It is vital for organizations to ensure that they prepare themselves to address issues associated with poor economic growth. Workforce management and cost-reductions are some of the major strategies that organizations use to remain operational when there are unfavorable economic conditions. When faced with the option of lay-off or cost-reduction measures most managers acknowledge the pain of the strategies. Therefore, organizations usually put off thinking about lay-offs and cost reductions until they are absolutely necessary or imminent. Organizations would then hurry up the process to get it done faster. However, it is vital for organizations to be patient when undertaking cost cutting. They should ensure that they take a week or two longer in planning an effective layoff plan or cost-reduction measures and take into account all people who would be affected by the move. Unfortunately, very few organizations know how to undertake layoffs in the right manner. This is because there are no ‘how to’ books or seminars on how to undertake layoffs in an organization. However, taking the right steps is vital in the layoff process. It is vital for an organization to ensure that it uses a structured approach during layoffs. The organization would like to eliminate or reassign six employees who constitute 20% of the workforce of the department. Therefore, it would be vital to develop a layoff strategy to ensure that it does not have a negative impact on the company.
The secret to implementing an effective layoff plan is ensuring that one is disciplined and scientific. It is vital for managers of an organization to acknowledge the fact that people’s lives and the survival of the organization are involved in lay-offs. Therefore, it would be wrong to use a “learn as you go” approach as it may have dire consequences that the organization may be incapable of dealing with. During layoffs, the organization should strive to determine some of the problems that may occur during the process. This would enable the organization to anticipate the problems and be well prepared to tackle them if and when they occur. The organization should also ensure that it creates a comprehensive workforce plan if it does not already have one. The workforce plan should include supply and demand forecast and various redeployment and layoff elements (Nelson & Quick 2012).
The organization should undertake research and benchmarking to determine factors that are critical in successful layoff plans of organization within its industry of operation. The organization should seek the services of consultants to determine the most effective strategies in layoffs. This would enable the organization to know when and why layoffs are successful, and factors that make them fail. If possible, the organization should study the results of layoffs in other companies. It should ensure that it determines the key individuals involved in layoffs and seek their advice on how to undertake layoffs effectively. The organization should also consult the staff of the company who were laid off and the survivors of the layoffs from the companies studied. This would enable the organization to determine what worked and what did not work in the organizations studied (Holley, Jennings & Wolters, 2011).
Prior to the layoff, the organization should set its business objectives for the next 24 months. It should strive to determine how the layoffs would contribute to the achievement of the goals. The organization should also update its market and economic growth, sales, and demand forecasts in accordance with the objectives. Generally, the organization should ensure that it identifies the needs of its business units. This would ensure that the business units maintain quality even after costs reductions. The organization should also ensure that it formulates layoff procedures. The procedures should be consistent with the laws and cultures of the region (Nelson & Quick 2012).
Layoffs may not be the only solution available to the organization to enable it cut costs. Therefore, it is vital for the organization to evaluate alternatives to layoffs. Some of the common strategies that the organization may use include executive pay cuts, pay cuts of all employees, voluntary or forced vacations, freezing of hiring, or reduction in the number of hours that employees work. However, it would be vital for the organization to ensure that the alternative solutions do not compromise quality (Rao, 2010).
The company should also ensure that it gets the approval of the CEO prior to laying off the employees of the department. This is because the layoffs may have a negative impact on employee morale, which would ultimately have a negative impact on the productivity of the organization. The department would also involve the CFO in the process. The financial acumen and knowledge of cost accounting would come in handy in determining the cost ratios and the costs of the layoffs. They would use metric and performance standards of the organization to ensure the department maintains a lean workforce. Conducting a cost-benefit analysis would also help in determining the impact of the layoffs (Nelson & Quick 2012).
The department should also set a budget for the layoff process. The budget would include the severance packages, counseling, legal advice, and costs of retraining and redeploying employees. The costs of the layoffs are usually underestimated. Therefore, to counter this, the department would overestimate the costs by 20% (Rao, 2010).
The department would ensure that layoffs are not done during business peaks and vacation periods. This is due to the fact that this may generate negative public relations to the organization. The department would ensure that the layoffs are completed within 60 days. The layoffs would be undertaken at the beginning of the week so that the affected employees may have time to begin job search immediately instead of having to languish over the weekend (Kelly, 2002).
Prior to the beginning of the layoff process the department would develop violence and suicide prevention guideline and a dispute resolution system. The department would also develop a system that would enable employees to provide anonymous feedback. This would enable it to handle all the issues that may arise due to the layoffs (Rao, 2010).
The organization would also develop a system for escorting employees who are laid off. It would be vital for the system to ensure that it protects the organization while simultaneously maintaining the dignity of the laid off employee. The organization would also formulate tools that would help in maintaining employee morale. The organization would have frequent meetings, provision additional training, and counseling to employees of the department. The department would also create “stay on” rewards (Kelly, 2002).
