Layoffs – The Reputable Way


j0433131 (2) With the news that Standard Bank will review costs which will result in layoffs, I thought it would be prudent to share some thoughts on doing layoffs in a reputable way.

So, you have been called in and told to cut costs by culling the workforce!

Just a simple exercise! FIFO method. First In, First Out. Basing your choice on what value the person has added to the organization.

This is the time for a Red Flag. Stop. Think. How can we part in a reputable way.  This is not just a HR or cost-cutting exercise. This is an exercise that can create long-term damage to your reputation. Rather think of it as an engagement exercise of sorts.

As a consultant I always tell companies to plan any retrenchment exercise with care as it is nothing other than another large scale change exercise, and as you know the only person that loves change is a baby with a wet nappy. My experiences below is based on having advised and implementing the downsizing of a whole company as well as my experiences as a consultant the past fourteen years.

Any retrenchment exercise has not only environmental and company impact but also psychological impact on both the people being laid off as well as survivors and stakeholders. They are all faced with uncertainty. Networks of relationships are interrupted.

I believe that companies should provide options: Examples:

** Avoiding Layoffs … there really are options ..Why not provide business start up training to those people – help them to become free agents to the organization? Allow them to tender their services back to the organization.

** How about running innovative cost-cutting campaigns in the business? Ask staff to come up with ideas and cost-saving suggestions. Make it a large scale awareness exercise and innovative thinking campaign.

** Companies should provide training to people on how to deal with being laid off. Many will take it personally, iro of the current economic climate.

** Managers should be trained with how to manage layoffs carefully and thoughtfully. A question that should be asked is: Are we looking at the human cost of these actions?  Layoffs are not about "headcount"; they are about people. Unfortunately layoffs spread a fear virus that can leave an entire organization weakened and open to attack.

The Fear Virus

Let’s assume that you are laying off 1000 people. Assume that each of the people laid off has close working relationships with just 5 people … that’s almost 5000 "surviving" employees who are now traumatized by watching their friends being laid off.  These people are now living in and acting from fear.  Plus their informal network for getting work done is shredded.  Productivity? Reputation Conscious? Not likely.

Now let’s assume that each of the 5000 traumatized employees spends several hours talking about layoffs and their fears to just 10 co-workers.  Now there are 50, 000 fear-based employees doing their best to do ‘’CYA’’ and avoid risk and management scrutiny. 

And these people as well as the original 1000 laid off people go home and have angry and fearful conversations with their family members, neighbours and friends. They spread messages that undertake a life of its own and become a virus of its own on all the social networks.

Let’s say that each person spreads fear and distrust of organizations to 10 people … now we’ve got a fear virus affecting millions.  At this point it tips and takes on a life of its own, creating environments where people don’t trust management and are not about to take chances, volunteer for new projects or propose new ideas. (Remember Malcolm Gladwell’s The Tipping Point)

Would that company have a good reputation?  Forget it! The seeds for destruction is sown!

The same company will have to spend more the next time round to recruit staff and encourage employment (One of the dangers of Reputation Risk)

Here are some other thoughts that may help guide lay-offs in a humane and reputable way:

I firmly believe that communication is the key to successfully implementing any large-scale organizational change.  Whether you are implementing new systems, redesigning business processes, or transforming organization structures through downsizing and M&A, effective communication is absolutely critical. 

A former colleague used to write, "Communication is more than the tangible vehicles and tools that convey information; it is the glue that binds internal and external stakeholders to your vision, mission, goals and activities. Effective communication engages the hearts and minds of all stakeholders."

With regards to a change process, the objective of these communications is to move your target audiences along the following continuum with the stated effects:

  • Awareness – individuals are conscious of the change
  • Understanding – individuals have a shared meaning of the change
  • Acceptance – individuals internalize the change and have a more favourable outlook
  • Alignment – individuals provide appropriate levels of support for the change
  • Commitment – individuals begin to claim responsibility and ownership for the change

This is only achieved by developing a communication strategy that utilizes multiple communication vehicles and delivery channels throughout the course of the change process.  Most importantly, these communications must build upon each other to share a bit more of the story as it unfolds.  It is not sufficient to make a global announcement the day before or the day the change occurs.

