Wednesday, November 9, 2011

I am not a human resource : 10 tips for handling layoffs

I read an interesting article in India's Business Line about the way Bank of America is handing layoffs of 30,000 people over two years.

The author reports:
"I called a friend who works at the bank to ask if the company had announced a schedule internally of how and where the lay-offs would take place, and how employees could find more information about it. She said she didn't know much more about it than what was reported in the papers, and employees were calling one another to find out if anyone knows more. "

The article goes on  to discuss the logic of decisions to reduce headcount ("When personnel costs are a major part of the business, it is so much easier to reduce the numbers employed and show quick results, rather than find and execute new growth opportunities.") but perhaps more importantly, the way in which such massive layoffs are executed. The article concludes with a classic sentence : "One protestor in the Occupy Boston movement held a sign that read: “I'm not a human resource. I'm a human being.” I guess that said it all." 

This reminds me of Anita Roddick's iconic statement which I have quoted for years, which she wrote in her book, Business as Unusual: "We were searching for employees but people turned up instead!" Yes, it's true. People are entire microcosms and each one is a link in a very large social chain. Companies which believe people are simply "resources" to be hired and fired depending on the way the numbers on the balance sheet show up on a given day are sorely missing the essence of sustainable business. Companies which take a nonchalant attitude to layoffs are destroying much of the social value they create in other ways. 

When I was ah HR Director with Unilever, we, regrettably, had to take a decision to close down a production plant employing 100 people. The plant had been operating for many years and it was loss-making to continue manufacturing at that site. There were many ethical issues to deal with arising from the decision to close the site, not least of which was when to advise employees. On the one hand, why not tell them as early as possible to enable them to prepare effectively for closure? On the other hand, the plant needed to continue operating until closure and if people know the plant will close, they may leave early or reduce motivation or productivity . Catch 22.

We ended up on the side of giving employees almost one year notice of intention to close the factory. Then, we worked with every single employee to offer relocation, outplacement support and provide financial and other assistance. By the time the plant gates shut for the last time, all employees had a solution - some were relocated to another plant, some had found jobs, some retired and some were in vocational retraining programs. Some had left, by agreement, during the closure notice period, with full severance benefits, to enable them to take another job much earlier than their scheduled release. The factory continued production right up until the last unit on the production schedule. While employees would probably have preferred to keep the plant open, everyone agreed that the way the plant was closed was responsible, fair, supportive and decent. What was the cost? Probably a lot less than if we had given the statutory month's notice and left people to fend for themselves.

How do you release employees in a fair and responsible manner? Some guidelines from my personal experience:

Provide timely information: Advise employees as early as possible after a firm decision has been made. Don't let them hear it first from the newspapers. Present the rationale for closure while emphasizing your commitment to the wellbeing of employees through the change. Emphasize values and principles in the way the company is approaching the closure or layoffs. Make sure employees know that the "what" is hard but the "how" will be carefully and caringly supported. Equally, in the case of downsizing, keep up a strong communication line with employees who will remain with the business. Their morale and peace of mind is just as seriously affected by layoffs of colleagues and their concern both for friends and for themselves (maybe they will be laid off in the next round ?) needs to be managed no less sensitively.

Engage the unions: If employees are represented by a Union or Employee Association, work closely and respectfully with the representatives. Keep talking. Stay open and honest. Remember that severance terms may seem high in the short term but they protect the business interests in the long term - within reason, be generous.

See the individuals: Work with employees to understand their personal circumstances and the implications of the change for them and their families. Each employee has individual needs. A collective severance package may not be the right approach for everyone. It is worth understanding where employees are in their life-cycle and what kind of assistance would be most relevant for them during a difficult period of change.

Involve families when appropriate: Sometimes the blow of layoff may affect the family as much as it affects the employee. A husband or wife, or even children, may find the stress of mom or dad losing their job very difficult to handle. Practically it might affect personal plans such as pension options, housing situation, higher education plans or payments for ongoing medical needs etc. If appropriate, for those employees where this is critical, involve the families, talk to them as well, help them to understand the company decision and the support it can provide. This may seem like overkill to some, but not all employees will need this and for those that do, it can make the difference between getting the best out of the layoff situation and becoming immobilized by double stress.

Be clear about severance terms and conditions: Make sure every employee knows her or his precise entitlement upon departure from the company. Help employees understand what this means - how much actually will be left after they have received severance pay, paid taxes, managed insurance policies etc. What holiday pay is still due to them? What other payments will they receive?

Provide practical assistance where it is needed. Some employees might require early retirement preparation and support for managing personal finances. Some might require retraining. Some might need outplacement services to help them prepare for a job. Longer-serving employees might not have been on the job market for 15 years or more - preparing a resume or handing an interview will be as easy for them as doing a PhD. Some employees might want to start an own business and may need some referrals. Be flexible in providing what is needed, not just a standard one-size-fits-all package.

Proactively locate alternative jobs: Contact all potential employers in the area and try to match their needs with those of the employees you are relasing. Do what's necessary to open up opportunities which might not have automatically appeared on the radar.

Train all managers to be sensitive, supportive and responsive. Managers may not have the authority to change a decision to release employees but they all have the opportunity to be caring and supportive. Make sure managers talk with "one voice" and present an aligned picture to employees.

Smile in the face of adversity. Employees need you to maintain a positive and optimistic, confident approach. Losing a job may seem like the worst thing in the world, but it can often represent an opportunity. While that's not easy to hear for most when faced with a redundancy notice, a sensitive but optimistic approach can help them grasp the positive and not get stuck in the negative.

Keep talking: Even when you have nothing to say, say it. Create opportunities to talk about the situation and let people vent while reinforcing possible opportunities. Celebrate when employees find alternative solutions. Keep people informed. Answer the tough questions. Be open. This may well be the most important topic of conversation for employees for months. Join them. Keep telling them what you know, even if it's not significantly different from what you told them before.

In summary, managing layoffs is real CSR-HR stuff and HR Managers must bear responsibility for the way this is handled, even if they are not responsible for the business decision to downsize. Ultimately, this approach will strengthen the business.

elaine cohen, CSR consultant, Sustainability Reporter, HR Professional, Author of CSR for HR: A necessary partnership for advancing responsible business practices. Contact me via  on Twitter or via my website

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