Could your layoffs unintentionally come across as racist? It seems like every other day, a different business is making another round of layoffs, and it got us wondering how this trend might affect company diversity. The answer? It isn’t good.
Laying off workers is never fun, but if you do so without factoring diversity, equity and inclusion (DEI) into the decision-making process, you could end up with a lot more problems than a guilty conscience. Let’s dive into how layoffs can affect DEI and what you can do to make strategic downsizing decisions that don’t hurt your organization’s diversity.
How layoffs can impact DEI
When a company is forced to lay off workers, it’s not easy deciding who gets to stay and who has to pack up their cardboard box of disappointment. You hired and retained each employee for a reason, which can make it especially challenging to kick perfectly good team members to the curb.
Some layoff decisions are made based on tenure or seniority, some are based on how much money each person or role makes for the organization or how essential they are, and other layoffs are made at random. Any of these strategies can severely harm your company’s diversity if these decisions are made without DEI in mind.
Here are three examples of how layoffs can impact DEI:
- Tenure- or seniority-based layoffs: If you recently made several diversity hires in attempts to expand your organization’s workforce, then using a “last in, first out” method will naturally undermine those efforts. There is a good chance that your most senior and longest-tenured workers are white and/or male, which means they will be the last ones standing with this layoff method.
- Essential-based layoffs: In theory, making layoff decisions based solely on how essential each person or role is to the company makes sense. If someone makes a lot of money for the organization, or if the business will suffer without them, you probably want to keep them around. However, this strategy can backfire if you don’t consider how diverse those roles are.
For example, in a tech company, nontechnical departments (e.g., human resources, customer success, marketing) are more likely to consist of women and members of minority groups, whereas more technical roles tend to be held by white men. Limiting layoffs to nontechnical positions, which may be considered less-essential roles, can unintentionally hurt the organization’s overall diversity.
- Random-selection layoffs: Choosing employees at random may seem like the fairest way to conduct layoffs, but you probably want to double-check your randomly generated layoff list before executing it. Algorithms and AI tools have been known to be compromised by biases. If all of the randomly selected individuals happen to be in minority groups, you might want to rethink your plan.
If you blunder the process by laying off a lot of women and members of minority groups, you may inadvertently brand yourself as a company that doesn’t care about diversity and inclusion. No one wants to make headlines for being the business that laid off all of its Black employees, even if that wasn’t the intention. In addition to causing reputational damage, this can leave a bad taste in your remaining employees’ mouths. It can also harm any future attempts at DEI, because candidates may be hesitant to work for you.
A Glassdoor study found that 76 percent of job seekers and employees consider workforce diversity an important factor when they’re evaluating companies and job offers.
How to lay off employees without impacting DEI
While some businesses are busy labor hoarding, others have found themselves with no choice but to lay off employees. If you’re currently in this unenviable position, consider these tips for implementing layoffs without severely harming your company’s diversity and inclusion.
Avoid the “last in, first out” method.
As mentioned above, letting someone go simply because they were the most recent new hire isn’t the best way to go about layoffs, especially if your recent recruitment initiatives included expanding your organization’s focus on diversity. For example, many companies emphasized diversity and inclusion when the Black Lives Matter protests took center stage in 2020. If you were one of these businesses, it’s important that you stick to your word and don’t undermine your DEI efforts.
Factor demographics into your layoff decisions.
Instead of making layoff decisions at random or based on tenure, factor in employee demographics when you’re choosing which roles to eliminate or which workers to lay off. How will each department and team be affected by your choices? Are diverse voices still represented at every level after you make cuts? After you make selections and before you officially lay anyone off, evaluate your representation to make sure your organization is still well balanced.
When you’re downsizing your workforce, it’s also important to consider the demographic breakdown of your employees versus contractors. A study by the Pew Research Center found that Hispanic and Black Americans are more likely than white Americans to be gig workers.
Use fair and equitable layoff strategies.
Once you’ve decided which workers will be cut from your workforce, it’s vital to be fair and equitable in the way you go about delivering the news. Be thoughtful and considerate when communicating the decision to each worker, and approach the situation with empathy. Having a face-to-face conversation with each staffer gives them the same level of respect and shows you’re treating every affected team member equally.
Create and distribute inclusive severance packages.
No one likes to be laid off, but a comprehensive severance package can soften the blow and show your departing employees that you still care about them and their well-being. The key here is to be fair and inclusive in what you offer each employee. Create a standard structure for how you determine what each laid-off worker will get.
For example, offering random dollar amounts to exiting employees can leave room for unconscious biases. More equitable ways of handling severance are to offer each employee a standard lump sum or two weeks of their pay for each year they’ve been with the company.
Be consistent in your communication about these severance packages as well. Clearly spell out the terms verbally and in writing. Documentation is not only critical for maintaining clarity and equity, but it also protects your business against potential liabilities. [Read related article: How to Terminate Employee Benefits]
How to keep DEI strong after layoffs
After you make layoffs, be sure to reevaluate your company’s culture and diversity. Consult with your remaining employees about the situation, as they probably have mixed emotions about the whole process. Some teams will be affected more than others, so make sure all voices are heard. If your company has employee resource groups, speak with the leaders of each group to ensure they still have what they need to be successful.
Once you receive feedback from your staff, it’s imperative that you act on any useful takeaways, such as finding new ways to rebuild diversity and inclusion in your workplace if layoffs had a detrimental effect on DEI. Leaving DEI issues unresolved will only diminish employee trust and satisfaction. Remind your staff how important they are to the organization, and prove that to them by continually investing in your company’s diversity, equity and inclusion.
>>Read next: Don’t Be a Downer – How to Keep Your Employees Happy During Down Times