Last week’s announcements by Meta (11,000 employees let go), Twitter (3,700), Stripe (1,100), and Lyft (700) turned heads as the high-tech stalwarts of the US economy stumbled. Previously, Coinbase, Shopify, Netflix, Microsoft, Snap, Robinhood, and Tesla had cut employees. When companies face reduced revenue (in this case, with high-tech, often from reduced advertising revenue), restructuring and layoffs occur.
But I was concerned by HR pundits — such as this one on CBS — who warned that those working remotely will be the first to be laid off partly because, he said, it is easier to lay off someone over ZOOM. Really? Is any layoff easy for a manager? Data on laying off remote workers is non-existent.
During restructuring, executives should hold on to their best employees and those with the technical skills required for the future, whether they work remotely, hybrid, or in the office full-time. Don’t be stupid with layoffs. Follow these 7 best practices that I will discuss below.
Moreover, the evidence is overwhelming that remote and hybrid workers are more productive and innovative than other workers. The average work-from-home employee can save a company $10k to 20k with improved performance, less turnover, and reduced real estate costs. The traditional office space was never that productive and innovative. As Gabe Burke has written, it has become a black hole that devours money and has long needed to be fixed.
It is not where you work or being elbow to elbow that makes for a high performing team. While having smart, dedicated employees and well understand goals, milestones, and operating norms is critical, research consistently shows that trust is the No. 1 factor for team success. MIT researchers and Harvard researcher and author Tsedal Neeley, even discovered that virtual teams can outperform co-located teams. Again, trust is a big factor for success.
How layoffs are carried off is as important as the layoff itself.
When business cycles hit an industry like high tech, companies need to adjust to survive a long-term trough in revenue and emerge better able to compete. This effort often involves redirecting investments from floundering products and services to the ones that will flourish in the future.
But I know from more than 20 years of laying off employees around the globe that how employees are laid off is as important as the layoff itself.
Why? Because of its effect on the survivors. Research shows that survivors often have a 20 percent decline in performance after a layoff. In addition, if they are not convinced of the company’s new direction and their belief in management to achieve their strategies for growth, it leads to voluntary turnover, especially among the best and brightest employees.
Don’t be stupid with layoffs. Follow these 7 best practices.
Rather than looking to cut productive home-based workers, follow these proven practices for planning layoffs.
1-Consider alternatives that help you keep valuable employees. Before implementing layoffs, consider doing the following, especially if the downturn is expected to be short-lived:
- Cut employee hours.
- Eliminate overtime.
- Use a temporary furlough instead and consider maintaining employee benefits.
- Use the Southwest Airlines alternative. Southwest typically keeps employees on the payroll at reduced hours doing needed tasks that didn’t get down during normal times or providing leaves or temporary furloughs to volunteers. It builds morale, and the airline can recover faster than its competitors when the market improves because it did not struggle to recall a disgruntled laid-off workforce. Southwest merely transfers them to their original jobs.
2-Give thoughtful consideration and use a process. If layoffs are necessary after considering these alternatives, decide on whom to lay off based on documented performance and keep the employees that have the leadership or technical skills you need in the future. This is a thoughtful process but worth it, as managers or teams of managers for the same employee job family (like data scientists or accountants) rate employees on their performance, job knowledge, and unique technical skills required in the future. Each team’s recommendations should be reviewed by HR and top management.
3-Audit it. Be sure to audit the rankings to ensure you are not disproportionately affecting protected classes such as those over 40, those with disabilities, people of color, and women. This involves running a statistical analysis and a review by your legal team.
4-Comply with the Warn Act. Be sure you are complying with the WARN Act. Congress passed it to ensure mass layoffs could not happen without notice or pay in lieu of notice. In short, you may be obliged to provide at least 60 days’ notice that layoffs are occurring. Companies must give advance notice under WARN when:
- They have more than 100 full-time employees;
- Or employ at least 100 workers who work a combined total of 4,000 hours per week,
- And are laying off at least 50 people at one work location.
5-Have a thoughtful communication plan. It is critical to create a communication plan. Remember the old rule, when more than three people in an organization know something, it is no longer a secret. Rumors often explode and distract employees from working when they are worried about who will be laid off and when. Consider which departments will and will not be affected. Delay other announcements about bonuses or promotions to later. Tell the affected employees first; it is always best to do it in person (not via email or Twitter). You can use ZOOM for long-distance remote employees. Discuss employee severance payments, COBRA benefits, and other benefits with these employees in a separate meeting. They typically can’t focus on anything after being told they are being laid off. Then tell the employees in affected departments that there were lay-offs and no more are expected at this time. Tell the rest of your workforce, as they will be abuzz with rumors and will need to be assured that it is over. Then tell the press. They will find out anyway. Shape the message to what you want your customers, suppliers, and stakeholders to know regarding the layoffs and your future strategies to grow the business.
6- Deal intelligently with server and email Access. Don’t shut off IT servers as your first notice of layoff. If you have specific employees who may make troublesome email rants and steal secrets, certainly shut them out. But most employees will not behave this way and they have a legitimate request to access performance appraisals and recognitions to help them find new employment. You are also better off allowing laid-off employees to hand over work to management and other remaining employees. Remember, this is a layoff, not a termination for cause.
7-Show kindness and compassion. Above all, communicate with kindness and compassion to employees. More than the laid-off employees are watching. If the survivors believe that the company was crass or cruel about layoffs, the company may have unwanted voluntary turnover,and remaining employees will likely give less than their best efforts. Remember, we are in a long-term labor shortage.
Layoffs are always difficult. However, if management plans well, is compassionate, and keeps in mind the impact on survivors, it will be able to move quickly to winning over the competition when the economy recovers.
Victor Assad is the CEO of Victor Assad Strategic Human Resources Consulting and managing partner of InnovationOne. He works with organizations to transform HR and recruiting, implement remote work, and develop extraordinary leaders, teams, and innovation cultures. He is the author of the highly acclaimed book, Hack Recruiting: the Best of Empirical Research, Method and Process, and Digitization. Subscribe to his weekly blogs at www.VictorHRConsultant.com.