Editor’s note: Randstad RiseSmart recently hosted a #SmartTalkHR webinar, ‘small business layoffs: taking care of employees at a critical time.’ Watch the on-demand webinar here.

For small and medium-sized businesses (SMBs), 2020 has been a year for the books. The impact of a global pandemic, societal tensions and political unrest have been felt all the way from the bank and boardroom down into the heart and soul. According to a study from the SMB Group, 78% of SMB leaders say COVID-19 has negatively impacted their businesses. And nobody can predict how long this impact will last – depending on the day, there may be talk of economic recovery or more downturns.

As you continue to manage your business into the new year, you are likely focused on how to navigate decisions around finances and employees. For most business leaders, staffing concerns are some of the hardest to face. In an SMB, employees are often thought of as family. You may have built a culture committed to personally caring for and supporting your team members both inside and outside the workplace. You or your managers may enjoy close relationships with direct reports and many years of history with loyal employees. With such strong ties, the idea of making decisions that impact these employees’ economic security can be daunting.

considering the options and the impact

During challenging times, it’s important to consider all available options before taking any action. As found in the SMB Group study, 59% of SMBs have taken one or more actions to trim payroll. When specifically focusing on the need to decrease employment costs, companies have used several strategies with success:

  • Transition staff to part-time hours with matching wages or reduce the hours of part-time employees.
  • Reduce salaries across the board by a certain percentage.
  • Offer voluntary furloughs to decrease salary costs and allow employees the freedom to attend to their own health-related and familial needs that may have arisen in light of the pandemic.
  • Make layoffs, which are painful for all parties, but are sometimes the only realistic exit plan for companies.

I recently heard from a friend that her educational consulting company found itself in a difficult spot this past spring. The financial impact of the pandemic was being felt by its customers right around the time the company should have started seeing new contracts and contract renewals come in. With no new revenues to forecast, the company made a tough choice. They instituted a 10% salary reduction across the board – including leadership – along with foregoing all matches to the 401K program through December.

While no employee enjoys having their salary and benefits cut, many likely prefer this option over seeking new employment during a global crisis. As the months progressed, the company found its customers more hopeful and ready to make commitments again. By September, the company reversed its cutbacks and reinstated full salaries for all employees. Within a few weeks, they begin matching 401K investments again.

As you consider the above ideas, you will study the financial benefits and impact of each. While one strategy might help you reduce immediate wage-related costs, it might lead to added costs if you fall short in meeting customer demands or must hire quickly once business picks back up. Figuring out how to balance all priorities is important in determining the strategy likely to drive the best outcome for your company.

brand integrity and transparency with employees

Employees are any organization’s greatest asset and how they view the company is imperative, especially at times of crisis and change. In the past decade, the employee experience has become central to many organizational cultures. In 2019, the Business Roundtable redefined corporate responsibility to include employer responsibility. As the chairman and CEO of the Business Roundtable, Jamie Dimon acknowledged that ‘Employers are investing in their workers and communities because they know it is the only way to be successful over the long term.’ Given this, it makes sense that the investment in employees extends to all stages of their journey with your company, including treating them with integrity upon departure from the organization.

Just as important as brand integrity is maintaining transparency in your communications with employees about actions and decisions the company makes. The education consulting company highlighted above chose complete transparency. They explained the revenue situation and shared forecasts for the year based on the anticipated duration and economic impact of the pandemic at the time. Employees appreciated having the full picture and it enabled them to trust that the decisions made by leadership were the right choices for the most people. As a result, employees thought favorably of the organization, no employees left the company and productivity remained strong during the height of the crisis.

related content: how leaders can communicate with transparency during a crisis.

when layoffs are the right choice

If your company reaches a point at which layoffs are the best route to support business viability, there are several ways you can support a smooth process that preserves your brand integrity and offers the best outcomes for your valued employees.

