Layoffs: Are there any best practices for them?

With the threat of recession looming over our heads, there is a sudden spike in layoffs by big tech companies. These layoffs have not only led to a sudden mass unemployment, but also to feelings of unrest and distress among the laid off employees. Here’s an attempt to understand the patterns and best practices for layoffs historically.

Before 1980s

Limited importance was given to systematically communicating the news of layoffs to the employees. Layoffs primarily relied on the content of the message, the medium for conveying the message, timing, rumors, organizational culture, diversity of employees, and the willingness of the management to lay people off.

1990s

Research conducted by Smeltzer et al (1992), recommended a few best practices for the management to carry out layoffs effectively. The practices include

• Developing sensitive strategies for layoffs
• Developing an informal rumor control system
• Employees learning about layoffs from the management rather than from the media
• Not ignoring legal policies and concerns
• Providing accurate and authentic information from an authentic source

Another research conducted by Feldman (1994) has also reported a few principles of better practices in managing layoffs.

• Early warning system to identify potential layoffs
• Focus on redeployment rather than permanent layoff
• Honest, direct, and empathetic communication about layoffs
• Assistance programs
• Social support to decrease psychological distress
• Social responsibility towards local communities to minimize the adverse impacts

Research by Allan (1997) places the responsibility of managing layoffs efficiently on human resource planning.

• Bringing about changes in the hiring practices rather than inflating the organization during a good time and cutting down during the bad ones.
• Balancing human resources supply and demand and linking that to the organization’s strategies and goals
• Communicate with the employees to keep them fully informed
• Outsourcing some tasks and training the existing human resources for a multiple skillset.

2000s

Research conducted by Kidwell (2001) highlighted the ways in which decisions about which employees to layoff are made.

• Checking if layoff decisions are just and ethical
• Providing clear information about layoffs in a way that doesn’t break trust
• Using open-book management to take decisions about layoffs

Marks and Meuse (2005) have provided suggestions for managing the resizing process.

• Preparing the employees in advance for the impending change
• Involve employees in the resizing process
• Communicate Openly, honestly, and frequently throughout the resizing process
• Do not promise that things will remain the same. Keep the promises you do make
• Over-communicate
• Address the Emotional Side of the Resizing Process

Bhattacharya et al (2005) proposed a few strategies for successful downsizing.

• Task analysis
• Using workforce reduction and organizational redesign strategies simultaneously
• Focusing on approaches focusing on employee-welfare and change-management at the same time

Gandolfi (2008) presented a few recommendations for effective downsizing.

• Proactively preparation of the organization and the employees for downsizing
• Providing training, support, and assistance, during the whole downsizing process
• The survivors receive full support, and access to help, counselling, support, retraining, and unbiased and timely information
• Weighing the ‘costs’ of downsizing

Skarlicki et al (2008)

• High importance to morality and the way layoff information is presented to the employees.
• Informational justice helps manage retaliation only when layoff victims perceived that their employer had high integrity prior to the layoff

2010s

This research was conducted by Karren et a (2012).

• The increased use of layoffs by organizations has created a large class of unemployed workers who, rather than being seen as victims, are perceived to be deficient in their skills and abilities.
• Organizations should examine their HR policies and practices regarding the unemployed seeking jobs.
• Discrimination against the unemployed may result in long‐term unemployment that may have enormous human costs.

Research conducted by Mujtaba et al (2020) reported

• Importance given to mental health consequences experienced by the victims of layoffs. Thus, suggestions given for laid off employees:
  • Understand that it’s not your fault and you are not alone in this
  • Try not to indulge in self-guilt
  • Manage your emotions
  • Indulge in physical and mental health care
  • Try to capitalize your existing skillset by becoming a Micropreneur
  • Network to get to know more job opportunities
• Responsibility of the HR Department
  • Evaluating reasons for layoff for their fairness
  • Planning and managing complex layoffs
  • Ensuring that the notices are delivered properly. (authenticity)
  • Transfers or transition support benefits

Analysis:

Layoff is an age-old and an inevitable notion. From the timeline, we can see the direction in which this concept is progressing. More than 4 decades ago, layoffs were more of a split decision, taken by the management, where people were viewed just as mere employees of the organization. Therefore, the best practices for layoffs mostly included how the message of layoff was being conveyed. Limited importance was given to systematic communication, and more importance to the content, timing, and medium of the message. Feelings of humanity were also scarce in the best practices.

