Change can be a difficult part of running a business and it's important to know how to manage layoffs and restructuring effectively. While sometimes unpleasant, these processes can often be necessary to ensure the long-term viability of a company.
If you are facing the difficult decision of making layoffs, it is important to manage the process in a fair and compassionate way.
What causes layoffs and restructuring?
Company restructuring can be a difficult but ultimately necessary decision for many businesses facing serious financial problems.
With automation replacing many jobs and other changes in the market, businesses are often having to make difficult decisions to ensure their survival.
Restructuring involves significant changes to the organisational and operational structure of a business so it can remain competitive or reduce costs. Restructuring might involve merger activity, reorganising departments, or changing the management structure, all of which could result in layoffs and downsizing as roles or departments become redundant.
In cases of company restructuring, even employees who are performing well may have to be let go due to the restructuring process. Therefore it is important for businesses to handle these circumstances with extra attention and care in order to protect their remaining workforce.
The situation can be painful for employees who remain with the business too. Not only will they have to take on additional responsibilities due to staff shortages, but the psychological impact of seeing their colleagues lose their jobs can also be difficult to manage.
Companies must therefore sensitively manage the restructuring process in order to ensure employee morale remains high during such a turbulent period. This means taking extra steps such as communication from senior leadership explaining why such a decision was taken and how redundancies were managed in accordance with company policies.
If managed poorly, these processes can leave workers feeling fear and uncertainty, not just about their own future but also that of the company they work for.
Companies need to take steps to ensure that they remain competitive and viable while remaining considerate towards their employees.
Steps to managing layoffs and restructuring
There are a few key steps you can take to manage layoffs and restructuring effectively:
1. Plan carefully.
Before making any announcements, it is important to have a clear plan in place. This includes identifying the roles that will be eliminated, the selection criteria for determining who will be made redundant, and the severance package that will be offered.
Build a business case
When building a business case for downsizing, it is important to take into account the impact that this decision will have on the lives of those employees affected. Acknowledging and communicating the reason behind downsizing in a sincere and transparent way is key to potentially salvaging the trust of impacted employees.
As an example, Hubspot CEO Yamini Rangan gave an explanation as to why 7% cuts in workforce were necessary and made this available on their company website so that it was out in the public domain and could be viewed by all.
This communication strategy worked because it provided people with insight and context into why such a difficult decision had been taken. Rather than resorting to nebulous terms such as ‘market conditions’ or ‘recession’, Rangan conveyed her reasoning in a way which allowed everyone to understand exactly what caused such action being taken.
Having genuine understanding as to how difficult decisions come about will help build trust between employer and employee and enable better conversations down the line when further tough choices need to be considered.
2. Communicate honestly and transparently.
Once you have a plan in place, it is important to communicate with your employees honestly and transparently about the upcoming layoffs. This includes explaining the reasons for the layoffs, the selection criteria that will be used, and the support that will be offered to affected employees.
How to communicate effectively
For businesses undergoing restructuring, communication is an essential part of the process to ensure that all departments and personnel understand the implications.
To best prepare for restructuring, the first step should be to form a team dedicated to the project, and then hold a planning meeting in order to thoroughly go over the details. It is important that everyone has access to clear and accurate information throughout the process.
This team should also work together to create a business case that outlines why and how restructuring needs to be done.
An effective communication plan should then be created which will dictate how restructuring news will be presented both internally and publicly, including determining who within the organization is responsible for certain updates.
Finally, it is crucial that any related matters such as severance packages or outplacement services are settled beforehand so as not to cause confusion or hardship at a later date.
3. Provide support to affected employees.
Layoffs can be a very stressful and emotional experience for affected employees. It is important to provide them with support during this time. This may include offering severance packages, outplacement services, and counseling.
Outplacement assistance is an important consideration when terminating an employee. Outplacement services are designed to help employees find their next job opportunity, and may include items such as CV writing and career counseling. They can help ease the transition for both the employee and employer during a difficult time.
