A Manager’s Guide to Managing Layoffs and Downsizing

Author: TASC Outsourcing
Jul 03, 2023

Cost-cutting, economic downturns, mergers, and other factors, among others, might cause a business to engage in downsizing through layoffs.


Although there are parallels between how an organisation should handle a layoff and a termination for the cause or poor performance, this article focuses on policies and procedures that are especially pertinent to the layoff scenario.


Every time a company considers laying off employees, it must weigh the possibility of breaking a variety of federal and state laws. In addition, in the event of a layoff, some common law claims may gain additional strength.


While firing a single employee may subject a company to a variety of legal claims relating to that employee, laying off employees may subject a company to a variety of claims by numerous staff in the way of a class action or collective action lawsuit.


One of the biggest difficulties a company may encounter is carrying out a layoff successfully. However, a sizable set of efficient procedures has been produced to help management carry out the procedure in a methodical, lawful, and compassionate manner.


What Causes Layoffs?

Layoffs are a tried-and-true method of decreasing organisational costs; staff reductions can make a big difference right away. It is only natural that organisations looking to cut costs prefer to concentrate on laying off employees since "people" expenditures, such as compensation and benefits, often account for half of a company's overall operating expenses. Even the disclosure of an impending layoff is frequently thought of as a rapid means to increase the stock price of a publicly traded company, even though studies disagree with that notion.


Tips For Managers To Handle Layoffs And Downsizing


Prepare For Layoffs


Preparation is the first stage in managing a business layoff. The management ought to have a strategy for how the procedure will go into effect. This involves determining who will be laid off and when. The management should also create a communication strategy so that staff members are informed of the layoffs as soon as possible.


Additionally, it's critical to keep in mind that hiring and firing decisions are made based on finances, not personnel. This means that the management must confirm that the business's funds are in line and that the layoff is required to ensure the company's existence.


Investigate All Possible Alternatives For Downsizing


Managers must look into all downsizing options before implementing mass layoffs. They should evaluate the business's health, including whether any tactics may be reformed, and determine whether it is possible to reshape the business plan.


As was evident during the pandemic, several businesses have adopted the following techniques to reduce their workforces without resorting to outright layoffs.


  • Furloughs: A period of unpaid leave is known as a furlough. To make immediate savings, some businesses impose full-staff furloughs.
  • Exit incentives: The manager could give staff members a chance to quit on their own initiative and encourage them with rewards like severance.
  • Voluntary sabbatical: Employee-led unpaid time off is known as a voluntary sabbatical. Employees may take time off to seek education that would advance their careers or focus on a passion project for a predetermined period of time.

These choices could help employees feel more in charge of their destinies. When people participate in the decision-making process, they might feel more positive about the business when they're entirely let off as opposed to bitter goodbye.


The management might inform their staff that layoffs or downsizing are being considered and solicit any suggestions from them. Utilising employee feedback can also increase the sense of empowerment among their employees.


Communicate With The Workforce


Maintaining open lines of communication with staff members during a corporate layoff is one of the most crucial things a manager can do. They must understand what is taking place and why. Any modifications or updates to the plan should be communicated to them by the management.

Honesty, transparency, and open communication from the manager are required. Do not attempt to minimise the issue or conceal the facts from staff. During this time, they will value their honesty and be more likely to believe them.


Offer Assistance


Employees who are let go may feel a variety of emotions. They might experience fear, worry, and uncertainty about the future. The manager's responsibility is to support them during this period.

By assisting them in finding new employment, putting them in touch with services like career counselling or unemployment insurance, and providing psychological care, the manager can offer assistance. Additionally, they ought to be accessible to respond to any inquiries about the layoff.


Deal With The Consequences


There are frequently numerous ramifications when a business makes layoffs. Employees may harbour resentment and anger toward the company. Additionally, they can be angry with their old management for firing them.


Dealing with the effects of layoffs as soon as feasible is crucial. This entails handling any rage or resentment that staff members may be feeling. Additionally, it entails being accessible to respond to any inquiries they may have regarding the layoff.


Manage The Remaining Workers

Strengthening and assisting the still-existing workforce is crucial. Losing a job can be emotionally draining. The workers who are left behind may become anxious or disengaged as a result.

The management should decide how they'd retain their current workers engaged as part of the layoff strategy. These could consist of:

A presentation to the entire staff outlining the new structure and how the downsizing will benefit the future of the business.
Discussions with management in private so that surviving workers can express how they feel about the layoffs and ask any questions.
Opportunities for education and growth.
Encourage a culture of openness and integrity. Be accessible to your staff by providing open lines of contact.
Celebrate accomplishments by highlighting them in company-wide gatherings and messaging to maintain positive energy.


Stay Informed With TASC

In today's rapidly evolving business landscape, managing layoffs and downsizing with care and sensitivity is of utmost importance. By doing so, you not only provide reassurance to your remaining employees but also protect your organization's reputation.As a responsible employer, staying informed and up-to-date on the latest news, vacancies, and trends surrounding the MENA region is crucial in order to navigate these challenges effectively. Follow us on LinkedIn, where we share valuable insights, resources, and updates tailored specifically for organizations and candidates in the MENA region.