Three years after the bottom of the recession, layoffs continue throughout the United States. The mid-year totals released last month show a 15 percent increase in job cuts across all industries compared with the same period last year. Businesses cut more than a quarter-million jobs in the first half of 2012.
Well-known companies such as Research In Motion, maker of the BlackBerry, Hewlett-Packard and Sony have all announced large-scale layoffs that will take effect by the year’s end.
Talent Management spoke with management consultant Susan Heathfield, who writes the human resources section of About.com, and executive coach Stever Robbins to identify how HR professionals can lessen the impacts of large-scale layoffs on employee morale and productivity as well as ways to ease the inevitable concern: ‘Am I next to go?’
How does a layoff affect corporate culture?
Heathfield: It makes people fearful, and companies don’t generally do a very good job of either forecasting the possibility for layoff or communicating with employees that there’s any impending doom. If you’re talking about the morale of the people who survive the layoff, and the goodwill with which people who were laid off think of your company, the more you can do to give them foreshadowing and to take care of them during the whole process — both the ones you’re letting go and the ones who remain — the least the impacts will be on your culture.
Robbins: In the short term, there’s a break in trust and a drop in productivity. Then there’s a bunch of interesting second-order effects that I never hear people talk about. If you lay off a bunch of people, you now have sudden gaps all over the place in terms of knowledge and process. The people who used to take care of things suddenly aren’t there anymore. So you’re going to experience a drop in productivity, not even because of morale reasons, but because the organization has to heal itself and all of the joints have to be retied. Then there’s the more subtle thing: If you lay off 20 percent of your workforce, and you do not decrease your goals by 20 percent, you’re insane. What you are saying is, ‘Gee, we couldn’t meet our goals with a full workforce, maybe if we lay 20 percent of them off, now we’ll be able to meet our goals.’ That’s flawed logic in any realm.
How can HR professionals lessen concern about ‘Am I next to go’ after a large-scale layoff?
Heathfield: Companies need to be transparent and open in communication. They should explain: this is why we did this layoff, this is why we think this is all the layoffs we’re going to have to do. They just have to communicate. Employees aren’t going to trust them for a while anyway. In a large-scale layoff, that’s the thing that you most injure. You need a way to rebuild that trust with the people who remain.
Robbins: If you’re going to have a wide-scale layoff, do it as quickly as possible and finish as quickly as possible. It’s the time of uncertainty in between that’s going to freak people out and cause all of the problems. If people constantly walk around afraid the other shoe is going to fall, they’re going to stay in a state of fear. Except in very rare cases, a layoff will destroy trust between employees and the current managers. Once trust is destroyed, you cannot get it back. Not that it’s hard to get back, you cannot get it back. I have asked hundreds and hundreds of people to give me an example of a time when anyone was able to regain trust, and no one has been able to do it. The only way to do it is for the people who broke the trust to quit and hire in new people.
What steps can talent management take long-term to lessen the impacts of a layoff?
Heathfield: Share with your employees your long-term plans for making your company profitable again. If you, as an HR person, have not been involved in affecting business strategy, it’s time to look at how you’re doing your job. Look at the talent management plan. Did you hire more people than you could actually afford last year? What are your projections going forward? It’s possible that most people plans need to be altered after a layoff.
Robbins: Reset goals and expectations in a participatory way, so people feel like they have some control. One of the biggest problems with a layoff is it leaves people feeling vulnerable and out of control. After a layoff, you want to reduce uncertainty as much as possible and be as transparent as you can be. I’m a big proponent of open-book management where you tell employees what’s going on and educate them to the finances of the business. Then they can take steps and make recommendations that might improve bottom-line results and feel like they are part of the solution as opposed to being victims of whatever decisions get made from above. As an HR professional, work with executives to create a culture that has more transparency with the specific goal of using that transparency to give the remaining employees much more feeling of control and participation.
What steps can HR professionals take externally to ensure a company’s reputation and customer base aren’t negatively impacted following a layoff?
Heathfield: It’s a small world, and in the world nowadays of social media and online job searching, bad news spreads like wildfire. The only way an employer can manage communication with the external world is to make the announcement themselves about layoffs. If the company is making the announcement themselves, it controls the message much better than letting it ooze out.
Robbins: It’s such a common story that people go, ‘Oh, Macy’s just had layoffs; I’m still going to go to Macy’s.’ The place you’re going to have problems is business-to-business operations. If you have a lot of corporate customers, corporate customers often care about feeling that their vendors and their partners aren’t going to suddenly disappear on them. In that case, sit down with the large customers and say, ‘Look, here’s what happened, here’s what’s going on, here’s what we’re doing to ensure we’re going to be able to serve our customers.’