IT employees in India, especially mid-to-senior level staff, stand the risk of losing their jobs as most firms prepare to lay off over 5-8 per cent of the total workforce in the upcoming quarters [source].
It is a rough patch for employees and HR professionals who have to facilitate the process as most companies are looking to streamline their operations and costs.
Overseeing layoffs is a repugnant part of management that many people fear. After all, letting employees go is one of the toughest decisions to make. Even if layoffs are done in the best interest of the company, it evokes mixed feelings of guilt, sympathy, sadness and anxiety.
It is hard for all the parties involved because of the emotional issues at stake. And, it is also one of the tasks that is most likely to land a company in legal trouble, if not done the right way.
Laying off an employee is not the same as firing an employee. When an employee is fired, it can happen for various reasons that are related to the employee’s performance or behaviour. On the other hand, layoffs occur when a company is trying to downsize, restructure, and re-scale its business.
There are dire consequences of a layoff going bad if it is done without paying due attention to the emotional and personal aspects. The degree of harm often comes down to how the employer handles the situation during and after the layoff.
Effects of Layoffs
One of the biggest consequences of a layoff is angry former employees who go on to tarnish your brand. Employees who are put under this kind of immense pressure and stress are likely to vent their feelings to family and friends. But, it doesn’t stop there, it can further extend to posting their negative reviews on social media pages, Glassdoor, etc. This will create an indelible impact on your brand and lead to more contempt for your company.
Here are some of the consequences of layoffs for Business and Employees:
Loss of Intellectual Property and Innovation
Greater collaboration between colleagues results in higher creativity. So, when you break the working relationships, you force the employees to again start from scratch. In addition, at times critical know-how of making business processes work can be lost by sending talented people out of the door.
Weaker Business Relationships
External relationships with business partners, clients and customers can also be derailed. Your company might have to start rebuilding client relationships which could impact customer experience.
With layoffs, the rational is saving money, which it does in one sense. However, the severance costs, cost of finding replacements and getting them up to speed are some of the hidden costs that should also be taken into account.
The remaining employees tend to turn sceptical and lose their trust in the company. This can affect morale, effectiveness and productivity.
Turnover of Important Talent
When employees begin to lose trust, they start looking for other brighter opportunities. There is a high chance of losing your top talent to competitors.
Best Practices to Manage Layoffs
Making the decision to conduct layoffs should be taken after careful consideration of its consequences. According to a survey, more people reported feeling betrayed and insulted about the manner in which the layoff was handled than the pink slip itself. People wished their companies hadn’t waited until the last second to announce the decision and had exhibited more compassion.
Here are some tips to ease the layoff process for both the employer and the employee:
1. Have a Clear Plan
Work out all the details of the plan by considering how to communicate the decision to employees, the kind of support you’ll be giving to the leaving employees, how the move could affect the organisation’s reputation, etc. Plan with compassion at every step. Handle it with dignity and humanity. This plan should be made specific to the situation and take into account the best interests of all stakeholders.
2. Prepare to Deliver the News
Don’t get into this task without prior preparation and don’t do it alone. Rehearse what you are going to say beforehand and be ready to answer questions. Of course, not everything can be rehearsed, the important thing is to show empathy and sensitivity to deliver the message in the best possible way. It’s all about striking the right balance.
You should also be ready with the severance arrangements in advance. Remember that the survivors of the layoff are watching how you treat them and handling any objections. If possible, provide training or other guidance resources for everyone involved in delivering the news to ensure a less stressful process for either party.
3. Offer Outplacement or Enlist Other Support Services to Ease the Blow
Finances may be tight when a layoff happens, but you certainly cannot overlook your obligations to your employees while letting them go. Consider outplacement support for the employees. If you are unable to cover extensive outplacement support, opt for other services that help employees to recover and find new opportunities.
Some options include services like resume writing, career coaching, financial planning and more. You can also consider enabling access to job search services.
4. Consider the Risk of Hiring After a Major Layoff
There are several reasons an employer should be cautious when hiring for a position that was recently eliminated. If this is not handled properly, an employer can land into legal trouble on the grounds of unfair termination and it can adversely impact their reputation. So tread the path of hiring after a large layoff with care. Be ready to answer tough questions on the need for re-hiring, soon after a layoff.
5. Minimize the Impact of Layoff on Survivors
The remaining employees or survivors of the layoff should also be taken care of and not left to struggle with the situation in vain. Leaders must be visible and accessible to listen to their concerns. Leaders should inspire confidence by positively talking about the mission, vision, plans for the future and emphasize the necessity of downsizing.
Additionally, introduce efforts to increase your organisation’s competitiveness following the layoffs. You can increase activities that will restore employee harmony, friendship and trust to help employees cultivate new workplace relationships.
Downsizing with Dignity
A layoff is a toxic situation that is often the last option to restructure your business. There is both a right way and a wrong way of conducting layoffs. So, make the best out of an otherwise unpleasant situation by approaching it with compassion. No employee should be deprived of dignity during such an emotional ordeal.