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Managers need to be taught how to handle layoffs. (Thinkstock)
Managers need to be taught how to handle layoffs. (Thinkstock)

Job cuts

Layoffs can go ‘horribly wrong’ if mismanaged Add to ...

Most managers are trained to handle a corporate crisis, but when it comes to the dreaded task of terminating employees, not enough do it well, experts say.

When breaking the news, some managers talk too much – including how difficult the decision has been for them. Others say too little, and come off as uncaring. The company itself may handle the move badly, depending on how aggressively they force the exits.

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“Every HR [human resources] person or manager should be let go in their lifetime so they know what it feels like,” says Colleen Coates, national practice leader at People First HR Services in Winnipeg. “You think you know how you’ll respond, but you don’t.

“If the employee starts to cry, how will they handle it? Or, if they get angry?” adds Ms. Coates, who has been on both ends of a job termination conversation in her career.

“It can go horribly wrong if they don’t prepare properly.”

Whether it’s a termination, where the employee’s job is eliminated, or a layoff, where the employee loses the job for a certain period of time, a company’s handling of it can have consequences long after the former staffers have left the building with their personal belongings in a cardboard box. That includes an impact on operations internally, and how clients and contractors view it externally.

Employers should approach any job losses with caution and always be respectful, says Mark Swartz, a career columnist at job-search website Monster.ca. He says too often employers don’t recognize the negative impact the event can have on employee morale, which in turn can hurt productivity.

“It’s traumatic to the remaining staff – the survivors – and can create fear and resentment,” Mr. Swartz adds. “People in fear don’t want to take the kind of healthy risks an employer needs to rise above its average.”

To help manage the disruption, Mr. Swartz says companies need to be compassionate and transparent about why the job losses occurred. “If you handle it in a benevolent way you boost your image as an employer … staff feel motivated and they don’t live in fear,” he says.

Companies should also consider whether job losses are even necessary, says Dr. Henry Hornstein, a business professor who specializes in organizational change management at Sault Ste. Marie, Ont.-based Algoma University.

He explains that some companies cut their work force to show shareholders they are trimming costs, but in the end the result isn’t always money saved. “There’s really only a 50-50 chance that downsizing will result in benefits that management anticipates,” Mr. Hornstein says.

“Too often organizations default to downsizing and don’t even consider any of the alternatives. It’s as if they aren’t considering what the potential negative consequences can be.”

Alternatives to job cuts include transferring staff to other departments, using fewer contract workers, or cutting wages.

If layoffs are the only option, Mr. Hornstein says they must be handled respectfully. “It’s a humiliating, psychologically destructive process. If organizations have to downsize there are more humane, productive ways than to turf people as though they are commodities, which they are not,” he explains.

Companies also need to make sure they are following the law when it comes to laying off staff, including paying out severance required by each province based on an employee’s years of service.

Under the Canada Labour Code, which covers federal employees, an employer has to provide at least two weeks’ notice in writing or two weeks wages to employees terminated with three consecutive months of employment, according to Human Resources and Skills Development Canada. Workers with at least 12 consecutive months of continuous employment also qualify for severance pay. .

The rules vary by province for the rest of the work force, including whether or not the employee belongs to a union.

Maxwell Brunette, a partner and employment lawyer at Blake Cassels & Graydon LLP in Calgary, says employers need to stick to the rules around termination and ensure the reasons are clear. “Make sure you are providing a fair amount of notice or pay in lieu of notice, and that you have objective business reasons as to why you are letting people go,” Mr. Brunette says.

Employers should also give employees time to consider what’s being offered in a severance package.

“I also think it is good practice to suggest to employees they should seek legal counsel to satisfy themselves that what has been offered is fair,” Mr. Brunette says. “Personally I like having employment contracts done with severance provisions so that you avoid this type of negotiation on the back end. You simply pay out what the contract provides.”

Ms. Coates of People First HR Services says managers should also receive training in advance on what to do and say to the person whose job is being cut.

“Everyone responds differently,” Ms. Coates says. “The goal is doing it as respectfully as possible and getting that employee transitioned out of the workplace.”

 

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