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Making small-scale layoffs effective

Posted by Jesse Nunes  February 2, 2009 10:23 AM

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By Elaine Varelas

It seems that each day our steadfast network television anchors put on their somber faces to relay the news of yet another massive layoff. Some of the best-known companies in a variety of industries - manufacturing, finance, technology, and retail - are having to make substantial cuts to their workforces. What isn't reported is the small businesses that are also having to let people go, or the large companies that are hoping a smaller reduction in force (RIF) will be enough to help keep the organization in business. But just because these scaled-down layoffs don't make the nightly news, that doesn't mean that don't have an impact. If a "minor" layoff is in your organization's future, here are some things HR managers should consider to ensure it doesn't cause major problems at the company:

Don't underestimate the impact of a small-scale layoff - Many HR managers and company leaders assume (or at least hope) that, because a layoff is small, it will go unnoticed. They believe that by not making a big fuss about having to let "just a few people go" they can minimize the fall-out with those employees who remain. But don't be fooled, people are watching, even when leadership thinks the reduction is tiny. Not publically acknowledging the RIF can cause distrust and a loss of morale.

Show employees R-E-S-P-E-C-T - It doesn't matter if the organization is eliminating three or three hundred jobs; each person should be treated with dignity and respect. How are people notified? Did they read about their job loss in a form email, or get a security escort from the building? Each person should get a private meeting with a manager to hear the news. What kind of separation package is the company offering? It should include a mix of benefits and severance to support people while they look for a new job. Is the organization providing any assistance to help those affected find work? When possible, companies should offer career transition support and access to an Employee Assistance Program (EAP) to departing employees. Providing a financial safety net and outplacement services is the right thing to do. It also sends a message to current employees that the organization will take care of its people, even in the most challenging times.

Make sure the cuts are deep enough - While it may seem counterintuitive, any organization looking to lay staff off, should make sure the cuts are substantial enough to benefit the bottom line. Some organizations make the mistake of not going deep enough on their first round of layoffs, which unfortunately, can lead to a second round. Leadership teams often make a small cut so they don't have to displace too many people, and keep their fingers crossed that it will be enough. But if it doesn't accomplish what it needs to in order to help keep the business viable, it can cause even more disruption to the company in the future. Be thoughtful about the size and scope of the RIF. Is this large enough? Will this make an impact on the business? In this turbulent economy, none of us can predict even three months out, but you don't want to have to consider another layoff every pay period.

Avoid the "1,000 little cuts" strategy - Some company leaders intentionally choose the "1,000 little cuts" workforce reduction strategy hoping that these small, frequent layoffs will slide under the radar. But little cuts can still lead to a hemorrhage. In fact, this strategy is often more painful and disruptive to the organization. By forcing employees to "live through" recurrent RIFs, they are kept in a chronic state of alert. It is difficult to be productive or keep positive if you are kept wondering if your pink slip is the next one coming.

Focus on who you need to keep - Sometimes, selecting jobs for elimination is straight-forward. An under-performing division or group may need to be cut purely for financial reasons. The selection process becomes more difficult however when the layoffs are a result of a general business malaise and need to occur across the organization. It can help to focus on the positions and talent the organization needs to keep. What does the organization need for the future? What areas will be most profitable? Who are the emerging leaders? What type of talent will help get the company through the rough times?

Stress communication - During a RIF, transparency becomes more important than ever before. Employees who remain deserve to know what is happening with the layoff, what the company will do to support those whose positions were eliminated, and what the company will do going forward. Set up multiple forms of communication - from mass emails to town hall meetings to newsletters - to keep people informed. Also encourage managers to develop an open dialog with their teams and answer any questions as honestly as possible.

Look forward - Don't get stuck in reduction mode. Regroup, refocus, and invest in your remaining employees. It is time to support and develop your people so they can help move the organization toward future success.

Elaine Varelas is Managing Partner of Business Development at Keystone Partners, a career management firm headquartered in Boston, and has over 20 years of career development and HR experience. She also serves on the board of directors for Career Partners International, the world's largest career management partnership. E-mail her at .

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