How to Handle Layoffs: 6 Practical Tips

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The job market has seen a lot of fluctuation since 2020. The US faced one of the largest and fastest employment declines that year and later experienced the Great Resignation where employees quit their jobs in record numbers. Plus, massive layoffs continued throughout 2023.

Countless businesses have closed their doors in the last several years, and many of those that haven’t are still struggling to navigate a rewritten and rapidly changing economic and labor landscape.

If your organization decides to lay off employees, partner with your human resources team. They can help your business leaders make these difficult decisions wisely, being mindful of more than just the numbers. HR can also help your employees as they grapple with the personal impacts of those decisions.

Parting ways isn't easy, but BambooHR® Offboarding helps make the process go as smoothly as possible, all while maintaining compliance. In this article, we'll discuss different types of layoffs, when they're necessary, and how to prepare for the hard conversations ahead.

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How Many Layoffs Occurred in 2023?

From January to August 2023, companies announced plans to cut 557,057 total jobs. That number is up 210% from the same period in 2022. The technology industry has been hit hardest overall with 149,142 job cuts between January and July.

Other sectors affected include:

In addition to these massive layoffs, overall hiring plans are the lowest they’ve been since 2016. This suggests that many of these lost jobs aren’t being added elsewhere.

Why Are There So Many Layoffs?

Employees have been let go at such an alarming rate because many companies are conducting their layoffs in waves. This is where hundreds (or even thousands) of people lose their jobs on the same day. Corporations typically lay off in waves for a couple of reasons, including:

Whatever the method chosen, you can be sure that when layoffs occur en masse, they’re usually the result of something other than just employee performance.

3 Common Types of Layoffs

Not every layoff is the same. Here are three common types:

Traditional Layoff

A layoff is simply an involuntary separation from employment. Layoffs can happen for several reasons, most notably because of changing economic conditions, budget reductions, or operational changes. They aren’t always permanent, either—the company may reach out to rehire an employee when conditions allow.

Reduction in Force (RIF)

A reduction in force (RIF) happens when companies eliminate positions and employees are no longer needed. Unlike traditional layoffs, a RIF layoff is permanent from the start. It's usually preceded by a drastic change in the company, such as a subsidiary closing, change in business direction and strategy, or serious budget reform.

Mass Layoffs

Mass layoffs occur when a corporation lays off large numbers of employees at the same time. This is usually done to quickly “right the ship” when a business loses money or falls below expectations. It can also help a corporation shift strategies more efficiently.

In some cases, employees may be invited back to be a part of the company’s transition, as occurred when Meta and Salesforce rehired laid-off employees to support their artificial intelligence (AI) innovations.

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How to Handle Layoffs

No one likes to be the bearer of bad news, especially an employer who cares deeply about their workers' wellbeing. And different solutions may work best for different circumstances. Before officially notifying your workforce, consider the following:

1. Determine Whether Layoffs Are Necessary

When sales and revenue suddenly drop, business leaders may feel an urgent need to cut overhead. Reducing labor costs is tempting because they're a substantial expense. But how should your firm do this?

Layoffs aren’t the only way, and they're not always the best way. HR can help decision-makers figure out if less dramatic measures might be more suitable for managing what's hopefully a short-term situation.

2. Explore Alternatives to Laying Off Your Workforce

Whether your company has seen declining sales or is working on a strategic pivot, there could be a workaround for mass layoffs. For instance, even amid 2023’s monumental tech sector dismissals, Apple managed to avoid the trend by curbing hiring, reducing or delaying bonuses, and taking other steps.

The following approaches may help you achieve the same goal:

Pay Reductions

A survey by the National Bureau of Economic Research (NBER) reveals that over half of US employees would take a 10% pay cut to avoid losing their jobs. And nearly one-third say they would accept a cut of up to 25%.

To win your employees’ support for pay reductions, make sure they know that preventing layoffs is the goal. Emphasize that the reductions are expected to be temporary and the company’s leaders are reducing their own salaries, as well. Also, if your firm is reducing pay by a certain percentage across the board, consider cutting lower-paid employees' income by smaller amounts. This can help ensure they'll still take home enough money to get by.

Reduced Work Schedules

Having employees work fewer hours or days can keep pay rates intact while saving money and jobs. HR may have insights about which employees or teams could do this without compromising tasks, goals, and customer satisfaction.