Criteria for Selecting Employees to be Laid Off
The organization is rightsizing to cut costs. Right sizing refers to matching the workloads of employees to ensure that the organization becomes more efficient. The best time for an organization to downsize is before it experiences financial constraints, which would necessitate it to undertake major staff reductions. The first step in downsizing is to analyze the workload of the department and determine the measures that can be undertaken without reducing services and turnaround times. The next step is to undertake process reengineering and restructuring. The department would ensure that it applies a consistent criterion to determine the employees to be laid off. The criteria would not be discriminatory (Davulis & Petrylaitė, 2012).
The department would first check the employment contracts of the employees to determine the employees who would be laid off. The employment contract may require the company to provide severance packages. Therefore, the company would ensure that it lays off employees with the least severance packages. This would reduce the economic impact of the layoffs.
The department would provide severance and other termination benefits to employees. This is despite the fact that the organization may not be required to offer the severance or other termination benefits. Providing the benefits would show the laid off employees, the retained employees and the public that the company values the contributions of its employees and cares about their welfare (Davulis & Petrylaitė, 2012).
The department would also review the collective bargaining agreements of the employees to determine the employees who would be affected by the layoffs. This is because the employees may be unionized. Unionized employees may have collective bargaining agreements that have limits on laying off employees (Ford, Notestine & Hill, 2000).
The department would also consider the importance of the employees in the achievement of the future goals and objectives of the organization. It would ensure that it does not lay off employees who are vital in the achievement of the goals and objectives. The department would also consider the skills and experiences of the employees prior to the layoffs. It would be foolhardy to lay off employees who have vast skills and experiences. This is due to the fact that it would be more expensive for the organization to recruit employees who have similar skills and experiences in the future when the need arises (Ford, Notestine & Hill, 2000).
Effect of Layoffs on the Budget
The layoffs would reduce the budgets of the department. They would reduce the funds available for the department to undertake its operation. The funds that would be saved from the layoffs would be used in the automation of various activities of the department. This would reduce the need for the department to hire more employees in the future. In addition, it would also increase the efficiency of the production process of the department.
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Other funds from the layoffs would be reallocated to the sales and marketing department and the R&D. The company would run extensive advertising campaigns to improve the competitiveness of its products. The campaigns would prevent the layoffs from having a negative impact on the organization. R&D is critical to the success of the company. Therefore, channeling more money to the department would enable the department become more productive leading to the development of more innovative products. This would guarantee the future growth and profitability of the company.
Layoffs would necessitate the restructuring of the organization. This would lead to the elimination of roles that are not vital in the achievement of the goals and objectives of the organization. It would ensure that the organization has a lean workforce. The remaining employees would perform the duties of the employees who would be affected by the layoffs. The organization would also automate its activities. As such, machines would perform certain duties of the employees who would be affected by the layoffs.
Communication is vital for any layoff to be successful. Prior to layoffs, it is vital for the department to plan communication early. The departmental manager would plan what to tell employees about the possibility of having layoffs. The department would develop a formal communications document that would list the major talking points in the communications document. The departmental manager would also communicate with employees early and often about possible layoffs. The manager would keep them informed on the developments over time. The departmental manager would also communicate in an open and honest manner. This would enable the employees plan for a worst-case scenario since they know the possibilities (Hellriegel & Slocum, 2010)..
During the layoff, the department would conduct a layoff notification meeting. The meeting would have several important talking points. The departmental manager would inform the employees the rationale for the layoffs and reasons why layoff is necessary. The manager would inform the employees the efforts the organization has taken to minimize the impact of the loss of jobs for certain employees. This may include the provision of severance packages and other benefits (Anderson, 2001).
The manager would inform the employees how the layoffs would have a positive impact on the organization and how it would affect its core values. The manager would then inform the employees the employees who would be affected by the layoffs. These would include the employees who are targeted for layoffs. The manager would also inform the employees the changes that are expected to take place due to the layoffs and what would not change. The manager would also inform the employees the resources that the organization would avail to support the employees that would be affected by the layoffs. The manager would also inform the employees who they should contact if they need more information. This would include the name, title, email, and contact of the individual.
The departmental manager would personally inform the individuals who would be affected by the layoffs. The departmental manager should not engage in small talk. The message should be delivered directly buy compassionately. The employees should be given time to read the written notice of their layoff. The manager should inform the employees the reasons as to why it is vital to undertake the layoff. However, it is vital for the departmental managers to ensure that they do not make comments that would compromise the decision. The managers should also be sensitive to the situation of the employees and desist from blaming others for the layoffs. The managers should not also be defensive, argumentative, or confrontational when informing the employees that they have been laid off (Hellriegel & Slocum, 2010).
It is vital for the departmental managers to be ready to tackle any problem that may occur during the meeting. It is a fact that certain employees may be resistant or plead with them. They may also want to speak with the ‘decision-maker’ or threaten to sue the organization. The employees may also claim that certain employees who are retained are less capable or have less seniority (Anderson, 2001).