Improving Employee Retention After a Layoff or Workforce Restructure

The U.S. economy grew somewhat more slowly at the end of last year than initially thought. The Commerce Department now says the economy grew at an annual rate of 2.2 percent in the fourth quarter of last year. That's down from the department's original estimate of 2.6 percent growth (Source: NPR). Forecasts suggest that the slowdown will continue in 2019. The Federal Reserve and the National Association for Business Economics have both recently lowered their forecasts for growth in 2019 to 2.1 percent.

According to Bureau of Labor Statistics data, the unemployment rate declined by 0.2 percentage point to 3.8 percent in February 2019, and the number of unemployed persons decreased by 300,000 to 6.2 million. However, the slowed economic growth means that companies may be considering workforce contraction or reorganization in order to remain profitable. This means that HR leaders must be prepared to handle maintaining both employer brand and employee retention after layoffs, particularly considering that organizations in many industries may not be slowing hiring in one area as they contract in another.

Layoffs often impact only a division, location, or position, however, meanwhile your company is still hiring and recruiting for various positions in other areas of the company. When your company displaces some workers, it’s important to focus on keeping your remaining workforce engaged and productive. Since many employees see layoffs in one area as a sign of instability or lack of job security, they may be tempted to shift focus and seek employment at one of your competitors.

How to retain your remaining workforce after layoffs

Downsizing, restructuring, or layoffs can negatively impact your company’s brand. No matter how necessary for your bottom line, it is imperative to have a solid strategy in place to minimize the damage—not just to your product and customer brand—but also to your recruiting and employment brand. This makes recruiting difficult, but it also impacts one of the most important HR metrics: employee retention.

According to reporting from SHRM, companies that laid off 0.5 percent of their workforces sustained, on average, an annual turnover rate of 13 percent—a rate 2.6 percentage points higher than the average annual turnover of companies that didn’t cut staff. In other words, an extra 2.6 percent of the workforce left of its own accord, more than five times more workers than were laid off. In addition, the more people companies laid off, the higher rates of quitting they sustained.

Related content: Downsizing with Dignity: Don’t Forget the Survivors

It’s important for HR leadership to have a plan in place in order to prepare for the aftermath of layoffs or restructuring. To build transparency and trust and retain valuable employees, consider focusing on the following four key areas:

Retention tip #1: Have a layoff communication plan for displaced workers

Once your legal and HR departments are on the same page with regards to transparency, let your HR leadership team take the lead with individual layoffs. Be prepared to answer ANY questions, and don’t just offer a severance package. There are companies out there who specialize in transitioning laid off employees. Hire one and offer their services to your impacted employees.

When employing a layoff communication plan, it’s best to focus on the fiscal health of your company and not the layoffs. Transparency, yes, but be sure to focus your communications on what has led up to your company’s need to restructure or lay off employees—not celebrating the benefits of doing so. It’s also helpful to be transparent about other areas within your company that may have hiring needs and effectively communicate these opportunities to your outgoing employees. If you have a well-developed skills training program, you will find transitioning your impacted workforce into other roles within the company is easier and results in longer term success for the employee and your organization.

Related content: 5 Steps to Launching a Scalable Career Coaching Program

Retention tip #2: Monitor your online employer brand

Know that you cannot talk outgoing employees into not writing reviews on Glassdoor or other employer sites, but you can give them everything they need to make a smooth transition to a new job, which can take the sting out of being laid off. With empathy, put yourself in the employee’s seat for a moment. They may be angry, hurt, confused, and caught off guard. They’re wondering “why” when you’re focused on the “how.” Address their concerns and give them time to ask questions instead of rushing them to pack up their desks.

It’s important to have frequently asked questions and resources handy. Displaced employees should receive a packet of information to help in planning and discussions for themselves and their families. This is also where an outplacement company’s services can help your organization to follow best practices and experience better outcomes. You don’t want to leave your impacted employees high and dry. Instead, offer the services of a company that has the expertise to work with your laid off workforce and quickly get them back into the job market and employed.

Related content: How to Manage Your Digital Brand After a Layoff

Retention tip #3: Be responsive to your employees

Recovery from a layoff is faster and easier if managers and employees are allowed to speak their minds freely about what's happened. Hold focus groups and employee meetings to help facilitate employee conversations. Don’t forget to remind employees of your company’s open-door policies with a gentle reminder to leaders regarding their obligation to follow the guidelines. In fact, it can be a great opportunity for the team of surviving employees to pull together and renew ties. Encourage your managers to be engaged and provide them with talking points and direction so they are prepared to lead their staff in constructive conversations about the layoff or restructure.

Related content: Avoid These 5 Layoff Notification Blunders

Retention tip #4: Have your senior leadership hold skip level meetings

Skip level interviews are one-on-one meetings between senior leaders one level above an employee’s direct-report manager. The goal of a skip level meeting is to develop trust and rapport so that the employee feels comfortable outlining his or her concerns to a member of the top-level leadership team before giving notice or resigning from your company. These meetings don’t have to be formal in nature, but more of a discovery conversation between employees and leaders.

In order for organizations to remain competitive in this fast-moving economy and global climate senior leaders must make necessary business decisions that may involve organizational changes, layoffs, or restructures. Before these decisions take effect, partner with experts who can lead you to follow best practices and ensure that your communications and preparations will lead you to the best possible outcome for your company and for your most important assets, your employees. In the process, don’t forget those who remain after the layoff—they will be the ones that lead your organization to future success.