My HR Cache Talks About Anti-Layoff
Are layoffs the only answer in crisis situations for organizations? Maybe not. Here are some top alternatives to layoffs and points to getting an Anti-layoff strategy and an Agile Crisis framework, in place.
"Layoffs hit Twitter recruiters", headlines caught my eye on LinkedIn today. It is not the first time, that layoffs are creating a stir on digital media. People were laid off in droves, without notice or support, in the recent past too. And with the Twitter news, my HR cache awoke and flooded my mind with views.
We are in a phase, still bridging the void caused by the pandemic. And trying to fill in the wide gap as a result of the great resignation. Amidst all that, layoffs seem like a cosmetic measure covering up root issues. Maybe there is a larger picture that organizations must account for. Here is why. My HR cache talks about anti-layoff, the impact of layoffs, and an overview of a few proven alternatives to layoffs.
Read on.
What happened to Social Responsibility?
Several mornings ago, I read about someone in my professional network. This virtual colleague worked with an established company for 18 years and was part of the company’s layoff drill. Retirement plans with the company led nowhere. It was concluded in a forced exit with revoked access, without notice. There was zero chance given to even retrieve personal photos, award certificates, and accomplishments collected over the years.
This is not a fictional story. It is a real-life event of a real person. 18 years didn't even matter! It could have been different. And which is what echoed across social media comments.
Organizations must have the social responsibility to care for employees' experience, not just during employment, but also, after. Any ill-timed or badly managed layoffs sting not just employees, but organizations too, in the long run.
Layoff causes in 2022
Over hiring and ramping up too soon, before reaching a plateau phase in business and coming to a screeching halt. Layoffs were caused by bad workforce planning. In other words, incorrect workforce planning versus project pipeline.
The other reasons range from cutting costs, and organizational restructuring to the impact of the pandemic, headcount management, and related reasons.
Remote work and business led to aspects such as technology innovations, increased competition, and industry declines. These have been noted as another league of reasons that contributed to layoffs.
And of course, inflation, bear market, the Russia-Ukraine war, and recession piled on. Experts are saying that the economy is on a slippery slope and we are seeing volatility in the market with fickle prices, dropping currency values, and an unstable stock market to mention a few.
Business reasons could be strong and valid. But the observations are that the approach to layoffs varied in length and breadth of it, in the recent past.
How Layoffs Can Haunt Companies
Layoffs create a seismic shift in the wellness of employees and their families, financially, emotionally, and sometimes physically, too. For Companies, it is a layoff of an employee but for that one employee and their family, the entire outlook towards life changes.
But what does not meet the eye, immediately, is that layoffs are bad for organizations, too. It could take them from better to worse (rings a bell?)!
-Bad Send-offs lead to Brand damage
For Better.com, all it took was one zoom call to lay off people, force shut access, and later reprimand some employees, to add insult to injury. If you search in Google, for Better.com layoffs, you’d see the amount of bad publicity and bad branding that the company received.
It is not to say, no company should choose layoff as an option. It sometimes could be the only way out, to stay afloat. The point is to manage the layoff, with social responsibility to slow the impact of the fall. To let people move on, with dignity in their careers, and in their life.
We are dealing with human beings, who become reservoirs of their life experiences. They gather their cache! And sadly, professional experiences cannot be differentiated or weeded out of the emotion factory, we all gather.
Additionally, employees are quite vocal these days. In fact, if an employee does not talk about it, social media and other digital channels provoke them to speak up and vent. And with nothing more to lose, employees take to social media and other platforms to express their resentment.
Does it do branding for the company? Certainly yes!
But is it good branding? Heck, no!
After layoffs, companies' stock prices either fall or get neutralized.
There could be lawsuits against companies filed by upset ex-employees.
There is a negative impact on the morale of existing survivor employees. They may have the fear of “is it me next” and insecurity feelings? And in turn, this could lead to attrition of top performers and other niche skilled employees.
More efforts will need to be put in by the organization to retain survivor employees.
