Eddy’s HR Mavericks Encyclopedia
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Layoff
Having to lay off some portion of your workforce is difficult for the company, for you, and of course for the employees involved. Why would you need to do this, and how would you handle it? Read on to get those questions answered.
What Is a Layoff?
A layoff can be a scary word for any HR professional. It means that some of your workforce will no longer be employed by your company. It is important for you as an HR professional to ensure that you are prepared to handle a mass layoff and able to retain your remaining employees.
Layoff vs Furlough
Layoffs and furloughs are very different. A furlough is a temporary suspension of employment, whereas a layoff is permanent. Furloughs can also precede layoffs. Both actions refer to groups of employees rather than individuals (which is simply a termination), and stem from a situation the company is facing as a whole.
Reasons to Lay Off Employees
There are many reasons a company may be forced to lay off employees, but all of them stem from stressed finances.
Reason 1: Customer Base
A lack of customers is the most common reason companies are forced to lay off employees. If you don’t have customers, you don’t have cash flow, and without cash flow, there isn’t money to pay employees.
Reason 2: Product Change
Companies sometimes need to change their offerings or products to meet customer demand. This may mean adding new teams or skills and letting old teams go. Companies may be able to find opportunities on the new team for those on the old, but if not, the old team may be laid off.
Reason 3: Company Restructure
We’ve all read headlines that say something to the effect of, “CEO Out After Company Restructures.” It’s usually not just the CEO who is out of a job due to a company restructuring; often entire departments are eliminated or cut due to a restructure.
How to Handle Layoffs
You’ve just been informed by the higher-ups in the company that a mass layoff is in the works. Where do you even start as an HR professional?
Step 1: Determine Who Will be Impacted
Before anything else, you need to determine the overall impact. How many people? What departments? When will the layoff be effective?
Step 2: Do Your Research
If you work in certain states or have employees who are part of a union, there may be steps you are required to take before you can lay people off. Check the collective bargaining agreement for the union and research with your local Department of Labor to get the information you need.
Step 3: Provide the Layoff Notice
Some states and cities require you to provide a written notice to your employees that their employment is being terminated, but even if that is not the case for you, written notice is a good idea. The written notice should include, at minimum, the employee’s name, the date the layoff goes into effect (even if it is immediate), the reason, and resources available to the employee as they move forward. We also recommend trying to meet with each person individually to explain the circumstances and their options, but depending on the size of the layoff, this may not be possible. At the very least, try to have a group meeting where you can be sincerely empathetic and fully explain the conditions surrounding the layoff.
"You never know how the employee will react. Be prepared for anything. Have someone close in case they get angry, have tissues on hand in case they cry, etc. Remember to be empathetic to their feelings, validate them if needed but don't drag it out. You want to be straightforward and direct with clear and concise communication. . . . Most of all remember to be kind. How would you want the news told to you?" – Heather Anderson SHRM-CP
Step 4: Retain Your Remaining Employees
After any type of layoff, there will be concern among your workforce that they could be next. It’s important to provide context to the remaining employees regarding the layoff and why it happened. Be honest when discussing job security with your remaining employees.
Resources for Employees Who Have Been Laid Off
It’s useful to provide laid-off employees with resources to find their next job or receive help until they are able to find another employer.
Resource 1: Unemployment Office
Every state has an unemployment office. Besides providing unemployment benefits, the unemployment office can assist with job searches as well as resume review and interviewing tips. When you provide the layoff notice, it can be helpful to give the affected employees steps to file for unemployment.
Resource 2: Social Media
The power of social media cannot be overstated when it comes to helping laid-off employees find their next employer. LinkedIn is a great resource that many companies utilize to find their next employees. A simple post on LinkedIn can generate a lot of interest in the employees you were forced to lay off.
Resource 3: Staffing Firms or Recruiting Agencies
Staffing and recruiting agencies are always on the lookout for great talent. It may be beneficial to include the contact information of a couple of placement firms to help get the employees' job search started. Some organizations even hire staffing firms to help laid-off employees find jobs. This is not only taking responsibility and showing care to your employees but can decrease unemployment premiums.
