How to Conduct Layoffs the Right Way

​Layoffs can and should be a difficult experience for an organization. Companies that conduct layoffs are usually in financial trouble. They may have to terminate employees who've worked for the company for several years, and they have to support the employees who remain.

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Working Through
an Unstable Economy

The decision to lay off workers can't be made lightly—but companies also should take care when hiring to make sure they aren't overextending themselves.  

Harley Lippman, CEO and founder of New York City-based IT staffing firm Genesis10, said having a proper hiring plan in place can sometimes help companies avoid the need to lay off employees.

"It begins with healthy hiring and moral practices during normal or prosperous business climates that include well-planned and data-driven staffing-level decisions to ensure that an organization is hiring the right number of individuals for their long-term need while avoiding over-hiring for temporary needs that may result in layoffs," Lippman said.

Many recently announced tech layoffs are a result of "aggressively over-hiring, well beyond the long-term needs of the organization," he said. "These organizations often end up losing in the long run."

One tech customer success manager based in Reston, Va., said she found a position at a software management company, accepted the job, gave her two weeks' notice for her previous company, and was laid off during the first week of employment.

"This company showed the near opposite of sound hiring practices," she said. "This has happened quite a bit in recent news–companies rescinding their offers–but to have been a part of this was devastating."

HR Teams Can Become Overwhelmed

Barbie Winterbottom, CHRO, founder and CEO of the Business of HR in Tampa, Fla., said in addition to abiding by employment laws regarding layoffs and terminations, communication and accurate information are two of the most essential elements to conducting layoffs well. It's important to ensure everyone is aware of what's happening and what their options are.

"Folks impacted by job loss have so many questions, are often fraught with fear and trepidation of 'what's next,' and they need and deserve support," Winterbottom said.

"At the same time, HR teams can be overwhelmed with phone calls and e-mails from hundreds or thousands of employees, while trying to process required documents and manage required steps in systems. It can make timely communication tough."

In the case of large-scale layoffs, she recommends creating an online portal or website for impacted employees with links to resources. Provide as much information as possible, in writing.

"It's important to keep in mind that many people go into fight/flight/freeze modes and don't always comprehend anything you are sharing," Winterbottom said. "And while they may nod as though they understand, as soon as they get home they realize they didn't absorb anything."

Companies that tout outstanding employee experiences "should insist on leaders delivering clear and concise human-focused messages," said Manny Campione, market leader and principal, compensation and organizational performance for consultancy Normandin Beaudry in Toronto. "Leaders should steer [away] from canned phrases and jargon and acknowledge that employees lost friends and colleagues in the downsizing."

What to Say to Employees Who Remain

During layoffs, appearances matter, said Christy Pruitt-Haynes, global head of talent management and performance at the NeuroLeadership Institute in Nashville, Tenn.

"Companies must consider how the layoff process will play out in the court of public opinion," she said. "People understand that layoffs are always a possibility, but the way they are handled speaks to the character and culture of the organization. Sending a mass e-mail with little context and little time to retrieve personal items and say goodbye makes that organization appear cold and uncaring."

Sid Upadhyay, CEO and co-founder of WizeHire in Houston, advises against putting a spin on the situation to present it in a better light or to frame it as an everyday business practice. "This can lead to confusion, mistrust and feelings of being gaslit for the employees left behind," he explained. "It is a sad situation. Be sure your employees understand that it is difficult for leaders, too."

Typically with a layoff or reduction in force (RIF), there is a business case and analysis associated with the rationale for such measures and it is usually carefully planned by executives, HR and outside counsel, said Stacey Berk, founder and managing consultant at Expand HR Consulting in Rockville, Md. But even if they hear a rational explanation, employees who were not laid off may feel uneasy.

"After a layoff or RIF, it is natural that the remaining employees will feel uncertainty and possibly anxiety about their status with the organization," Berk said. "The CEO can start managing the aftermath of these changes immediately with a strong all-staff communication followed by various staff meetings, depending on how widely dispersed employees are by location after the layoffs have taken place."

Follow WARN Act Requirements

George Morrison, attorney at law firm Buchanan Ingersoll Rooney in Philadelphia, said a "successful RIF will require careful and early planning, including a strategic analysis of any WARN [Worker Adjustment and Retraining Notification] Act and mini-WARN Act implications."

Plans should be proactively reviewed for possible disparate impact to ensure there are no disproportionate effects on protected classes of workers.

A careful plan will consider and potentially implement a severance program to reduce exposure to individual, class- or collective-action claims.

"In light of a group termination and the potential for wage and hour issues, employers should recognize that additional legal requirements may trigger to obtain a valid and enforceable release of claims," Morrison said.

Assisting Those Who Are Laid Off

Pruitt-Haynes said that ideally, companies should help employees find their next jobs by offering them assistance such as resume preparation, access to a full-service outsourcing company and interview preparation classes.

Phyllis G. Hartman, SHRM-SCP, president of PGHR Consulting in Pittsburgh, said when she handles layoffs, she first gathers as much information as possible on how to apply for unemployment and prepares a presentation and handout for employees. She also includes information about last pay and benefits, including COBRA forms and the employee assistance program.

"Helping people to leave with dignity and kindness pays back," Hartman said. "[For small-scale layoffs], meet with each employee and explain everything and give them time to ask questions at the meeting and provide contact information for questions later."

Amy Mosher, chief people officer at isolved, based in Gardnerville, Nev., said, "Employees who remain want to know their company is helping their former co-workers who have been impacted. They want to know that their job is secure, that the company has a future and, ultimately, that they're making the right decision by staying."

Paul Bergeron is a freelance writer based in Reston, Va.