How to Handle Layoffs as an Employer
Layoffs are having their moment in America.
NASDAQ reported that layoffs reached a 16-month high in June, with a massive increase in weekly jobless claims.
Largely, experts believe these layoffs are happening as a response to the Federal Reserve's recently raised policy rate. This monetary tightening cycle is said to be the most forceful in three decades, which continues to stoke the fears of an impending recession and lack of demand for labor. Other reasons for mass layoffs may vary, from decreased operations and project cancellations to mergers, acquisitions, outsourcing or loss of funds.
E-commerce company Shopify recently laid off 10% of its workforce, which affected about 1,000 workers. In the publicized letter about the decision, Shopify's CEO Tobias Lütke attributed the cause to a decreased production demand following the unprecedented boom the company saw during the pandemic. Though e-commerce is still being largely adopted in America, the rate at which it's happening has slowed to pre-pandemic expectations.
It's not just e-commerce companies that are affected by these changing demands. Life sciences and biotech companies are also feeling the pressures and several have contributed to the mass layoff trends being reported.
DNA medicine company Inovio Pharmaceuticals cut 18% of its full-time workforce to reduce operating expenses amid its new focus on developing a COVID-19 booster shot. Cell therapy biotech startup PACT Pharma laid off nearly 100 employees due to restructuring. In an effort to save about $500 million, Biogen has been gradually cutting its staff since March. And that's just the tip of the iceberg.
Considering biotech and pharma companies are not immune to the pressures and situations that lead to layoffs, maybe it's time to think about how to handle that if you find yourself in a similar position within your own company.
It's difficult for both the company and the worker to go through layoffs, but the process is made slightly easier when it's organized and handled thoughtfully with compassion and care.
Plan for the Notification Meeting
The reduction in force (RIF) notification is the meeting when employers communicate with their staff members that their employment has ended. Employers should be as objective as possible when considering layoffs and remain objective in their conversations with the workers affected.
Before sitting down for any RIF meetings, managers and HR personnel should all be on the same page regarding layoff plans. Will the entire company be restructured? What are the criteria for positions to be eliminated? Are these decisions based on results or restructuring necessities? Can employees move into new roles instead of getting a pink slip?
Documentation for these decisions is crucial and can largely help inform your employees of the strategies you're using to save the company. Don't be surprised if employees want detailed explanations of why their position was affected when their coworker's position is safe.
Also consider the Worker Adjustment and Retraining Notification Act (the WARN Act), which requires larger, covered employers to provide a 60-day notice for workers under specific layoff circumstances, like a mass layoff or plant closing situation. In the eyes of the WARN Act, a "mass layoff" is considered a layoff of 500 or more workers at a single site of employment during a 30-day period, or layoffs of 50-499 workers that constitute at least 33% of the employer's total active workforce at a single employment site.
The WARN Act is meant to protect affected employees, help ease their transition to a new workforce and ease the burden on their families.
Being organized ahead of time and recognizing that the conversation(s) will be painful is a good first step toward an effective meeting.
Researching and understanding all required aspects of a mass layoff will help aid in the organization and preparation for RIF meetings. Once you're prepared, you should recognize that these conversations will be painful. Compassion and professional communication are crucial for maintaining your and your worker's integrity.
The best way to manage these conversations is by ensuring every affected employee is given a private meeting with a chance to ask questions and receive explanations for the news.
Expressing care, being clear about reasoning and showing compassion during the RIF meetings will help your employees still feel valued despite the circumstances.
Offer Support and Assistance
Layoffs have drastic effects on workers. Harvard Business Review notes that layoffs "tend to increase employees' level of stress, burnout and insecurity" while decreasing morale, job satisfaction and trust. Even the workers that are still employed will feel the waves of this decision.
Along with giving employees time to ask questions and be heard, companies should also offer outplacement assistance and appropriate separation packages. Each employee should have some sort of financial assistance to carry over until they find work in another position.
Outplacement assistance is a common tool used to offer support and help with finding employment following mass layoffs. Outplacement can look different for everyone, but the goal will always be to find another source of steady income for those affected.
Organizations like GetFive work with companies to offer potential employment solutions to those affected by layoffs. GetFive prioritizes protecting the companies conducting layoffs while also taking care of their employees.
Alternatively, if you know of other companies who may be looking for employees, you could set up conversations with your staff to offer laid-off workers an immediate option for alternative employment. Career transition firms may also be of use in certain cases.
Information about employment assistance programs should also be provided in the case that one of your previous workers is unable to provide for themselves or find other work.
Just because layoffs feel commonplace in America right now does not mean they are easy to manage or understand. Preparation is key and consideration of your employees throughout every step of the process is absolutely necessary. Employees who are not laid off are also affected by the gravity of the situation, so consider placing a moratorium on layoffs immediately following one this year.