Putting Humanity into HR Compliance: When You Conduct a Layoff, Don’t Do It Like This

 

Jathan Janove, J.D. By Jathan Janove, J.D. December 17, 2018
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Former employment attorney and author Jathan Janove writes for SHRM Online on how to inject greater humanity into HR compliance. Jathan welcomes your questions and suggestions for future columns. Contact him at the e-mail address at the end of this column. 

Here's a story that's all too common:

Chapter 1: My friend recently received her annual performance review. It glowed. In addition to providing positive, encouraging comments, her manager said there would be much work to do in the upcoming year.

Chapter 2: Two weeks later, my friend walked into a quarterly growth and development meeting. An HR representative told her the company had decided to eliminate her position and slid a severance agreement across the table.

Unfortunately, my friend's experience is not atypical. Employers commonly believe it's best to keep information about contemplated or impending reductions in force (RIFs) and layoffs strictly confidential until the last moment. They reason that it makes sense to keep the workers happy until the last minute.

In my law practice days, clients often asked me to weigh in on the legalities of contemplated layoffs. Occasionally they would ask for my input on the human side.

One such client planned to close a manufacturing plant. The closing would occur when a new plant in another state had been constructed and was operational.

Because the client assumed such plans should be kept confidential, I was told, "Workers at the existing plant can't know about this. Otherwise they'll quit before we're ready for them to leave."

They asked me what I thought. With encouragement from the vice president of HR, I suggested the opposite approach.

Instead of secrecy, I encouraged them to choose transparency. Led by HR, company leaders:

  • Let employees know their plans—what they were doing, why and when the change would take place.
  • Invited and addressed employee questions and concerns via e-mail, newsletters and town hall meetings.
  • Created a severance plan that incentivized employees to work until the new plant was up and running. However, the plan left open the possibility of earlier departure based on an agreement between the employee and the company.
  • Engaged a career counseling firm to work with employees.
  • Thanked employees for taking care of their customers while the new plant was being built.

Although hundreds of employees eventually lost their jobs, the results of the transition were:

  • Improved productivity and customer satisfaction.
  • Reduced workers' compensation claims and safety issues.
  • Reduced leaves of absence due to Family and Medical Leave Act and Americans with Disabilities Act claims.
  • No lawsuits.

Why is my client's experience the exception and my friend's experience the rule, and what should be done about that?

My friend's experience struck a nerve with Ava Doman, vice president of HR for Zetec Inc., in Snoqualmie, Wash. "Why prepare and discuss a performance review if you're going to lay someone off within a month's time?"

Instead, Doman said, let the laid-off worker have some time to say goodbye and work through the adjustment. "We are so caught up in the departing employee being mad and doing something to compromise the company—like stealing trade secrets or intellectual property—that we are losing the human element of those staying and those leaving."

At her company, managers give longtime employees who are let go a choice: They can continue to work for a period of time, accept part-time work or accept a severance package with the possibility of returning as a temporary employee. "Then we throw them a goodbye party at a local bar and pick up the tab. This has been greatly appreciated."

Nathan Childs is OtterBox's chief support services officer in Fort Collins, Colo. His mantra is "No surprises."

"I want people to know that we will not pull the rug out from under them. Helping people to know where they stand at all times reduces uncertainty and curtails negative speculation. It also restores discretionary effort that might otherwise be wasted in gossiping and other problematic behaviors."

Childs provides an example: "Recently, we decided to consolidate our customer service operations and close an office. We let the employees know as soon as we finalized our plan, which was six months before carrying it out. Employees responded well, and the consolidation was a huge success."

Federal law also requires that certain employers give workers a heads-up about impending layoffs.

The Worker Adjustment and Retraining Notification (WARN) Act requires employers with at least 100 employees to give 60 calendar-days of notice for plant closings or mass layoffs. "The WARN Act was designed to eliminate the abusive treatment described in your story, where the employee got completely blindsided," said Maria Danaher, shareholder in the labor and employment law firm Ogletree Deakins in Pittsburgh.

"Unfortunately, however," said Richard B. Friedman, an employment law attorney in New York City, "the WARN Act has many limitations, including scope of coverage and exceptions. Moreover, it doesn't require the humanity your client practiced. WARN notices can be cold, technical messages that ignore the emotional and practical realities of impending job loss on those who will suffer it."

Sean Driscoll, an employment attorney and partner in Lewis Brisbois in Portland, Ore., said the humane approach is good for claim prevention. "Getting fired can be a major life event, especially for long-term employees, and when an employee receives that news with little to no notice and only the barest of information about why he or she was selected for the RIF, the [information] gap can get filled in with the idea that there must have been a discriminatory motive.

"Open conversations about the process and the employee's selection can fill in the gap with the difficult business truths that justified the employee's selection. The reduced surprise, along with severance, continued work, and personally connecting the employee to a career counselor or staffing firm, tampers the employee's emotions about the news and reduces the chance of litigation."

So HR professionals, I have a proposal. Let's amend the WARN Act—not legislatively but as a collective professional commitment—to handle RIFs and layoffs with transparency, empathy and respect, and with advance thought about how we can minimize employee pain and suffering.

Jathan Janove, J.D., is the author of Hard-Won Wisdom: True Stories from the Management Trenches (HarperCollins/Amacom, 2017). He is president of the Oregon Organization Development Network and was named in Inc. magazine as one of the Top 100 Leadership Speakers for 2018. If you have questions or suggestions for topics for future columns, write to jathan@jathanjanove.com.


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