Managing Layoffs Right

Layoffs are on everybody’s minds these days—whether they are impacting teachers in Wisconsin or GM employees in the US who found themselves affected by the Japanese earthquake this week. Nobody likes them. But for those of us operating any kind of enterprise in this tough economy, burying our heads in the sand is not an option. Yet that’s exactly what companies sometimes do when it comes time to make tough staffing decisions. Why?

Hiring is usually approached as a core business process with policies and procedures behind it, but staff reductions simply don’t get the same rigorous treatment. Companies tend to view them as a “one-off” event rather than part of the ebb and flow of business. But organizational change, whether in times of growth or in times of retrenchment, is a constant that must be continually managed. And it requires not only having the right information, but having the processes and technology to act on information effectively.

Imagine going to the doctor for a pain you are experiencing and he doesn’t examine you, take your temperature or blood pressure, ask you a single question or run any tests before writing a prescription. How much confidence are you going to have in his diagnosis and treatment plan? The same goes for layoffs. If cuts seem arbitrary, poorly planned and inconsistent, the employees affected will feel they’ve been treated unjustly, and those remaining will feel anxious and uncertain (could they be next?). Similarly with any kind of pain, personal or professional, you would want to know that the remedies are actually “treating” the problem rather than exacerbating it. If a layoff is needed, it’s critical to know if the proposed staff reductions could cause further damage like driving away valuable talent, exposure to lawsuits or regulatory penalties, or increased costs that offset the financial belt-tightening intended in the first place.

What will help support a layoff process that is as intelligent and compassionate as possible?  The answer is simple: information and consistency. This is where human resource professionals have an important role to play.

On the information side, detailed data about the organizational structure will help decision-makers understand where they could make changes to consolidate the workforce – which departments could withstand cutbacks, which are indispensible and shouldn’t be touched, where there are staffing redundancies. Information rich organizational charts can even help  identify employees who could be redeployed, offered voluntary severance packages or retrained in order to avoid or reduce the scope of involuntary layoffs.  For example, wouldn’t it be helpful to be able to quickly pinpoint the individuals that might have requested early retirement or who have shown interest in a career change?

Let’s discuss consistency. When planning and managing a reduction in force, consistency of process and communications is critical.  A consistent process ensures that every affected employee is treated the same, in accordance with business rules and external regulations such as WARN or Older Workers Benefit Protection Act (OWBPA), reducing the organization’s exposure to lawsuits and fines.  Consistent communications the entire employee population the information they crave in times of change.  People like to have facts. When there are clear and specific business reasons given for layoff decisions, there’s a greater chance that those affected won’t take things personally and that those staying on will be reassured of their role in the organization’s future.

By putting the people, processes and technology in place to fully understand the organization, plan for change, and manage the process, HR can arm the business with the tools needed to make staffing decisions that make the most sense…in both good times and bad. Layoffs are never going to be easy, but they can be managed in a way that is less stressful for employees and employers alike. Whether a business is scaling up or scaling back, the right information is critical to making wise and fair decisions for everyone involved. It’s time to take our heads out of the sand.

Suzanne Johnson is Director, Global Services at HumanConcepts, the developer of OrgPlus Enterprise and Transition Manager. She has over 10 years experience working with Fortune 200 companies to develop best practice processes and technology supporting reductions in force in a consistent, compliant way, improving the experience for all involved.