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For businesses facing tough economic times, layoffs might seem like the only answer to monetary challenges. In the third quarter of 2008, the number of mass layoffs in the United States reached its highest level—1,330—since 2001, according to the Bureau of Labor Statistics. More than 218,000 workers were separated from their jobs for at least 31 days.
But layoffs can thin the number of workers on the payrolls in unexpected—and undesired—ways. According to research cited in the November 2008 issue of
HR Magazine, companies that laid off 0.5 percent of their workforces experienced a turnover rate 2.6 percentage points higher than companies that didn’t cut staff. The more people that were laid off, the more people quit, researchers said.
Of the employees who stay, many report less productivity and more stress on the job. They say customer service has declined, they see more errors, and they think their organizations’ prospects have worsened. (See “Layoffs Pack Punch to ‘Surviving’ Employees,” Dec. 22, 2008,
Companies can avoid layoffs and reduce payroll with some innovative methods. Jason Zickerman is president and CEO of
The Alternative Board, an organization that brings together executives of similar-sized, noncompeting companies for monthly meetings to brainstorm strategies and learn from each other. Thousands of business owners have found creative ways to hold onto their employees, he said. These include:
Society for Human Resource Management (SHRM) research also has found that many companies employ tactics other than layoffs to cut staffing costs. The 633 randomly selected members responding to an Oct. 30, 2008,
poll reported using these measures:
However, 48 percent of respondents said that their organizations had laid off employees in the past 12 months. Respondents reported spending more time calming employee fears about job security (52 percent), counseling employees worried about retirement funds (50 percent), and devising and recommending alternatives to layoffs (37 percent).
Nearly half (43 percent) reported spending more time managing organizationwide communications. Sharing information with employees is vital to keeping them onboard and working productively, Zickerman said. Retaining “layoff survivors” will be important, as 60 percent of respondents to the SHRM poll said it was very or somewhat likely that their organization would lay off employees in the next 12 months.
“I can’t emphasize enough the amount of time, communication and morale support you have to give the people who are still there,” he said, adding that senior leaders will be relying on these workers to take on more work, report in for longer hours, and do more for the same or less pay. “You need to communicate and celebrate the small wins along the way. Give them thanks, kindness and recognition.”
Clueing layoff survivors in on why the layoff took place and how the company sees the future shaping up can help build a better corporate culture. Jason Jamrog, senior vice president of research at i4cp Inc., advised participants in a webcast to “give employees a sense of context. Why are these changes being made? What are we here to achieve? Is there a clear direction for the organization?”
To build engagement, let employees speak up about the company’s direction and delineate clearly what is up for discussion and what is not. Provide rewards and recognition, Jamrog said, and let the survivors know why they are still there to help build a sense of belonging.
“Make them part of the solution,” Zickerman said. “There’s more to deciding whether to do layoffs—there’s also how you run your company and manage the morale of the corporation.”
Beth Mirza is senior editor for HR News. She can be reached at
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