The scenario started changing after the 90s. Developing sensitive strategies for conveying layoff, developing early warning system for potential layoffs, controlling rumors, extending social support to the victims, and engaging in empathetic communication the message were some methods for layoffs recommended by researchers. By the end of the 90s, some researchers recommended bringing about changes in the hiring policies and outsourcing resources if required rather than engaging in a recursive cycle of recruiting and downsizing. Taking the employees into confidence was the key theme of the best practices for layoffs during this time which paved a way for morals and ethics while making layoff decisions.

Research based practices in the 2000s focused mainly on the fairness of the layoff decision, nurturing trust, overcommunicating, being honest and just, and preparing the employees in advance for layoffs rather than dropping a sudden bomb on them. This reflected the humanistic consideration for the employees in the layoff practices. Some practices even aimed at providing training and retraining, access to support and counselling services, and assistance during and after the downsizing process. These considerations opened the doors for integrity and stigma to enter the picture of layoffs by 2010.

As layoffs kept on increasing and the strategies became more humanistic, employer’s integrity and morality was called to question. At the same time, an increasing concern for the victims of downsizing was the tag of being unskilled or undeserving. This reflected that rather than sympathizing and supporting the victims of layoffs, they were being stigmatized. This would’ve naturally made employees in general fearful for their job. This can be associated to the relief that the layoff survivors experienced reported in research around 2015.

All this culminated in the existing strategies that are being used for layoffs. Existing methods for downsizing focus more on reassuring the victims about their skills and abilities, helping them engage in mental health care, and motivating them to move forward to either find new job opportunities or cash on to their existing skills by staring small businesses.

In this whole record, a common factor found in all the research studies is the responsibility of the HR Management in making the downsizing process more empathetic and as painless as possible. This brings us to the question that why has this persisted in the research for best practices for layoffs for more than 4 decades? Considering the existing mass layoffs, were they carried out empathetically and humanistically? What are some existing layoff strategies that can be called as empathetic? (Can we write here “Let us know in the comments below your perspective about the current layoffs and were they empathetic”?) (Do we mention a couple of empathetic strategies as well?)

References

Smeltzer, L. R., & Zener, M. F. (1992). Development of a Model for Announcing Major Layoffs. Group & Organization Management, 17(4), 446–472. https://doi.org/10.1177/1059601192174009

Feldman, D. C. (1994). Better practices in managing layoffs. Human Resource Management, 33(2), 239–260. doi:10.1002/hrm.3930330206

Kidwell, R.E., Scherer, P.M. Layoffs and Their Ethical Implications under Scientific Management, Quality Management and Open-Book Management. Journal of Business Ethics 29, 113–124 (2001). https://doi.org/10.1023/A:1006455228312

Allan, P. (1997), “Minimizing employee layoffs while downsizing: employer practices that work”, International Journal of Manpower, Vol. 18 No. 7, pp. 576-596.  https://doi.org/10.1108/01437729710186437

MARKS, MITCHELL & De Meuse, Kenneth. (2005). Resizing the Organization:: Maximizing the Gain While Minimizing the Pain of Layoffs, Divestitures, and Closings. Organizational Dynamics. 34. 19–35. 10.1016/j.orgdyn.2004.11.005.

Bhattacharyya, S., & Chatterjee, L. (2005). Organizational Downsizing: From Concepts to Practices. Vikalpa, 30(3), 65–78. https://doi.org/10.1177/0256090920050306

Gandolfi, F. (2008). Learning from the past-downsizing lessons for managers. Journal of Management Research, 8(1), 3.

Skarlicki, D. P., Barclay, L. J., & Pugh, D. S. (2008). When explanations for layoffs are not enough: Employer’s integrity as a moderator of the relationship between informational justice and retaliation. Journal of occupational and organizational psychology, 81(1), 123-146.

Mujtaba, Bahaudin G. & Senathip, Tipakorn. (2020). Layoffs and Downsizing Implications for the Leadership Role of Human Resources. Journal of Service Science and Management. 13. 209-228. 10.4236/jssm.2020.132014.

https://qz.com/work/1663731/mass-layoffs-a-history-of-cost-cuts-and-psychological-tolls The Short but Destructive History of Mass Layoffs

https://www.shrm.org/resourcesandtools/tools-and-samples/toolkits/pages/managingdownsizing.asp