By Amy Schabacker Dufrane
Many of us remember the fiscal crisis of 2008. Leading to a loss of more than $2 trillion from the global economy, it forced employers to make deep workforce reductions. Pervasive enough to be labeled “The Great Recession,” nearly nine million American workers lost their jobs and unemployment in the U.S. hovered at 10 percent in late 2009.
Fast-forward to today’s labor markets and we’re grappling with “The Great Resignation.” But are we really? With interest rates rising to stave off high inflation, companies are cutting back. Companies including Tesla, JPMorgan Chase, Coinbase and Netflix have made job cuts. And, as competitive as the labor market remains, in a recent press conference, the chair of the U.S. Federal Reserve shared his anticipation of a better balance between supply and demand and wage pressures.
The handwriting is on the wall. Some employers will be forced to make tough decisions and many HR professionals haven’t lived through systematic workforce reductions previously. I urge you to keep one theme in mind: keep the human at the core.
Downsizing should be a last choice scenario; yet organizations under considerable pressure to meet their quarterly numbers often deploy it quickly. It’s always shocking to employees when high-flying companies screech to a halt and HR professionals are asked to turn their attention to managing layoffs instead of identifying new talent pools, filling open reqs, and creating retention strategies.
Whether you’re a seasoned HR professional or dealing with your first foray into rightsizing the workforce, consider these approaches that will help you manage through the storm:
- Employees are not line items: Workforce reductions are cost reductions, but employees aren’t line items. They are talented individuals with unique skillsets. Failing to recognize what you’re giving up when making tough decisions can have long-lasting impact. Think that older worker who knows COBOL programming is expendable? Perhaps his salary puts him on the list without consideration that he is the only person able to resolve the complexities of legacy business-critical systems. And given the effort required to attract a soon-to-be top-performing sales rep, do you really want to eliminate her potential prematurely? HR is closest to the workforce and has the tools and insights to inventory the true value of the human assets.
- Let them leave with dignity: As hard as layoffs are for HR, the disruption to the employee and their family is overwhelming. The humiliation of being “on the list” cannot be underestimated. Locking someone out of their email as a signal of what’s to come is inhumane. Announcing layoffs via text or zoom can be equally harsh. Wherever possible, layoffs should be conducted one-on-one with clearly stated communications and next steps such as severance and support. Your former employees become your employer brand ambassadors and while no one is ever happy to be let go, give them individual time to process their emotions with the option to ask questions.
- Keep the door open: There is no better example than the airline industry. During the pandemic, carriers felt forced to offer early retirement and layoff considerable percentages of their workforce. In an industry where recruiting, training, credentialing and background-screening take time, rebooting this important transportation sector has been painful. Employment delays are constraining airlines’ ability to meet passenger demand and ensure safety. Instead of planning for the future, management focused only in the moment. By not keeping its employees engaged in some manner – for example, to invest in their ongoing learning and certifications while furloughed – the industry is struggling, impacting its earnings, its growth and, most of all, its passengers.
HR professionals are wired to help workers thrive. There’s another aspect of managing a workforce reduction and that’s those workers who are retained. Survivor syndrome is real, and once stable cultures will become off-kilter. Designing learning and team-building programs to improve morale will help maintain workgroup stability. Be clear in your communications; if no further layoffs are planned, say so. The anxiety of the unknown can be significantly destabilizing and result in further attrition.
Preparing to lead through organizational challenges is a functional area of HRCI’s certifications in Human Resources. This foundational knowledge can be indispensable as you deal with today’s dynamic economic and labor indicators.
