Handling layoffs: The good, the bad, and the ugly

No one wants to go through layoffs. Yet, it happens, and in many cases, it’s needed for the survival of a business. In fact, BuzzFeed is not the only media company undergoing job cuts: Vice Media is another firm that announced a restructuring that will see 10% of the staff lose their jobs.

And most recently. Better.com CEO Vishal Garg came under fire for the manner in which he let go of 900 employees – effectively doing it via a Zoom call. Almost immediately, he and his brand received vicious backlash.

Whether it’s because of bad decisions, an economic crisis, a change in business strategy, or a general reorg, companies might reach a point where layoffs are an inevitable option to keep the business alive. And when you get to this point, it’s not just about why you got there; what matters is that you’re here now – and you need to carry out the process with as minimal damage to your employee morale and your employer brand as possible. You can start with how you’ll communicate layoffs to your employees – both those who are leaving and the ones who are staying.

The next day

Again: we are not talking about the decision to lay off employees. This is a whole different story that involves strategic decisions, financial results, competition and so many other factors. Here, we are interested in the extent to which the way a company is handling layoffs can – or can’t – impact its reputation.

Surely, we can’t expect positive or indifferent reactions to a company’s announcement of mass layoffs. Shock, sadness and even outrage can be inevitable. But, while many of the negative reactions refer to whether the company could have chosen another option instead of letting people go, a significant number of discussions centers around what the company is doing to protect employees’ rights. Here’s what happened during some of the most recent layoffs:

In BuzzFeed’s case, there was a lot of talk around the way the company handled layoffs. From the aforementioned quiz that points out known problems (like the lack of a workers’ union) to an open letter from ex-employees who demanded (and managed successfully) to get paid for their unused PTOs, it’s clear that BuzzFeeders were not satisfied by the senior management’s approach and they were willing to go public with their grievances, putting the firm’s brand at risk.

Also in 2019, Tesla announced mass layoffs to increase the production of Model 3s while keeping the cost low. But employees had concerns. Those who were let go had doubts about the criteria used to determine who stayed and who didn’t – claiming that the company chose to fire the more experienced, and thus higher-paid, workers. And employees who kept their jobs were concerned about the quality of work and their own workload considering that entire departments were cut back by half. When it came to Tesla layoffs: employees – both current and former – indicated and complained vocally about a lack of transparency in the company’s decision.

When Toys ‘R’ Us announced layoffs in March 2018, it didn’t come as a huge shock as the company had already filed for bankruptcy the previous September. Or, that’s what we may think. In fact, many employees said that the news came as a surprise to them, because their former employer closed more stores than what was earlier announced. What’s worse, due to the bankruptcy declaration, laid-off employees were not eligible for a severance package, leaving them even more uncertain and anxious about their future.

Is there a better way?

This much is clear: there’s no easy way. Layoffs are a dreaded part of business, for everyone. Some people lose their jobs and those who keep them enter a job insecurity phase or endure survivor’s guilt. The company must deal with legal obligations towards laid-off employees and work to reverse the negative atmosphere among remaining staff, all the while dealing with the potential bad press that comes with large-scale layoffs.

(Note that, when you’re handling layoffs, you need to check and comply with local labor laws that apply based on your company size and the location where your company operates.)

You can’t sugarcoat a layoff. But perhaps, you can try to make things smoother for your employees. Here’s how:

First, be respectful

One of the hardest parts in managing layoffs is the actual announcement – that crucial moment when you gather employees to announce the bad news. This is the time to be empathetic towards people who are about to lose their jobs. This is the time to be transparent as everyone will be wondering why this is happening. Surely, communicating layoffs to employees is uncomfortable and that’s why even written memos are often full of corporate lingo that doesn’t explain much, and if anything, can make things worse. On the other hand, a respectful, more personable speech or letter can go a long way:

“We’ve decided to make some major changes at Medium. I’ll start with the hard part: As of today, we are reducing our team by about one third – eliminating 50 jobs, mostly in sales, support, and other business functions.”

That’s how Medium’s CEO started his letter that announced layoffs in 2017. And later, he continues:

“Obviously, this is a tough thing to do, made tougher by the immense respect and love we have for these people who have helped make Medium what it is today. […] This is certainly one of the hardest things I’ve done in my years as a founder and CEO.”

An open letter is a good idea if you want to use your own voice to describe the situation in public. But, it’s not enough. The CEO should speak directly to employees and explain what is happening and why – if you’re all in the same location, then this is best to do this in person. In the wake of a mass layoff, there will be gossip. The more transparent you are and the faster you do so, the more likely it is that you can avoid rumors and uncertainty – and disdain – among laid-off and remaining employees.

Help former employees get a new job

In 2011, Nokia laid off 18,000 employees. Having experienced protests, boycotts and bad press back in 2008 when they let go of 2,300 employees, senior managers of the telecom firm knew that they had to do things differently this time. So, they developed a program to help employees find a new job inside or outside Nokia, start their own business, learn new skills or pursue their personal goals. As a result, former employees managed to build successful startups and Nokia maintained a good reputation as an employer.

When you’re going through layoffs, it might seem counterintuitive to spend money on transitioning laid-off employees or training them for new jobs. While the idea may seem well-intentioned, it’s understandable that it’s not always realistic. There are other, though, less costly things you can do: offer resume-building advice, connect laid-off employees through your network or cover the fees for a short-term online course or a local college program that will help former employees build upon their skills or transition to new careers. In other words, don’t leave employees in the lurch; show them in action that you truly respect their contribution to the company and that the layoff is not a matter of poor individual performance.

Adopt a “prevention is better than cure” mindset

That’s what senior managers at AT&T were probably thinking when they realized that there was a shortage of skills that would be in high demand in the coming years and, at the same time, many of their current jobs would become obsolete. So, to avoid mass layoffs, they designed the Workforce 2020 (WF2020) program; an initiative to train employees on new skills, promote internal mobility and build new career paths.

The same attitude applies even if you know you won’t be able to avoid layoffs after all. When you’ve tried different plans (such as cutting back on benefits or implementing a hiring freeze) but nothing seems to work, get ready for the “layoff plan”. Determine which jobs you need to cut and which ones you absolutely need to save and start thinking on how your staff can remain productive despite the downsizing.

The aftermath of layoffs

You probably can’t make amends for people who are losing their jobs, but be by their side, be fair, and provide practical support the best way you can. And for those who are staying with you, don’t let them live in insecurity; explain clearly why layoffs happened and be open and transparent about your future strategies.

By taking these steps, you can dull the pain of large-scale layoffs, maintain employee morale and avoid a PR nightmare like that seen after the Better.com layoffs. At the end of the day, you want to take care of your employees through both good, bad, and ugly times.