How Not to Manage Staff Layoffs

folder_openEmployee Relations, Policies, Wellbeing

It’s more than possible that 2022 will be remembered as ‘The Year of the Mishandled Staff Layoffs’.

April saw the much-publicised sacking of 800 employees from P&O Ferries.  The company wanted to replace them with an agency workforce on significantly reduced employment terms, and in doing so, failed to adhere to even the basic requirements of UK employment law.  Many of the sacked employees only learned of their fate through a pre-recorded video message.

In November, Twitter’s new CEO Elon Musk announced that he would be going through the “difficult process of reducing our workforce”.  Said process involved a series of mass layoffs in which all Twitter employees received an email: to their work account if they were staying in their job, and to their personal account if they weren’t.

As the FT later reported, not only did Twitter grab headlines for “brutality and incompetence”, but embarrassingly, Musk also tried to immediately rehire some of the 3,700 employees he let go, claiming they had been laid off “by mistake”.

A sorry season of cuts

For the tech industry in particular, email layoffs seem to be in vogue. 11,000 employees at Meta – formerly Facebook – also received a ‘sacking email’ in November, following an admission by Mark Zuckerberg that his company had “overinvested at the start of Covid”.

However, the tech industry isn’t the only sector making seismic staff cuts.  A recent article in The Economist notes that some investment banks, property firms, and food manufacturers have also started paring down their workforces, in response to rising costs and uncertain market conditions.

A large company can spend years promoting a cohesive culture and shared values, only to see its reputation trashed in the wake of a badly-handled programme of layoffs.  As the FT article notes, “unexpected job losses, especially if they are handled cruelly, undermine any sense of shared sacrifice among not just the departed but those left behind”.

These are unsettling times for us all

Companies would do well to note that the barest hint of staff layoffs, particularly following a life-changing pandemic and in the midst of a cost-of-living crisis, will be unsettling.  So much so, the subject is a current hot topic of discussion amongst employees, regardless of whether they are directly affected. 

In July, a People Management article that reported favourably on the fact that businesses were planning fewer redundancies also cited telling data from Glassdoor, which publishes anonymous employee reviews.  “Talk of layoffs and redundancies has increased by 185% from March to June in employee reviews, indicating that it is top of mind for many individuals”.

How to manage layoffs well

The first, and most important, question companies should ask themselves is: are staff layoffs absolutely necessary?

If they are, care, empathy, and sensitivity must take centre-stage: not only in relation to employees facing the axe, but also to the ‘survivors’.  As The Economist points out, “…the colleagues who are left behind also endure lasting consequences; and for managers, this group is the one that determines success”.

“Managing the fallout is simpler,” the article further notes, “if the employees who are left behind still trust their bosses to get the big things right.”

This will involve a dedicated process of fairness and transparency, with managers taking time to clearly explain the business reasons behind staff layoffs.  They must ensure that those selected have a safe, confidential space to ask questions, whilst reassuring those who remain.  Care must be taken not to reduce staff headcount, only to pile those left behind with unreasonable workloads.

Companies should also try to be as generous as they possibly can.  The FT reported positive examples of companies such as Stripe and Airbnb, which offered substantial severance packages and outplacement support to their departing employees.  This approach highlights that when it comes to managing staff layoffs, “basic decency can reap benefits”.

If you would like to discuss sensitive employee-related issues with an experienced specialist, we at Viridian HR are ready and waiting.

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