equitably. Set one-on-one meetings to discuss the process and the tools they can use to streamline their workflows.
Knowing how to manage a layoff compassionately signals that you’re empathetic with your employees’ situation. And if you try to help them in their future endeavors, you can minimize the damage to your personal and corporate reputation.
Image on Pexels by Ron Lach.
