Downsizing that leads to employee layoffs is something that no employer wants do.


Companies want to grow and expand but sometimes downsizing cannot be avoided. Employee layoffs can be one to the most difficult things that a Human Resource Manager will every do.

Before the announcement is made the Human Resource Team must give thought to the effects this will have on the employees. Even minor downsizing can be very demoralizing to the employees that are not laid off as well as the ones who are. Even though employee layoffs are a very difficult thing to do, sometimes there is no other choice especially if the company wants to continue to stay in business.

Because of all the emotions that will be in play the Human Resource Team needs to make sure that the employee layoffs are conducted in a thoughtful way, and that everything that is done will comply with all state and federal labor laws.

Being thoughtful and compassionate will help the affected employees to get through this very tough day.

Things to consider when conducting Employee Layoffs

The first thing to remember is that the purpose of the downsize is to reestablish the profitability of the company.

  • Employee costs can be a very large part of a company’s expenses. Employee wages can rise above 40% of a company’s total budget.  Because of this when a major downturn hits employees may be one of the first cuts that are made.
  • Before any employees are laid off the management team must take a good long look at the necessary process needed to keep the company productive.
  • Organizational roles and positions also need to be revisited. Keeping those positions that are needed to ensure the company gets back on track and become profitable again.
  • Once this has been done you will want to keep the most productive and qualified employees at each position. The criteria for those who stay with the company will be skills, experience, those who have potential, and those who are quick learners, and those employees who have the abilities to multi-task.

Avoiding claims of discrimination can be tricky

There is no way to avoid the fact that this is going to be a very bad day for many employees.  Emotions are going to be very volatile at this point.  Management needs to watch every phrase that is said during this time.  Employees will be looking for anything that they can use to prove the employer did not act properly.

  • Make sure the during the employee layoff all state and federal laws are followed concerning discrimination.
  • Make sure that employees understand that this is a simply a business decision and not a personal one based on age, gender or any other protected category.
  • Make sure that management has been trained on the most effective way to conduct and employee layoff.
  • If you employ over 100 employees the law requires you to give them 60 days’ notice in writing before the downsizing.

What is the best way to handle the layoff?

  • The best way is to meet one on one with each employee. This will go a long way to show that you are concerned about your employee’s welfare.
  • Make sure that the layoff is handled quickly.
  • Have a coach or advisor available to help guide your ex-employees on what their next step should be concerning getting new employment.

What about severance packages?

Many companies make it a point to offer severance packages.  Some offer continued health care for a time.

  • Instead of a lump sum, it is better to offer the ex-employees a continuation of salary. We have all heard the expression that it is not wise to bite the hand that feeds you.  The point is that employees will be much less likely to sue if they are still on the company payroll.
  • Let employees know that if they should be able to find new employment they will still get paid for the total severance package.

After the downsizing is finished

  • Once the downsizing is done you will want to set up a meeting with the remaining employees.
  • Go over the companies plan and vision to make the company viable again.
  • Be specific and be prepared and ready to answer any questions that may arise.
  • Make sure that the management team stays positive.
  • Once you have cast the companies new vision continue the vision casting at strategic times.