Nobody likes the idea of layoffs, but sometimes handing out pink slips is the only solution to protect your business's bottom line. With proper planning, downsizing can be handled with care and dignity. Advance preparation can also help reduce the risks of lawsuits and minimize the negative impact downsizing can have on remaining employees. Plan a strategy that includes:
- Job search assistance for downsized employees.
- Motivation and support for remaining employees.
- A clear picture of how the workload will be redistributed.
- All necessary legal documents and benefits forms.
Define your vision
Your first step is to come up with a clear picture of how you want your organization to function post-layoffs. Consider which employees or departments are most necessary to make that vision a reality. Develop an organization chart to show who will be handling specific tasks after downsizing. Be sure to redistribute the workload of employees being laid off.
Contact the Department of Labor
Tap into the Department of Labor's Rapid Response services for employers, which offers coordinating services to help transition displaced workers and to minimize disruption due to layoffs.
Rapid Response coordinator in your state at the Department of Labor Web site.
Stay within the law
To minimize the risk of lawsuits, conduct layoffs in accordance with the law. Most important is being able to demonstrate that employees are being downsized based solely on specific business-related guidelines.
Maintain good records
Document the layoff process with the necessary forms, including information on details such as final pay, COBRA rights and retirement plan distributions.
Determine severance pay
Severance pay is typically based on the length of employment. A common guideline is offering employees one week's pay for each year of employment. There are no laws governing severance pay and it's up to your discretion. In exchange for severance pay, many employers ask employees to sign a general release that minimizes the risk of future lawsuits.
Provide opportunities
Consider contracting with an outplacement service to ease the transition for downsized employees.
- Secrecy isn't necessarily the best policy when layoffs are in the pipeline.
- Oftentimes, employees will leave of their own accord, eliminating expensive severance packages.
- After layoffs, provide open communication with remaining staff. Managers should meet with the staff regularly to answer any questions about extra workloads or the reorganization of assignments.