Additional Tips for Delivering the Bad News
HR professionals and business leaders can avoid negative employee responses and public backlash by handling layoffs the right way. Here are a few tips for announcing layoffs:
Lead With Empathy
HR, help your leaders deliver bad news with empathy. Thank employees for their contributions. Ask them how you can best support them, and provide opportunities for them to voice their concerns and ask questions. Do not insult their intelligence or humanity by suggesting the company will be better off without them.
"There is never an easy way to deliver bad news. However, there are best practices to help ease the shock impact to employees. First, prep the managers for what is going to happen or be said, let them know the details as much as possible so they can be prepared to help their teams when they receive the news. . . . It is our job to make the landing as soft, smooth, and humane as possible." – Kelly Loudermilk
Take Ownership for Layoffs
When announcing layoffs, it's best to be direct and transparent, taking ownership for the event rather than putting blame on employees. Milly Christmann advises, “Have the courage to be transparent. Share the reasons that resulted in the need to eliminate positions. Show empathy and continued support for former employees—they can still be your brand ambassadors, and they will recall how they were treated upon exit.”
Help Employees Land on Their Feet
Actions speak louder than words—even when those words are kind. Layoffs are hard on all parties involved, but that doesn’t mean you wash your hands of the people who up until recently were your coworkers, direct reports, and friends.
"The key here is to be as transparent and specific as possible with documentation that led to this decision of layoffs. Afterward, let the employees ask questions and answer them specifically and empathetically. The HR Team can provide one-on-one support explaining their rights for COBRA and how to apply for unemployment. HR can provide incredible support to these employees by holding resume workshops, networking events, and mock interviews." – Ryan Archibald
In addition to directing laid off employees to the resources already mentioned in this article, you can get creative to help them land on their feet after they leave your organization. Here are a few ideas to help you get started:
- Offer severance pay (as much as you can)
- Accelerate equity vesting
- Extend healthcare coverage (beyond COBRA)
- Redirect your internal resources, AKA tap your recruitment teams to help with interviewing workshops and job placement
Topics
Nick Staley
Nick is a certified HR professional holding an SPHR and SHRM-CP. Nick has built HR teams from the ground up as well as worked for big corporations. Nick enjoys consulting and training those who are just getting started in HR. When not working, he enjoys spending time with his family.
Frequently asked questions
Other Related Terms
Eddy’s HR Mavericks Encyclopedia
Layoff
Having to lay off some portion of your workforce is difficult for the company, for you, and of course for the employees involved. Why would you need to do this, and how would you handle it? Read on to get those questions answered.
What Is a Layoff?
A layoff can be a scary word for any HR professional. It means that some of your workforce will no longer be employed by your company. It is important for you as an HR professional to ensure that you are prepared to handle a mass layoff and able to retain your remaining employees.
Layoff vs Furlough
Layoffs and furloughs are very different. A furlough is a temporary suspension of employment, whereas a layoff is permanent. Furloughs can also precede layoffs. Both actions refer to groups of employees rather than individuals (which is simply a termination), and stem from a situation the company is facing as a whole.
Reasons to Lay Off Employees
There are many reasons a company may be forced to lay off employees, but all of them stem from stressed finances.
Reason 1: Customer Base
A lack of customers is the most common reason companies are forced to lay off employees. If you don’t have customers, you don’t have cash flow, and without cash flow, there isn’t money to pay employees.
Reason 2: Product Change
Companies sometimes need to change their offerings or products to meet customer demand. This may mean adding new teams or skills and letting old teams go. Companies may be able to find opportunities on the new team for those on the old, but if not, the old team may be laid off.
Reason 3: Company Restructure
We’ve all read headlines that say something to the effect of, “CEO Out After Company Restructures.” It’s usually not just the CEO who is out of a job due to a company restructuring; often entire departments are eliminated or cut due to a restructure.
How to Handle Layoffs
You’ve just been informed by the higher-ups in the company that a mass layoff is in the works. Where do you even start as an HR professional?
Step 1: Determine Who Will be Impacted
Before anything else, you need to determine the overall impact. How many people? What departments? When will the layoff be effective?
Step 2: Do Your Research
If you work in certain states or have employees who are part of a union, there may be steps you are required to take before you can lay people off. Check the collective bargaining agreement for the union and research with your local Department of Labor to get the information you need.