Demonstrating care for impacted employees during a layoff through supportive services and benefits will positively reflect on a company’s brand, including among remaining employees, and help maintain morale and productivity. The positive impact of this care will also likely outlast the current economic crisis. And, as the economy recovers, finding top talent will again come into focus. Companies that have demonstrated care for their workforces during such a challenging time will be viewed as employers of choice and will have an easier time acquiring talent.

Given the power of social media and the popularity of sites like Glassdoor and Yelp, an employer that does not consistently demonstrate a caring employee culture is at greater risk of negative ratings and social media comments from former and current employees that can impact the company for the long haul.

related content: 5 ways to keep employees productive before, during and after a layoff.

recognizing the value of outplacement

One way to show care for employees affected by layoffs is to provide robust exit packages that include severance and outplacement services. As a SMB employer, you’re likely personally invested in your employees’ long-term success and want to give then a leg up in the job market. Providing outplacement services can ease the pain of job loss and help them find their next role.

In today’s fiercely competitive hiring environment, employees’ success in the job market often depends on an understanding of the current job search techniques and technologies – neither of which are skills people naturally possess. Coupling a job search with a potential transition to a new industry that’s necessitated by market circumstances can be discouraging. Because of these circumstances, outplacement services are key to your impacted employees’ success.

Whether you’re providing these services internally or working with an outplacement partner, make sure your outplacement benefits include the following elements:

  • Professional career transition coaches that guide the employee throughout the entire job search process. Coaches should possess an understanding of your local market and industry, and have experience developing individualized job search strategies. Effective coaches can also assess individuals’ skills, passions and career interests, and identify the most relevant networking and job opportunities in the job market.
  • An updated, professionally written and keyword-optimized resume and social media profiles that convey a consistent, professional brand.
  • The capacity to connect to jobs through virtual job fair participation, access to recruiters and expanded networking opportunities.
  • Resources and tools such as assessments, videos, tip sheets, podcasts, webinars and workshops that excite employees to learn job-search best practices and make the most of their outreach activities.
  • Services with capabilities to be delivered virtually, not just in person.

Through this kind of robust outplacement, departing employees are much more likely to land their next role sooner than if left on their own. The bonus for your company is that the sooner impacted employees find new roles, the lower the organization’s unemployment and severance costs and the more favorably these employees will perceive their former organization.

related content: why helping exiting employees reskill and upskill is to your advantage.

preparing for a layoff

As the decision maker in the organization, you may be new to layoffs given the low unemployment rate in recent years. Even if you’ve had to lay off staff due to budget changes in the past, the landscape and best practices for letting people go have changed as organizations focus more on the employee experience.

Start by assembling a team of trusted advisors to support you in managing the layoff process from start to finish. Your team might include your employment attorney, your accountant and maybe an HR consultant. This team will help you maintain compliance, reduce the risk of legal repercussions as a result of layoffs, ensure all necessary documentation is prepared and develop an effective communications strategy.

When communicating layoffs, do so with compassion and transparency. A layoff is an incredibly stressful life event and employees are also dealing with the added stress of a global pandemic. A key piece of any layoff communications strategy is clearly explaining the benefits available to departing employees – such as severance pay and healthcare. By empowering your impacted employees to take advantage of all the benefits available to them – including outplacement – you can help them land their next role sooner and help reduce their stress.

As the new year approaches and you embark on the difficult decisions ahead, the planning process will be pertinent to achieving an outcome that is perceived as fair, even if it isn’t pleasant. Being transparent in your communications and providing support services to impacted employees will go a long way in making these employees that you think of as family feel taken care of and confident when they need to find new employment.

Leverage the planning support and career transition services offered by outplacement providers like Randstad RiseSmart to help you effectively navigate employee notifications. To learn more about best practices to plan and conduct a layoff, watch our on-demand webinar, ‘small business layoffs: taking care of employees at a critical time.’

kimberly schneiderman.

senior practice development manager

01 December 2020

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