Outplacement services may include things such as workshops on networking, online job search training, CV building, cover letter writing advice, interview preparation along with career management sessions. These services provide more personalised support for the individual in finding the right job with special emphasis on understanding their skills and potential roles.
It’s also important to ensure that severance packages are fair and legal when offering outplacement services. You should consider any company resources or savings associated with leaving employment such as unused vacation time or payment of any training fees related to a current certification or education course prior to termination date.
Additional considerations may include reimbursement of moving expenses if applicable, extended healthcare benefits while searching for a new job, visa support in case of expat staff looking to move home or out of the country and finally if remote working has been provided, guidance on what should be done regarding WFH equipment provided by the company.
4. Announce the restructuring and layoffs
For many employees, hearing the news that their organisation is restructuring and layoffs are expected can be a difficult experience.
Companies should take thoughtful steps to make sure that this announcement is delivered in the most sensitive and professional way possible.
Firstly, company leaders could choose to communicate clearly with all impacted employees individually about the restructuring measures and specific plans for layoffs. This could be done through face-to-face interactions or video calls without compromising privacy.
Furthermore, the organisation-wide communication plan should be strategic and considerate of its message. It should focus not only on why these changes are taking place but also provide insight into any potentially offered support through new benefits or resources.
Potential communicative methods employed by companies may include an email announcement, informational webinars, as well as Q&A sessions. It's essential to create an open dialogue for employees so they can have an understanding of what is to come in the weeks ahead and ensure that they know where to direct questions if needed during this stressful time.
When communicating layoffs it’s essential for companies to remember how important it is that they remain professional yet compassionate throughout every step of the process.
5. Support those who remain too
Survivor guilt is an often underestimated emotion among employees who remain after a restructuring process. They may feel isolated as their routine and colleagues have changed suddenly or drastically, and they could start to question why they were not picked for termination. It is an employer’s duty to look after its workforce by alleviating some stress.
Regular meetings with individual employees can clear their confusion and give them the assurance that despite external changes, the management still has confidence in them.
Additional training for newer roles or responsibilities can also help build back team morale and create a learning environment which would motivate the remaining team members to re-establish relations with one another. This type of support should be provided unconditionally, impartially, without any patronizing behaviour — so that each member feels valued again!
How to decide who to layoff during a restructure:
When it comes to layoffs due to restructures, HR professionals are faced with a difficult task—deciding who to let go from the organisation.
Not only do they have to bear the emotional responsibility of delivering the news, but there can also be legal complexities involved in making this decision.
The most important factor in deciding who to layoff is that fairness and objectivity are maintained throughout.
Objectively evaluating employee performance and contributions over time is one of the best ways to make impartial decisions that comply with labour laws.
Furthermore, it’s essential to consider any exemptions or legal protections for certain groups that may have been adversely affected by downsizing. Factors like age, race, gender, or disability should never cost an employee their job unfairly.
In addition to looking at legal limitations, other factors should also be considered when making cuts. It can be helpful for organisations to look at flexible job models and identify additional positions that could potentially remain intact despite a reduction in force.
This may include roles such as remote staff members or those with part-time hours which help reduce costs without disrupting team dynamics too deeply.
Layoffs and restructuring can be a difficult and emotional experience for everyone involved. However, by following the steps outlined above, you can manage the process in a fair and compassionate way.
To ensure that the process is effective, managers should consider their objectives and make sure they communicate these clearly.
This includes being upfront and honest with employees, breaking down any restructuring information into smaller pieces, and setting reasonable expectations. Additionally, managers should offer resources such as internal promotion guidance or outplacement services to help affected employees transition successfully to another job.
The most important thing when it comes to restructuring is having empathy for those affected by the change and respecting them during this difficult time. To start this off on the right foot, managers need to provide clear direction of what steps need to be taken next and ensure all questions are answered.
Furthermore, managers should also connect their teams or departments that may be affected in order for them to stay connected throughout the process.
Lastly, offering extra support such as corporate discounts can go a long way in helping retain a positive working environment even during challenging times like restructuring.