How Layoffs Affect Employees

A well-thought-out layoff compensation package is the best first step for any organization that finds itself in the position of downsizing. But that is not all; a successful rebound depends entirely on how your team handles the entire layoff process. Mindfulness and care must be taken for the people being let go as well as for those who are staying. Use these tips to help smooth over a rough layoff-induced transition period for your organization.?

Tip 1: Prepare your layoff compensation package in advance?

Right before (or even after) a round of layoffs is not the time to prepare a severance package. This step should be done at the same time you are creating your hiring strategy. When an employee is laid off, there are usually questions about compensation and benefits, and having everything in order leaves a better impression of your organization. Anticipate what questions employees might ask and have answers ready. In addition to final paychecks and benefits, there may be questions about other compensation or equipment if you have a virtual office.?

Don’t have a layoff compensation package?

No time like the present to start. Here is a good list of items to consider incorporating into your plan:?

• Severance: Many organizations offer 1–2 weeks of pay. Depending on the tenure and job title of the employee (as well as your budget), you may consider a tiered offering. Accrued PTO or Vacation should also be included in severance pay and be aware of the laws surrounding vacation and sick pay in each state.?
• Healthcare benefits: An employee is usually covered through the end of the month. Those looking to extend their benefits may be able to enroll in COBRA. Check with your provider to learn the employee options and gather any forms employees may need to fill out.?
• Reimbursements: Set a deadline for submitting any outstanding business expenses and a date for when they will be paid.?
• Retirement benefits: Include contact information for your provider so employees know who to contact about their 401k.?
• Other benefits: This may include gym memberships, commuter stipends, metro passes, and more. Make a list of these benefits and the date they will expire (immediate or the end of the month).?

Tip 2: Show compassion and patience?

Layoffs are uncomfortable for anyone, but leaders must do their best to make it as quick and painless as possible. The experience employees have when being laid off can have a ripple effect across social media, Glassdoor, and more. Remember that past employees can be future clients, referral sources, and more. Even in this challenging situation, you want to leave a good impression.?

Eric McNulty, co-author of You’re It: Crisis, Change and How to Lead When It Matters Most, offers sage advice to leaders facing downsizing:?

“Be clear, be careful, and be compassionate. Make sure people understand why you’re doing this. Make the business case to them and not the usual corporate speak of ‘market conditions.’”??

When preparing for a layoff, meet with team leaders to discuss how you will go about it. Will you have a meeting with everyone being let go, or will you do it individually, manager-to-employee? Take time to understand the different questions employees might ask and know how to answer them. Be prepared for all different types of emotional reactions — tears, anger, silence — and offer to be available for questions after the meeting.?

Above all, make it very clear that this decision was not taken lightly and was not personal but based on business conditions.?

Tip 3: Do not forget about the employees left behind?

Managing layoffs extends beyond compensation packages for those departing. It is crucial to support the workforce holistically, ensuring those who remain feel valued and understood. Discover effective strategies for easing the layoff process for everyone involved.?

In the aftermath of corporate layoffs, the focus often shifts to the remaining workforce, who must navigate the challenges of increased workloads and the emotional impact of seeing colleagues depart. Beyond essential layoff compensation packages, organizations must prepare for the subsequent needs of these employees. This preparation might involve planning for increased promotions and merit increases, recognizing the additional responsibilities remaining employees will likely shoulder.?

While it's natural to concentrate on those leaving, the employees left behind require equal, if not more, attention. Surviving a layoff doesn't necessarily equate to relief or gratitude among the remaining staff. Many experience "layoff survivor guilt," coupled with a noticeable shift in attitudes or productivity. A McKinsey study highlights that 70% of employees find their sense of purpose in their work, explaining why layoffs can deeply unsettle the workforce. Leadership IQ further reports that 74% of employees experience a decline in productivity following corporate layoffs.?

The root of this downturn in morale and productivity often lies in the psychological impact of layoffs. Sally Spencer-Thomas, a workplace mental health expert, notes that layoffs can foster paranoia and distrust within an organization. Employees may doubt whether their well-being is a priority, leading to a "psychological tsunami" effect post-layoff.?

Easing the Transition for Remaining Employees?

To mitigate these effects, it's imperative to have a robust communication plan for the employees who remain. Transparently explaining the reasons behind the layoffs and outlining the company's strategy for stability and growth is crucial. This communication should preferably occur in person or via video rather than being initially conveyed through email. A follow-up email can recap the discussion, but the initial conversation should be direct and allow for expressing concerns and questions.?

Implementing Recognition and Addressing Compensation??

Acknowledging the added burden on remaining employees through appropriate compensation and opportunities for advancement is vital for maintaining morale, motivation, and productivity.??

This includes:?

• Adjusting compensation to reflect the increased workload and responsibilities can help mitigate feelings of being undervalued.?
• Offering advancement opportunities compensates for the increased responsibility and helps fill leadership voids, signaling recognition of employees' contributions.?
• Enhancing support programs, such as professional development opportunities and mental health resources, demonstrates a company's commitment to its workforce.?

How an organization handles layoffs and supports its remaining employees can significantly impact its culture, morale, and future success. Companies can foster a supportive and motivated workplace environment by focusing on transparent communication, recognizing the increased contributions of the remaining staff, and reviewing compensation and advancement opportunities accordingly. This comprehensive approach helps mitigate the negative impacts of layoffs and positions the organization for a stronger, more cohesive recovery.?

Layoffs are hard; make sure to have the support you need.?

Big or small, a layoff is brutal on everyone in the company. Having the support you need to develop both a layoff compensation package and strategy will go a long way to easing the pain and supporting those left behind.?

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Meet the Authors: Kimberly Beckstedt & Ann Fosburgh CCP, PHR, SHRM-CP

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