Now let me put the above into practical terms. A few "nuts and bolts” regarding lay-offs that I picked up, being part of a team that had to dismantle an organization:

  1. Give as much advance notice as possible.
  2. Have the lay-offs announced by the person with the highest authority possible, hopefully the decision maker or the top person in the organization to whom the person belongs or, minimally, the supervisor, i.e. someone the person respects or has some personal relationship with. (I believe that Standard Bank did this) For the sake of humanity, such notices should be made in person.  Retrenchment notices are stone-age stuff.  The notification session should be interactive sessions.  Those making the announcements MUST be briefed or trained on what to expect and how to handle various reactions, i.e. give them models like the grieving process (denial, resistance, exploration, commitment), have them prepare questions, etc.  If notification cannot be made in person, then telephone can be substituted if done properly and by the right person, e.g. someone the person has some relationship with.  If individual notification is not possible, it might be done in as small a group as possible, but this is certainly not a preferred alternative by any stretch of the imagination. Follow-up or augment the human notification with a concrete, written set of plans or guidelines that the laid off person can refer to as he or she tries to accommodate the lay-off, e.g. steps that will take place, contact people, how to access unemployment, etc.
  3. If at all possible have a workshop for workers which should be held immediately (within 24-48 hours of the notice) that explains things like unemployment, severance pay, job hunting, etc.  Experts should conduct the session but the leadership should be represented to help clarify how things will be implemented or viewed in the organization.
  4. A good counselling program should be available to the laid off workers, e.g. financial counselling, job searching, starting your own business programs, grief counselling, etc.  If at all possible, a list of job opportunities should be provided.
  5. As much as possible, respect the privacy of those laid off for as long as possible even though that will be eventually lost as transition occurs.  The word will get out but time gives the employee a chance to adjust or get thru some of the grief cycle before having to deal with well meaning co-workers.  Even expressions of sympathy may be hard to take for someone in denial or resistance.   If possible, give the laid off person some time off, but no more than one work day.  He/she will need a support group to help deal with some of the chaos they will experience and removing them from that becomes counterproductive if too long. 
  6. Provide a hotline.  Email offers a great venue because email can be routed to an appropriate expert.  If that is not available, provide a phone or drop box for people to provide concerns, anonymously if they prefer.
  7. The potential for workplace violence is real.  Think about it, very seriously; both from the perspective or prevention and remediation.
  8. Remember, not only the laid off workers will be affected.  Briefings or other forums where they can get information and share concerns are important for them, too.  The culture will be affected, not to mention the formal and informal organization.  Some thinking needs to be given to ensuring proper reconnection of the loose ends that will inevitably take place as people leave.  The people who are left need to feel a sense of regained homeostasis as soon as possible. 

I know many organizations do not deal with lay-offs so compassionately, i.e. notice is made and the employee is supervised while clearing his/her desk and immediately escorted off the premises.  This has changed due to legal restrictions, but the above suggestions will go a long way to show why the organisation regards itself as an Admired company, as it lives up to its brand promises.

The list above is is certainly not comprehensive but some stuff I learned thru first hand observation, I offer them because my heart goes out to the estimated 50 million people worldwide who will be affected this year.

Economically it will not always be possible to put all of the above into action, but remember you want to part ways with an ex-employee in a manner that the company’s integrity and reputation will not be jeopardised.

· For those who know of professionals who will be laid-off, please ask them to contact me. I may be able to assist them with setting up their own consulting practices. For the past twelve years I have run a program called Market your Consulting Practice that have been well received by those wanting to turn their professional knowledge into a personal advantage.

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