Laying off employees is never an easy process.
Now, the economic downturn caused by the coronavirus outbreak has left many companies with no recourse. Cuts and furloughs have been pouring in from every sector and industry. Nearly 10 million Americans applied for unemployment in March. This number is expected to continue to rise as the pandemic progresses, businesses shutter, and shelter-in-place order immobilize workers.
The situation is critical, but the hope is not lost. The largest stimulus package in American history was finally signed into law by President Trump on March 25th. The stimulus package goes by the name, the Coronavirus Aid, Relief, and Economic Stability Act (CARES). Some experts hope that with this boost, and wise decisions from companies, the coming recession may be shorter and recover sooner than we think.
Businesses now must prioritize running a tight ship to survive the pandemic. Layoffs may be inevitable; but so is an economic recovery. As businesses do what they must to stay afloat, they must also be sure to preserve relationships with current and former employees and remain ready to pivot when the tide changes.
Before Downsizing & Laying Off Employees
The goal of laying off employees is to cut costs while maintaining trustful relationships with critical employees. In order to strike this delicate balance, employers must make a coherent plan for the long road ahead before even communicating layoffs to employees. Here are vital steps for framing important decisions:
During such extraordinary times, employers may consider nontraditional solutions to avoid layoffs. The decision to lay off employees, meaning that the company loses out on strong workers with years of expertise, is final. It may be better to offer some type of unpaid leave, such as a 4-day work week or optional sabbatical. Employees may be open to intermediary measures such as temporary layoffs or furloughs if they know it will save the jobs of their colleagues.
Dave Cote, the CEO of Honeywell, offered advice on how he was able to carry his business through the 2008 crisis by furloughing instead of laying off workers. For him, it is important to remember that “there will be a recovery, and we need to be prepared for it.” Through furloughs, Honeywell was able to retain the talent needed to meet increased demand after the economy recovered.
Plan how the post-layoff company will look.
Before proceeding with layoffs, employers need to take stock of the company and clearly define a vision for how they hope their company will function both during the period of crisis and beyond. This will help to pare down the organization to its essential roles. In addition, it’ll make it easier to educate remaining employees on how to move forward
Employers must also remain cognizant of the layoff rights of employees which may differ regionally. A lay-off planned according to business needs, perhaps organized by seniority, will be well within the bounds of the law, avoiding potential litigation.
Communicating Layoffs to Employees
It is vital that layoffs are communicated in a respectful and responsible way. Laying off in this way, makes employees feel valued and cared for. Here is a ‘how to lay off employees’ small business guide to ensure a clear and compassionate layoff.
Communicate with compassion.
Treat departing employees with the dignity they deserve. Although these tumultuous times may make it difficult to give advance notice, those leaving are sure to appreciate as much warning as possible. Not to mention, the employees staying will trust the company more if they see them acting in a principled way.
As face to face meetings might be off the table, employers may consider using a letter for laying off employees. The purpose of a letter is to offer support to those being let go and gaining the support of those who remain.
Emphasize that it is not their fault; the circumstances have left no alternative and communicate employees’ value and your gratitude for their hard work. Bear in mind that an employee being laid off is likely to be anxious and concerned, and to grieve. Give them whatever help you can.
Offer outplacement or other support to ease the blow.
Help your employees to quickly find a new job by offering to write them a recommendation. You can also offer to make a call on their behalf. In the meantime, provide them with whatever information they will need to file for unemployment benefits.
The CARES Act, passed to ameliorate the coronavirus layoffs, can help to support employees let go because of the pandemic. This Act not only expands unemployment insurance to cover workers who are not normally eligible. But. it also provides an additional $600 a week for four months to supplement state unemployment. The duration of benefits has been extended from the typical 26 weeks to 39 weeks.
Once an employee is laid off, they will be able to collect unemployment even if the job market remains tough.
Keep in touch.
It has been reported that small businesses forced to lay off employees during a crisis are eager to remain in contact with the part-time and full-time workers they have been forced to let go.
Britney Ruby Miller, co-owner of a chain of steakhouses, said her Cincinnati-based company will keep laid-off 600 workers on company health insurance through June. The family-run company sends weekly updates to its former employees and offers assistance for those suffering from depression or anxiety. Miller says that the goal “is to welcome 100% of our employees back.”
It’s a good idea for managers to keep the door open in case they’re in a position to welcome back top talent one day soon.
When laying off employees small businesses must keep in mind one important thing. That is, to not only communicate with those who are departing but with the rest of the company. Managers should update the remaining employees as often and as openly as possible. This is one sure way to increase trust, something that is often rocked by layoffs but will also provide an opportunity to reorient employees to modified responsibilities and expectations. Take this time to emphasize your company’s mission, values and goals.
Communicating layoffs to employees is just the first step of a long process of reorganizing and restructuring the organization for future success. Keeping in touch with former employees and offering support to current employees is vital to renewing growth.
How employers handle this crisis will determine how their employees see them —as well as how they are perceived by the wider industry. The coronavirus pandemic comes with many challenges, but one of the most impactful will be the way in which companies handle laying off employees and rebuilding from the inside out.
Written by Valerie Slaughter; Edited by Tanya Lesiuk