Strategic Approach to Cost-Cutting: Learnings for HR to Execute Layoffs Better

April 25, 20179:48 am1622 views

Be it due to economic slowdown or revenue slippage, there are times when company downsizing is the only one but unavoidable solution. When things get tough and the organisation realises the need to downsize to cut down on the operational costs, obvious layoffs are the way to go for companies fighting the race for survival.

While downsizing, might sound like a great idea to keep the business operations afloat, unfortunately executing layoffs and letting talented employees go is one of the most toughest and daunting experience for HR managers.

The way you treat people matters, a lot. For employers, layoffs might be a tough decision to make. However, for the affected employers, sudden dismissal might come as an unpleasant surprise that shatters their future business plans. Because, when a pink-slip is handed over to an employee, they can react and sometimes responses could be way out of control for HR managers to handle – sometimes sudden emotional outbursts could leave the management in a state of shock. Therefore, it is critical for HR leaders to execute layoffs in a professional manner.

You must make sure that the individuals your organisation decides to let go, should be terminated with dignity and transparency, such that there will be no prolonged issues emerging out of the sudden management call to downsize.

With right strategy and strong planning execution, downsizing could be the organizational lifesaver that can protect your business from the brink of collapse. Conversely, if downsizing is done without a thoughtful strategy, it will only lead an organisation nowhere, rather than effective cost-cutting. When such scenario happens, then the cost of layoffs will outweigh the benefits gained.

How you plan downsizing and announce layoffs without impacting the morale of other employees in the team? Take a look at the following tips on how to execute layoffs better:

See: How Should Managers Deliver Bad News of Layoffs to the Workforce?

  1.    Choose the right people

Deciding on whom to layoff from the talent pool is one of the biggest challenge of a downsizing plan. Everyone might have worked their best, but you have to determine fair and square about the individuals who show the least performance.

It is crucial to make it clear why the person is selected to be laid off. You can use measurable metrics such as tenure, productivity, and performance reviews to justify your decision. Through this method, you can root out favouritism and employee bias in the decision-making process.

  1.    Pick the right time to make the announcement

Perfect timing is everything for a smooth layoff execution. The best time to tell the bad news is to announce it to employees early during the week. However, you should avoid Monday. They could respond angry and out of control, because people tend to have bad moods sometimes getting back to work after the weekend.

Friday afternoon is not a good day too, as they could be very upset about losing their job, just before the weekend. Therefore, Tuesday should be the best day to announce layoffs, perhaps because it’s not yet middle of the week and employees are in work-mode and responses to such announcements can be handled by HR managers to keep the uproar in control during the week.

  1.    Decide on the right method

Some HR managers choose to notify about the layoffs by email or phone, but this is not the right method. Layoff is a big thing, and you should tell the employees face-to-face. Schedule a private meeting with the employee ahead of time. You should make sure that only you and the affected employees acknowledge the real purpose of the meeting.

Show your compassion and treat the employees with respect during the process, such that they know that they’re valued in your organisation.

  1.    Pay severance and provide counselling

Employment law is complex. If you’re not careful enough, there is a high chance of being involved in unwanted lawsuits coming from dissatisfied employees. Before the D-day, you should draft everything you need, to talk with them, such as the reasons, severance pay arrangement, and outplacement.

Severance and outplacement is usually offered by the company, as an exchange of their release. In addition, these services are also useful to avoid lawsuits. Therefore, make sure that your company has already sketched out the legal agreement regarding this matter. To help them survive the layoff, you can provide job counseling.

  1.    Communicate with rest of the staff

To avoid baseless rumors circulating after the downsizing operation, you should be able to communicate layoffs with the rest of the staff. Share openly with retained employees about the names of fellow workers who are laid off, the reasons behind their downsizing, as well as how it will affect the team as a whole.

Downsizing usually comes as the last resort to save the company’s boat from sinking. While it is not an easy feat, there are always methods that will keep both parties satisfied with the decision. The best advice to conduct layoffs is to treat the employees the way you would like to be treated, if you are in their shoes.

Read also: Restructuring at Snapdeal Begins Right from the Founders Chair, Layoffs on Anvil

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