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How to Handle Company Layoffs


For most executives managing company layoffs remains an emotionally difficult responsibility. But the greater good dictates that layoffs are sometimes unavoidable.

Experts suggest that there are right ways and wrong ways to handle downsizing.

Justifying Layoffs

Must a business justify layoffs when the end goal is cost cutting? Businesses are not morally bound to justify layoffs, but employees are any enterprise’s most important asset and inside your corporate culture justification may be expected. According to payroll provider ADP, by April of 2009 small companies with fewer than 50 employees had laid off 1.2 million workers in the current economic downturn. And Businessweek Magazine says reducing the negative impact of layoffs requires a company to be transparent about its difficulties with a clear plan for future recovery.

Who Goes?

Layoffs and restructuring are about getting past a problem. While layoffs frequently focus on soft targets, workers in areas of redundancy, The Wall Street Journal suggests that the single most important question in downsizing is always, what jobs are vital to continuing operations and moving a company forward? A failure to focus on core mission will only result in further restructuring later.

The Mechanics of Layoffs

How does a company best implement layoffs and move on? The American Psychological Association notes that dehumanizing workers creates only more problems. How a company handles layoffs will determine how remaining employees handle the company. Managers experienced with layoffs agree on the fundamentals. Layoffs ought not to be stretched out over weeks and months. Individuals deserve private notification before any company-wide announcement. Layoffs should take place in the morning, not at the end of the weekday. Laid-off employees deserve respect, and thanks. Companies should never promise more than they can deliver in helping laid-off workers, and severance packages should be determined prior to actual layoff notifications.

After the Fall

The layoff process doesn’t end when downsized employees leave the building. While the administrative mechanics of layoff may then become the bailiwick of Human Resources, successfully managing the workforce still charged with helping to pilot the company into tomorrow is of paramount importance. MIT’s Sloan School of Management believes that layoffs are a time for increasing flexibility within the workforce and improving trust between managers and employees. The consulting firm of Marsh, Mercer, and Kroll reminds clients that even in times of economic distress, the best employees always have options. Companies simply can’t afford to alienate or lose talent in the newly restructured environment of a post layoff landscape. Better communication is the key to retaining your talent. Any and all efforts to upgrade the quality of the workplace will be noted and appreciated.

Handling company layoffs is never pleasant, never easy, but structuring your company for new growth down the road may be the best protection for your valued workforce.

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