Furloughs

For some workers, a furlough of one or two months may be preferable to losing their position permanently. If you assure your employees that their jobs will be waiting for them, some may even volunteer to be furloughed, especially if you can promise their health insurance and other benefits will continue uninterrupted.

3. Carefully Consider Which Positions to Eliminate

If employees must be laid off to save money, it might seem simplest to let the highest-paid individuals go. However, this could create some skill gaps in your company. Keeping key players and top performers helps ensure your organization is poised to rebound.

Workforce management is key in these situations, as it helps ensure the right people stay with the organization. Consider salary, but also think about the potential loss of knowledge and influence. Carry out layoffs the same way you hire—with a focus on hard and soft skills that contribute to your company’s ability to succeed.

4. Mindfully Break the News

Ideally, you should follow best practices in delivering the bad news about layoffs. For instance, give each person a private meeting with their manager and an HR representative, and present the details verbally and in writing. If factors like company size and a remote workforce make face-to-face meetings challenging, host video conference calls.

The goal is to communicate in the best ways possible, minimizing as much stress as you can throughout the conversation. Maybe that means informing managers ahead of time and having them conduct short-notice meetings with their teams all at once, with exit interviews scheduled throughout the rest of the day. In these situations, you want to avoid leaving employees to wait around and wonder whether they're going to be let go—which is why informing the whole organization ahead of time, as well-intentioned as it may be, might not go as planned.

That said, the federal Worker Adjustment and Retraining Notification Act (WARN) requires certain companies with 100 or more employees to issue written notices 60 days before impending mass layoffs. From New York to Colorado, WARN notice listings are available online for many states and several have additional layoff notice regulations. Use your discretion, but always follow the law.

The bottom line is to do the best you can under your circumstances. Even if you have no alternative but to resort to a group layoff on Zoom or a phone call in the days following your closure, explain what’s happening and why, and offer as much guidance as you can.

5. Assist Laid-Off Workers

Losing a job isn’t easy in the best of times, and it’s even harder for employees during a recession or periods of high inflation. In this case, they’re also dealing with the stress and uncertainty that’s overtaken the world and likely reading about job insecurity and the economy in the news. As the list goes on, how can HR help laid-off employees?

First and foremost, it’s important to be as humane as possible during this difficult transition by showing each individual empathy and respect. That may include listening to people who need to talk, expressing understanding and concern for their wellbeing, and helping them feel confident in their ability to find a new job.

Also, be transparent and give as much notice as possible. This allows exiting employees to take advantage of open job opportunities and gives your team time to consider what outplacement services to provide. Make sure you offer whatever support you can to help former employees find new jobs. This could mean resume and interview coaching, letters of recommendation, and reaching out to employers who are hiring in your network.

HR should also address the nuts-and-bolts questions employees may have about their departures—even if they don’t ask. Common questions during layoff meetings include:

Finally, don’t forget the power of kindness to help soften the blow.

As you speak with laid-off employees, assure them that their situation has nothing to do with their performance. If rehiring is a strong possibility, it’s okay to carefully express your desire to see them return, as long as you make it clear that you can’t promise anything. And when it’s time for their final exit, thank them sincerely for their service.

6. Provide Ongoing Support for Remaining Employees

The remaining employees at your company need special attention, too. They may feel shell-shocked by the downsizing, overwhelmed by a heavier workload, and worried about future layoffs. It's a good idea to plan for a drop in productivity as some lose their focus.

What can help? Maintaining two-way communication is key, as well as a genuine attempt to understand what those on the front lines want to know. That means listening to your employees’ concerns before you speak instead of assuming you know what they want to hear.

Employees generally appreciate the chance to be heard, and there are many ways to give them the opportunity. For example, gather constructive feedback that helps leaders foster greater trust, compassion, stability, and hope.

After a layoff, your remaining employees will be hungry for honest information about what’s happening now, what’s expected in the future, and how the company is working to meet its challenges. HR can help leaders speak directly to employees in company-wide meetings, team meetings, and one-on-ones, using appropriate technology and platforms for your in-person, remote, and hybrid workforce.

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https://www.bamboohr.com/blog/furloughs-vs-layoffs
https://www.bamboohr.com/blog/definitive-guide-exit-interview
https://www.bamboohr.com/blog/measure-employee-satisfaction
https://www.bamboohr.com/blog/exit-formalities-for-offboarding