Remember Empathy, Legality and Business Health During Workforce Reductions

December 05, 2022

By Matthew Kerzner 

As we approach 2023 and businesses continue to navigate the external pressures of the fragile supply chain and volatile economy, workforce reductions are becoming top of mind for many. While many organizations might have a “wait and see mentality” when it comes to this topic, it’s important to think proactively about how to address the issue and have a plan in place. 

Layoffs have major implications on both employees and the organizations. As such, it’s important that business and HR leaders’ mindsets be rooted in compassion, proper organizational structure, and legality when facing this stressful and unfortunate reality.  

Here are a few tips and considerations employers should keep in mind when contemplating workforce reductions.  

Keep Compassion and Empathy Top of Mind 

A forced reduction in workforce will have far-reaching impacts on the lives of your employees outside of work, so it’s important that throughout the process, compassion and empathy are top of mind. 

When considering employee layoffs, how and when you communicate the message is key. Start the process early and ensure your leadership team’s messaging is clear and concise—not leaving anyone in the dark. As part of your messaging, keep empathy top of mind by understating everyone’s situation is unique, and be as honest and transparent as possible. 

Layoffs should never be treated transactionally. If empathy for your people is not a top concern during the process, you’ll risk creating lasting morale and image issues for your current employees and clients. 

Never Skip Out on Legality 

While a reduction in workforce or layoffs is a people-centric process, it’s also a legal one. If an employer does not follow the proper protocols, it will likely find itself in legal trouble. Never leave legal counsel in the dark during a workforce reduction. In fact, legality is such a priority in the process, I recommend having both internal and external legal counsel as part of every meeting, communication, touchpoint and decision from the very start. Here are just a few of the many legal areas to be aware of: 

Unions – If your employees are part of a union, there may already be an existing clause protecting employees from an externally driven workforce reduction or layoffs. While every collective bargaining agreement (“CBA”) is different, some may include clauses that protect employees based on tenure or prohibit layoffs altogether. Work with your union representative early and throughout the process to ensure they’re not caught by surprise and you’re not breaking your CBA. 

WARN ActThe Worker Adjustment and Retraining Notification (“WARN”) Act is a U.S. labor law that mandates employers with more than 100 employees provide at least 60 days of notice prior to the planned layoff date. Enacted in 1988, the provision is meant to protect workers and their families by giving them time to prepare for and adjust to a loss of employment. While there are some exceptions to the rule (e.g., reason, size, duration of the layoff), employers should be aware to avoid costly fines and legal trouble. 

Discrimination, EEO, Title IX – While programs like Equal Employment Opportunity and Title IX should be top of mind when it comes to hiring and organizational practices, they should never be overlooked when facing a reduction in workforce. To avoid breaking any laws shielding a protected class, ensure all layoffs are equal and certain protected groups are not being affected more than others. Even if it is by sheer coincidence, first analyze if there are any trends that could be interpreted as discrimination. 

COBRA – The federal Consolidated Omnibus Budget Reconciliation Act (“COBRA”) protects employees from losing necessary health insurance after being laid off or let go. In most cases, businesses with more than 20 employees are required to continue coverage for up to 18 months after an employee exits the company.  

Ensure the Business Can Still Operate 

Workforce reductions and layoffs often cost money in lost productivity and institutional knowledge, so it is important business leaders plan for this ahead of downsizing. Laying off too many employees due to a reactionary mindset can do much more harm than good for business health in the short run. You may have seen in the news that many large employers conducting layoffs are cutting 13% of their staff. Why 13%? Perhaps that is the level at which businesses can still effectively review and redeploy their existing workforce to handle their current and near-future needs. 

Layoffs are an unfortunate and oftentimes unavoidable reality. If you must reduce your workforce, for whatever reason, make sure you keep empathy, legality and future business health top of mind. Ultimately, it’s best for all concerned. 

 

 

About Matthew Kerzner

Matthew Kerzner is a Managing Director in the Center for Individual and Organizational Performance and the Center for Family Business Excellence. Matt has more than 25 years of experience in organizational development with a specialization in assisting family businesses and closely held businesses.