Talent Management

Managing Compassionate and Equitable Workforce Reductions

Business People Having Serious Conversation
Business People Having Serious Conversation
A headshot of Pat Horan

Pat Horan

Pat Horan is a Principal at Educe and has 10 years of experience implementing talent management systems and processes…

Everyone is talking about the one thing nobody wants to be talking about: layoffs.

The wave of workforce reductions that started in 2022 has gained momentum in 2023, especially in the tech industry, as organizations continue to look for ways to cut costs.

For many companies, the rapid success and subsequent hiring over the past few years has made workforce reductions and the heartache and headache that comes along with it a foreign concept, and now organizations are scrambling to figure out what to do. Worse yet, many organizations have worked hard to implement diversity initiatives in the past few years and may now find those employees who have the least amount of tenure could be adversely impacted in a layoff.

This perfect storm of over-hiring and under-planning has made recent notable workforce reductions chaotic, painful, and risky for organizations, and of course, even more difficult for their employee base who are left wondering what is going to happen to them.

Layoffs are an unfortunate part of business. But when one is necessary, it is critical for organizations to act with sensitivity and thoughtfulness, making a difficult situation as straightforward and equitable as possible.

If your organization finds itself faced with an impending layoff, how you manage the process matters. For both the impacted employees that you may want to re-engage with in the future and the employees who will remain to see your business through this challenging time, it is important to demonstrate that your organization handles adversity in a responsible and respectful manner to allow everyone involved to constructively move forward.  Below we discuss several items to consider to ensure you approach this decision in a fair manner.

Determine what you need to accomplish with a workforce reduction and if other alternatives exist

For most organizations, a workforce reduction is the last step you want to take when faced with a need to cut costs. Before turning to a workforce reduction, organizations should evaluate whether an alternative approach could address their objective. Instituting a temporary hiring freeze, retraining your employee base to better fit the required skillsets and needs of the organization, temporary furloughs, or even offering voluntary separation packages before resorting to involuntary layoffs are a few examples of options that should be more fully explored first.

It’s important to include all key stakeholders and leadership in these discussions, especially your CHRO and CFO who will be most familiar with the specific objective and whether an alternative approach could work. Only if no other alternative can meet your organization’s objective, should you proceed with a workforce reduction.

Define the process used to make workforce reduction decisions

The next step to ensuring a compassionate and equitable process is to clearly define the criteria that your organization will use to make decisions. Examples of decision factors could include things like performance, skillset, tenure, geography, work type, or a combination of these factors.

Be clear with how your organization will reach decisions, and who is responsible for both providing input and making the final call. These decision-makers should be transparent with those who will communicate with impacted employees, as they will be tasked with the most difficult part of the process.

Define a consistent method for how and when impacted employees will be notified and what information will be provided. Be sure to consult with your legal team to ensure your organization is compliant with regulations that are relevant to the impacted audience and the process you have defined.

Collect the necessary data and make workforce decisions based on complete information

Typically, the data needed to make workforce reduction decisions is spread across various systems, which makes it challenging to have a comprehensive view into everything that is needed to make informed decisions. Focus on aggregating all the relevant data needed to fairly execute your process and put it in the hands of those will need it.

Workforce reduction decisions are some of the hardest that organizations make, so having the complete picture is critical to making the most fair and equitable decisions.

Communicate workforce reduction events transparently

Be transparent with all employees about why your organization must move forward with a workforce reduction and what alternatives your organization considered before making this decision. When decisions have been made, focus on completing the process quickly and efficiently, so your employees are not left in limbo wondering what is going to happen. Provide your impacted employees with clear, transparent, and thorough information throughout the process, and make it easy for them to access severance packages, outplacement services, and other relevant information. The more information you provide and the easier you make it to access, the better position your impacted employees will be in for a smooth transition, short-term stability, and future success.

Once the process has been communicated to impacted employees, organizations should further communicate to those employees who remain. Reaffirm your organization’s commitment to your employees by providing details on how your business will move forward and work to avoid further reductions.

The initial disappointment of a layoff for impacted employees and those who remain is expected, especially considering the time and energy that these individuals have invested in the success of your organization. However, handling the process with empathy, objective decision-making, and in a fair, transparent, and compliant manner will minimize the negative impact on your organization’s morale and reputation.

Workforce reductions are a critical component within the talent management lifecycle. If your organization wants to learn more about how to manage them in a more effective, equitable, and transparent manner, we’re here to help.

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