Avoiding the Layoff Hangover

Employment Law Reporter, Ervin Cohen & Jessup LLP

An employer that has successfully conducted a reduction in force has required that management work hand-in-hand with highly trained, experienced human resources personnel to minimize the potential problems. If the layoff was performance-based, employees were selected based upon well-documented reviews and disciplinary issues. Where necessary, a detailed forced ranking took place based on agreed-upon objective criteria with input from all essential managers. Disparate treatment, as well as disparate impact analysis, was undertaken, and state and federal layoff statutes were followed. In addition, individual employee obligations, severance, outplacement and exit interviews were considered and implemented, as appropriate. The employer can now close the books and move on to the next chapter, right? Wrong.

The manner in which an employer deals with its employees in the aftermath of a layoff can be just as important as the manner in which the layoff itself was conducted. Put differently, the failure to take proactive measures following a reduction in force can precipitate declines in morale and productivity and encourage costly litigation against the company. But employers can avoid the layoff hangover by following this brief checklist of issues to consider in the weeks and months following a reduction in force.

  • Consider offering counseling. The atmosphere of the workplace in the months leading up to the actual reduction in force is typically fraught with anxiety. Employees are often well aware of a decline in business and a need to cut costs. Rumors of an impending layoff abound and are virtually impossible to stop. While employers often consider the use of employee assistance program counseling in the weeks leading up to the layoff, the remaining employees following a layoff can often experience feelings of anxiety over the possibility of future layoffs and guilt concerning their retention as employees over their friends and co-workers. As a result, offering counseling in the weeks immediately following a layoff can provide these employees relief and reduce stress that can impair or delay an improvement in morale and productivity.

  • What is the message? A prudent employer will make sure that management sticks to a script regarding the layoff and the layoff process, particularly in connection with meetings that occur among employees concerning the terminations. However, the message sent to employees in the months following a termination is just as important. Management should be trained to consistently deliver a message concerning the future plans of the company following a layoff. If possible, the message should be positive, personal and specific. General statements that the company is successfully reducing its costs and is poised for success are helpful, but adding more personal comments about the remaining loyal, experienced and talented personnel engenders good feelings about the workplace. More specific information concerning targeted business, strategies for success and marketing efforts can further serve to bind employees to the future goals of the company by fostering a team mentality. This transparency at the management level can also alleviate fears by providing much needed answers to employee questions.

  • Check the pulse of employees. Management, including human resources, should not assume that anxiety associated with a layoff will dissipate in the weeks following the event. Positive feelings regarding the workplace and its managers can be seriously damaged by a layoff. Further, certain employees may not understand or receive the positive message the company seeks to deliver about its future plans. Accordingly, for a period of at least six months following the layoff, management should make additional efforts to speak directly with employees regarding their feelings about the company and the workplace. In addition, management should use these opportunities to discuss the progress the company is making with respect to its post-layoff plans. This is not a time to rely exclusively on formalized written surveys, email or other forms of impersonal communication. As politicians learned long ago, face-to-face contact and “pressing the flesh” is the best way to let people know you care.

  • Remain visible. It is amazing how many members of senior management use vacation time following a layoff. While it is understandable that these decision makers want to relax after such a stressful event (and perhaps avoid the emotional fallout of the layoff ), the absence of these key individuals sends the wrong message to the remaining employees. Even important business trips to shore up or preserve significant customer and vendor relationships should be carefully considered in the weeks immediately following a layoff. Employees need to feel that the company is in good hands and that management, particularly senior management, is doing all it can do to assure the future success of the organization. Highly visible and confident leadership, through their continued presence, can help to deliver the message that the company is on the right track.

  • Focus on productivity. Employers should use the opportunity of a layoff to make changes concerning measuring performance in the workplace. Where possible, performance-based rewards should be instituted or enhanced. Objective criteria for goals and rewards should be established wherever possible. In addition, short-term goals that are achievable should be a priority. The new methodology and focus will send a message to employees that things have changed and that the company is doing what it needs to do to be successful. Reaching goals, whether company-wide or individual, can go a long way toward rebuilding morale.
  • Hold managers accountable. Like your employees, the efforts of management personnel should be measured and rewarded. This should not just be in terms of productivity, but also in terms of their ability to communicate the messages of the company, to improve morale, and to identify and assist employees who continue to struggle as a result of the layoff. Bad managers – those with a negative attitude and who fail to grasp the importance of a positive hands-on approach following a layoff – are often the cause or “final straw” that leads to the loss of additional key personnel or the filing of troublesome lawsuits.

Layoffs are traumatic for both employers and employees and the perception of management is often that life will be easier following completion of this unpleasant task. However, workplace issues can take a turn for the worse following a layoff, if management does not take immediate steps to implement a system to improve morale, retain employees and increase productivity.

A version of this article was first featured in the American Banker in August 2011.



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