Talent Management

The Do’s and Don’ts of Layoffs

experienced manager working on laptop
experienced manager working on laptop
Kim Trattner headshot

Kim Trattner

Kim Trattner is a Product Owner at Educe and has over 25 years of experience building, implementing, and operating…

Stories of botched layoffs are all too common. A thoughtful approach helps ensure your organization does better.

We’ve all heard stories of companies mismanaging layoffs. Notifications done en masse on a Zoom call. Information about impending layoffs being leaked before impacted employees are notified. Promises of severance payments employees never receive. These careless missteps leave both terminated and retained employees feeling vulnerable and unappreciated.

As one of the most externally visible functions of HR, when executed poorly, workforce reduction events can expose the organization to financial, compliance, and reputational risk. The way employee separation events are managed, and the way employees are treated during the process, matters.

To ensure your organization is not tomorrow’s headline, you need a process, the right tools, and a plan for properly managing employee separations.

The Do’s

Do make a plan. Attempting to manage a reduction-in-force without a plan almost ensures failure. Workforce reduction events are complex and require coordination across many departments within an organization. Be sure to consider the following in your plan:

  • Identify the population to be impacted (ie., departments, office locations, roles, job titles, etc.)
  • Determine budget impacts once you know the total number of impacted employees.
  • Identify the stakeholders that will make separation decisions and the criteria that will be used.
  • Identify the impact on retained employees including how work will be absorbed.
  • Plan for payments other than severance including vacation, bonuses, and unpaid expenses.
  • Ensure you have a plan for communicating the layoffs to the entire organization and to impacted employees.

Do understand the legal requirements. There are many laws at the federal and state level that need to be considered during a layoff. If your HR team is inexperienced in managing workforce reduction events, they will need supplemental support and access to legal resources to help them mitigate risk. You will want to ensure all applicable compliance reports are being filed with the appropriate agencies, including Adverse Impact, OWBPA, WARN, SOX 404, Legal Extract, ADEA, etc.

Do build transparency into the layoff process. Be clear about who is being impacted and why. If possible, provide details about the age, gender, and job titles of impacted employees. If the organization was able to offer impacted employees other open positions within the organization, highlight this.

Do consider an investment in offboarding software. Despite the growing number of offboarding software platforms available, many organizations are still managing layoff events on spreadsheets. This approach is error-prone and exposes the organization to unnecessary risk. Offboarding software helps organizations streamline the decision-making, administrative, legal, and financial processes associated with employee separations.

Do support managers responsible for notifications. Notifying an employee that they are being terminated is one of the most difficult responsibilities for a manager. Ensure they are provided with support, training, and a script they can use to facilitate the conversation.

Do lead with empathy and get to the point. Notifications are best done in person. Approach these conversations with empathy and keep the notification short. Remember to thank employees for their work and allow them time for questions.

The Don’ts

Don’t overlook hidden costs. A handful of severance overpayments will add up quickly. A workforce reduction event that drags out will lead to decreased productivity and will distract the HR organization from other priority work. A discrimination lawsuit brings legal costs and, if upheld, may cost the organization millions of dollars. Consider the financial, time, and reputational risk when evaluating the true cost of layoffs.

Don’t lay off employees critical to the business. This may seem like a no-brainer, but if you don’t make sure key decision-makers are engaged throughout the process you may end up terminating employees who are critical to the success of the business. Offboarding software can provide a technology-enabled interface to ensure key decision-makers are part of the process.

Don’t find yourself in a continuous layoff cycle. Take the time to plan up front to ensure a one and done approach to reductions. Poor planning often results in multiple rounds of layoffs with significant impacts on employee morale and productivity.

Don’t only offer severance. Providing impacted employees with a robust package helps minimize impact and demonstrates the value the organization places on its people. Consider including the following as part of your package:

  • Outplacement support
  • Job training assistance
  • Extended employer-paid benefits such as COBRA after the termination date
  • Mental health services
  • Financial coaching

Don’t leave impacted employees guessing. Make sure your severance agreement and package documents are detailed and curated for each employee. These documents should not include extraneous information (i.e., how to return a company car if an employee doesn’t have one). Offboarding software can be used to generate dynamic documents specific to each employee.

Don’t force employees to sign severance agreements. Legally employees have a certain number of days to review paperwork, which can vary by state and is based on the employee’s age. Forcing employees to sign documents puts the organization at risk for legal action and does not allow employees the time they deserve to process important information.

Don’t forget about the employees left behind. There will be an impact on the employees who remain with the organization. Acknowledge this and provide them with transparent information and the support need.

With careful planning, transparency, and an empathetic approach it is possible to manage reductions-in-force in a way that minimizes negative impacts. Offboarding software can streamline the process, reduce risk, and ensure the impacted employee experience is managed with compassion. Educe’s Transition Manager customers understand firsthand the benefits of a technology-enabled solution for managing employee separations. If your organization is ready to learn more, contact us.

Related Content