Your company may need to layoff employees for various
reasons. There may be a slow down of the general economy
or your industry may be on the decline. Layoffs may
also signal more serious problems at your company.
There could be flaws in your business model, delays
in production or reduced sales. You might have expected
future business growth that did not occur. Before you
can fix these problems, you must layoff employees to
get back on solid financial ground. Whatever the reasons,
most companies will find they need to conduct a layoff
at some point.
The biggest issue most business owners and Human Resources
managers face during a layoff is how to conduct one
effectively. You want to be fair to all workers, both
to those who will lose their jobs and those who will
remain. At the same time, you need the business to
continue to run with minimal interruptions. A layoff
can throw a monkey wrench into your daily business
operations. To prevent this from happening, you must
systematically decide who to layoff and then effectively
communicate this to all employees.
Who do You Layoff?
Many companies follow the rule of seniority when layoffs
take place. Employees who have the most time with the
company have less risk of being laid off than those
you recently hired. If your workers form a union, the
union may demand that you give preference to people
with seniority. The thinking here is that senior employees
have more job experience and more company training.
Since the company has invested more time and money
in these workers, it seems natural they should keep
their jobs.
Instead of seniority, other companies look at their
business operations. They find product or service areas
that are losing money. If a company wants to refocus
on its core business, it may want to drop a whole business
segment. In these cases, the company gets rid of all
jobs associated with these areas. The employees holding
these positions are laid off.
Yet another way to reduce your workforce is to offer
early retirement packages. Here the business assumes
that some employees will retire soon. These workers
will voluntarily leave their jobs if the severance
package is high enough. Of course with a voluntary
layoff, the company may not meet its layoff quotas.
Finally, you may use an employee rating system where
all workers get regular feedback on their performance.
If you have applied your system consistently across
the workforce, you can use it to layoff a group of
workers. For example, the manager can rate the employee
from a 1 to a 5 where 1 is an excellent worker and
5 is someone who needs continuous coaching and retraining.
In this case, you could layoff all employees with a
rating of 4 or 5.
However you decide to layoff employees, you must do
it consistently. Be aware that selecting an entire
group is less risky than cherry picking who gets a
pink slip. Conducting layoffs this way also minimizes
negative effects for the remaining workers. The layoff
will feel less personal to those employees losing their
jobs, and it immediately gives security to those who
remain. That said layoffs will still wreak emotional
havoc on your workplace. The best way to get through
them is quickly. Be up-front, take responsibility and
allow your workers some time to grieve only then can
you move forward to full business recovery.
Our
recommended employee termination procedure.
Legal and fair.