Layoffs can back-bite companies at a later time. And it goes beyond bad publicity. The cost, time, and the pricelessness of a brand image which could take more time to build up are smaller elements of the whole. It takes 150% of an annual salary to find a replacement hire, according to Gallup. Hiring, training, inducting, building traction, and then firing is a shortcut to bump up internal costs, when seen cumulatively.
Factoring all that, being proactive about exploring alternatives to layoffs is a safe approach. In parallel, it propels your brand leadership, saves costs, and supports investing in long-term objectives for better standing.
Here are some alternatives to layoffs that organizations can explore.
Alternatives to layoffs
Interestingly, the number of job openings in April 2022 alone has been 11.4 million openings. Since 2019, job openings have only increased with every passing year. (Source: Job Openings and Labor Turnover - April 2022 (bls.gov)).
We are in July 2022, and we are still counting the number of job openings. We are seeing “hiring” hoardings around every corner you turn.
What this means is, that despite layoffs, employers still need employees. Hiring may have been frozen, temporarily in some companies. But sooner, hiring has resumed, on low burner or high.
But what if, we look for those employees on the inside, instead of external pools? What are the options we got? A ton of them!
Well, then, now that we got it in line. Here are some of the alternatives to layoffs that we could look at-
· Select the best candidates from within the organization instead of from outside-
We know that companies terminated employees yet at the same time, their hiring efforts continued in parallel. As earlier indicated, (Gallup), the cost of hiring a replacement is 150% of the annual salary of an employee. According to Glassdoor, it takes an average of 52 days to fill up a position. And the loss of disowning an employee who has been hired, trained, paid, waited for traction, sent on paid vacations, upskilled and bonused, and then fired is much more. Keeping these costs in mind, companies can look at internal employees before looking for external hires, as a preliminary step.
· Slow down layoffs
With better re-strategizing of manpower management, employees can be staffed when a business goes full throttle. Slowing down layoffs could be a calculated risk that is worth taking.
Companies let go of hundreds of employees. But in a short time, due to a sudden surge in projects, they get into a frenzy of speedy hiring. The cost of getting the wrong hire is steep. Acquisition teams under the pressure of hiring, overlook misrepresentations in candidates' resumes. This is proven as per research.
· Slow down hiring
When layoffs are slowed down, it is an adaptive status quo to find value in what 'is'. And similarly, slowed-down hiring is a shift to re-focus on the manpower capacity that is existing.
By slowing down hiring, there is scope to hire internally, in newly restructured roles. This approach trumps pre-hire ghosting before joining time, which is rampant during hiring efforts. And with existing employees, the organizations have the benefit of manpower available at hand, who are well-inducted into the company’s culture, as per internal training and performance metrics.
· Deploy existing pool to other departments
When an organization is restructured, the upgraded version would not differ much from the original. In other words, the functional aspects, the job role expectations and the industry of origin would not change much, in most cases. Therefore, the skills and expertise of employees could be of use in the restructured roles. Organizations must assess and match the existing pool of employees for a possible fitment in other roles. It may be similar to how systemic and hierarchy design changes occur in mergers and acquisitions. Existing employees could still be of value, in differing roles, with similar skill requirements. Any gaps in skills can be upskilled and trained.
· Slash pay by percentage
This is a straightforward approach. When there is limited revenue, limit how you spend it. Organizations can be transparent in communications with employees and express possible solutions. Assess the need for cutting down the pay by a percentage and follow a uniform approach for all employees. Share the cut that leaders have taken, with employees. It shows that we are all in it together.
Keeping authenticity in communications builds brand loyalty and reputation. It reinforces the trustworthiness of a company. More clients and businesses could be attracted to work with such brand worthiness. It upkeeps employee morale and a sense of belongingness. Some of them may go beyond what duty calls and deliver more, given the need of the hour. While some others may choose to look for greener pastures, which is also fine.
· Delay promotions
In a similar line to what we discussed in the above point, be open about delaying promotions. If there is limited work, and limited revenue to pay out, why would a company need more people in higher ranks? Share open communications about the approach being taken to delay promotions.