Step 3: Provide the Layoff Notice
Some states and cities require you to provide a written notice to your employees that their employment is being terminated, but even if that is not the case for you, written notice is a good idea. The written notice should include, at minimum, the employee’s name, the date the layoff goes into effect (even if it is immediate), the reason, and resources available to the employee as they move forward. We also recommend trying to meet with each person individually to explain the circumstances and their options, but depending on the size of the layoff, this may not be possible. At the very least, try to have a group meeting where you can be sincerely empathetic and fully explain the conditions surrounding the layoff.
"You never know how the employee will react. Be prepared for anything. Have someone close in case they get angry, have tissues on hand in case they cry, etc. Remember to be empathetic to their feelings, validate them if needed but don't drag it out. You want to be straightforward and direct with clear and concise communication. . . . Most of all remember to be kind. How would you want the news told to you?" – Heather Anderson SHRM-CP
Step 4: Retain Your Remaining Employees
After any type of layoff, there will be concern among your workforce that they could be next. It’s important to provide context to the remaining employees regarding the layoff and why it happened. Be honest when discussing job security with your remaining employees.
Resources for Employees Who Have Been Laid Off
It’s useful to provide laid-off employees with resources to find their next job or receive help until they are able to find another employer.
Resource 1: Unemployment Office
Every state has an unemployment office. Besides providing unemployment benefits, the unemployment office can assist with job searches as well as resume review and interviewing tips. When you provide the layoff notice, it can be helpful to give the affected employees steps to file for unemployment.
Resource 2: Social Media
The power of social media cannot be overstated when it comes to helping laid-off employees find their next employer. LinkedIn is a great resource that many companies utilize to find their next employees. A simple post on LinkedIn can generate a lot of interest in the employees you were forced to lay off.
Resource 3: Staffing Firms or Recruiting Agencies
Staffing and recruiting agencies are always on the lookout for great talent. It may be beneficial to include the contact information of a couple of placement firms to help get the employees' job search started. Some organizations even hire staffing firms to help laid-off employees find jobs. This is not only taking responsibility and showing care to your employees but can decrease unemployment premiums.
Additional Tips for Delivering the Bad News
HR professionals and business leaders can avoid negative employee responses and public backlash by handling layoffs the right way. Here are a few tips for announcing layoffs:
Lead With Empathy
HR, help your leaders deliver bad news with empathy. Thank employees for their contributions. Ask them how you can best support them, and provide opportunities for them to voice their concerns and ask questions. Do not insult their intelligence or humanity by suggesting the company will be better off without them.
"There is never an easy way to deliver bad news. However, there are best practices to help ease the shock impact to employees. First, prep the managers for what is going to happen or be said, let them know the details as much as possible so they can be prepared to help their teams when they receive the news. . . . It is our job to make the landing as soft, smooth, and humane as possible." – Kelly Loudermilk
Take Ownership for Layoffs
When announcing layoffs, it's best to be direct and transparent, taking ownership for the event rather than putting blame on employees. Milly Christmann advises, “Have the courage to be transparent. Share the reasons that resulted in the need to eliminate positions. Show empathy and continued support for former employees—they can still be your brand ambassadors, and they will recall how they were treated upon exit.”
Help Employees Land on Their Feet
Actions speak louder than words—even when those words are kind. Layoffs are hard on all parties involved, but that doesn’t mean you wash your hands of the people who up until recently were your coworkers, direct reports, and friends.
"The key here is to be as transparent and specific as possible with documentation that led to this decision of layoffs. Afterward, let the employees ask questions and answer them specifically and empathetically. The HR Team can provide one-on-one support explaining their rights for COBRA and how to apply for unemployment. HR can provide incredible support to these employees by holding resume workshops, networking events, and mock interviews." – Ryan Archibald
In addition to directing laid off employees to the resources already mentioned in this article, you can get creative to help them land on their feet after they leave your organization. Here are a few ideas to help you get started:
- Offer severance pay (as much as you can)
- Accelerate equity vesting
- Extend healthcare coverage (beyond COBRA)
- Redirect your internal resources, AKA tap your recruitment teams to help with interviewing workshops and job placement
Topics
Nick Staley
Nick is a certified HR professional holding an SPHR and SHRM-CP. Nick has built HR teams from the ground up as well as worked for big corporations. Nick enjoys consulting and training those who are just getting started in HR. When not working, he enjoys spending time with his family.
Frequently asked questions
Other Related Terms
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