September 18, 2009

Layoffs, Terminations, and Corporate Responsibility

There’s no doubt about it. What’s going on now in the economy is tough. Everyone is stressed to meet payroll and to drum up whatever revenue may still be out there.

I commend for the foresight and humanitarianism of organizations that hold onto their workers in spite of declining revenues. The growing emphasis on corporate responsibility is possibly inspiring their noble choices. But they also know that, if possible in times like these, it is a good investment to retain talented employees who have proven their value and to wait out the downturn with them. They also realize few other employers are hiring and, if they let employees go, the employees and their families will have serious difficulty.

What if Layoff or Termination Cannot Be Put Off Any Longer?

Do you fret over losing your top employees? Feel confident you’re paying and managing them better than anyone else in your industry. View our webinar Employee Retention: High Impact Performance Management for Engaging and Retaining Your Top Performers and get ahead of the competition.

When recessions drag on, even well-meaning employers often find themselves having to use this last resort. This blog post will help guide non-union employers in making perhaps the most difficult choices they must make: choosing among employees to let go. Union employers are often restricted in these choices by terms of the collective bargaining agreement that they have negotiated with their employees.

Some people say that recessions are like disasters such as hurricanes and forest fires. They correct excesses that have been allowed to accumulate, such as carelessness about regularly maintaining good practices. Maybe keep this bright side in mind and consider the following factors when confronted with needing to make layoffs or terminations:

Learn More About Our Compensation Software

1. Focus on skills. Start by thinking about skills of the employees, just like you do when you hire job applicants. Base your decisions on skills in order to have a strong organization after the recession. Basing your decisions on skills may well also help you if claims are made later of discrimination during the process of letting employees go. This is another way that the process we’re talking about here is like the hiring process, but in reverse.

2. Notice what is out of date. During the good times, were there employees you hired for special projects or for particular purposes that were popular during the good times but may not become popular in the post-recession environment? For instance, did you make hires to work with consumer purchases they made with excess disposable income they may not have for a while yet? If so, they may now be candidates for transfer to other parts of your organization or for layoff or termination without great impact on the organization in the immediate post-recession period.

3. Move talent around. Are portions of your organization now a little “skill-heavy?” By this phrase, I do not mean to imply that I suspect you have portions of your organization that are over-staffed. Most organizations I know of are seldom over-staffed.

By “skill-heavy” I refer to a situation that often occurs after a prolonged period of not hiring staff. Because existing staff normally leave employers for a variety of reasons, I suggest you scrutinize your entire workforce. Employees who remain may now have overlapping skills in some areas in which you now do not need as many employees. In other areas, employees may have insufficient skills because the “stars” left for whatever reason. Now might be a good time to see if some of the employees with redundant skills would consider moving into other areas to fill gaps.

4. Review skill history. When making the step I suggested above, before asking employees if they wish to move to other areas of the organization, review their personnel files. Look for hints that the employees have skills in the areas you plan to ask them to move into. Check their employment application and their training record for skills that you did not hire them for initially or that they have added to their skills toolbox while in your employ. Now is your chance to make sure any training classes they missed work to attend, or that you plan to pay for, really give back to you.

Ask employees to update their training record before you ask them to move into a new area. That way you will have more information on which to base your request. The transfer process should be oriented toward making the organization stronger in the post-recession period; not in finding an outlet for bored employees who want to try something new but for which they show no propensity.

It’s better to transfer talented employees and keep their talents than to let those employees leave– especially if you paid to cultivate those skills through training or classes.

5. Make recommendations. This next suggestion takes corporate responsibility to another level. If you have to layoff or terminate employees maybe you can help them find another job. Do you know other employers who may be able to use the employees’ skills? You know how great it is to get a referral of a good client. Help out employers in your network by referring to them great employees.

6. Stay in touch. It’s always a good idea to keep track of former employees you would hire again. Why? Things change. Sometimes the new job does not always turn out as well as they expected when they left your organization. If your revenue comes back to where you can start hiring, consider calling people you were compelled to lay off or terminate due to pressures of the recession but they were outstanding performers. They will appreciate your effort to bring them back, and even if they do not return, you may have made a loyal customer out of someone who may have been unhappy that you had to let them go.

Regards,

Joe Gross

Do you have a topic you would like Compensation Today to cover? Write us at comptoday@payscale.com.

Are you paying your best employees enough to retain them after the economy picks back up? Get up-to-date and make sure your external salary market data is specific enough to the education, skills set and experience of employees you want to keep. Give a PayScale Demo a try.
• Get accurate compensation data with a free PayScale Compensation Report.
• Learn how performing Compensation Research will save your company time and money.