Express how the organization and its leaders highly value each employee’s contributions and performance, in such crisis times. This could be a test of their mettle. See who will stay and who will leave. Encourage employees to progress their careers, if they find something better and that they’ll be reached out to in the future, as applicable.
· Convert FTEs into Contract employees
If organizations are in no position to pay recurring monthly salaries but can accommodate intermittent compensation, they must be open to adopting such new avenues of work models, relatively.
Converting FTEs into contracts could be an option, considering legalities, offer agreements, and systemic regulations with data privacy checks. This way companies will not have to re-invest in training or upskilling employees. Extend such offers with bonuses and other perks of well-being and flexibility.
· Option of Cross-skilling
Using the SME training model, companies could retain subject experts and house them for inter-department training. These trainings could be for cross-skilling and sharpening of skills more needed for changing roles or newer structural requirements. As per Organizational psychology, employees tend to stay longer with companies where the depth of their roles is more varied, and have more options to learn from. Also, organizations that have a clear vision and mission, with intact values and philosophy, retain employees' trust for a longer span and are not easily, waivered.
· Counsel towards Voluntary resignation
Planning for the future does not necessarily mean planning for a brighter future alone. Else we would not have insurance and risk businesses today. Companies do plan for growth and high performance in the next 5 years or more. But the point is, they must also, plan for the next steps when the business is in the doldrums.
Plan for steps that can make the climb down less steep and minimize the fall. Plan to unravel layer-by-layer associated resources such as employees. When no other plan works, company counselors can be trained and prepped for having tough yet candid conversations with employees. It goes without saying, to keep it all in sync with legal formalities and past agreements.
Employers must act with social responsibility and care for employee well-being, in every sense. Give a bit of a long rope to employees to find their way out, and find an alternative job, if possible.
· Cut bonuses, perks, and travel expenses
Organizations, having a financial crunch, look to layoffs as a quick fix band-aid approach to cut costs. But the appalling fact is that they don’t review other internal avenues of cutting costs. Bonuses, perks, and unnecessary travel expenses, for example, can be controlled or cut down. These aspects may vary from organization to organization, but the point is to be frugal and wise, in a planned and structured way. And this leads to the need to plan for the rainy day, well ahead, even when the business is making hay while the sun shines.
How adaptable these alternatives to layoffs maybe would vary from employer to employer. And perhaps there could be an irretrievable situation of complete downsizing. If there is a dying market share or a redundant product trying to survive amongst top competitors, none of the above aspects may work. That could be a black-and-white situation when the existence of the product or company, maybe in question. And in such a circumstance, employees will get impacted and retrenchment is inevitable.
On a closing note
It is wrong to seek a panacea in a crisis situation. Financial markets and venture capitalists influence corporate decisions and determine layoffs to improve profits. Layoffs may be seen as a 1st cost-cutting measure for immediate P&L sheet relief, but often, in the long term, it does not cut costs. More proactive measures are needed for organizations to manage crisis situations.
Establishing a tentative anti-layoff strategy from the ground up could aid in situations of head-count crunching. Just as how we work on frameworks for employee engagement, training, rewards and recognition, and the like, it would not harm to have an agile contingent framework for crisis management. I am certain many organizations already do, but that is not enough. As long as there is more layoff noise, it is a signal indicating unpreparedness.
Layoffs or no layoffs, it is time to acknowledge the fact that employees are your brand influencers, whether they are on rolls or off the rolls. Prospective candidates watch, research, and study your brand with or without your knowledge. We must respect that and let the employee economy come to its full form. After all, we have seen how the great resignation hit companies and left them scrounging for the right candidate pool. It is time, we put people first!
Sources
1.2 million link: https://www.bls.gov/news.release/pdf/jolts.pdf
https://knowledge.wharton.upenn.edu/article/how-layoffs-cost-companies/
· https://abcnews.go.com/US/great-resignation-origins-means-future-business/story?id=84222583