Considering Layoffs? Lean into Your Core Values as Your Guide
Scale. Just 45 days ago, many businesses in the United States were strategically pushing for growth. Now new s-words take the spotlight: survival, solvency, and eventually, we hope, sustainability. This time of unprecedented global public health and economic uncertainty is now pushing business leaders across the world to assess the viability of their operations and make difficult decisions. Unlike any other time in our living history, leaders don’t have access to trend data for a pandemic of this enormity, and therefore risk being disproportionately influenced by the narrow aperture of this crisis’ daily dispatch.
The decisions leaders make today not only impact business viability, employer brand and company culture, but also create the blueprint for their firm’s recovery, and next several years of business. Our guidance is to lean into the company’s core values: let them be the foundation of the principles guiding key decisions.
Live values through actions and decisions
A company’s core values are the fundamental beliefs guiding the business during good times and bad. Core values are a cultural cornerstone steering all decisions, actions and communication. Values serve as an informal compact between leaders and employees, team members, and even customers, outlining how the collective makes decisions, interacts, and confronts adversity. Failure to authentically practice the company's values, particularly during challenging times, breeds distrust and significantly impacts a leader’s future relationship with customers and employees.
We encourage leaders to apply company values when considering business trade-offs and to reflect:
Are we living our values through our actions? For example, if a company values “diverse opinions and inclusive behaviors,” are leaders engaging every person in the company independent of seniority, department, location, race, gender, etc. to contribute to creative cost cutting problem-solving?
Are we living our values through our decisions? For example, if a company values “solidarity” and salaries are reduced as a cost saving measure, are the most senior leaders experiencing the same relative financial impact as the lowest paid employees?
At the end of this crisis, will leaders be able to look back and say that these, truly, are their core values? Did the values anchor their words, actions and decisions throughout the challenges of COVID-19?
Consider all other options before laying off employees
As operating expenses outpace revenue in this challenging time, businesses are looking at ways to reduce costs. Payroll and related employee costs form a significant portion of operating budgets. Historically, layoffs have been the default response to tumultuous markets and volatile futures. However, companies often underestimate the true cost of a layoff given the hidden costs. Companies that layoff employees see:
an overall drop in profitability that persists for several years.
Companies also risk their reputation as an employer that puts short term profits before their people, which can tarnish the company brand and ability to attract top talent in the future.
Before deciding on a layoff, leaders should carefully consider all other options first, including:
Reduce non-essential costs: Reduce discretionary spending to a minimum. Cancel non-essential technology subscriptions and/or other equipment upgrades. Negotiate a contract to a lower rate. Reduce marketing and advertising costs. Redirect savings due to shelter in place policies e.g., travel, events, and explore other ways to redirect budgets.
Reskill to increase flexibility and improve employer brand: The tectonic shift of this crisis may reveal gaps previously hidden by rapid growth or identify new needs related to security and working from home. Leaders should look closely at their hiring plans to see what roles are no longer critical, and if new roles could be filled by internal candidates, with light support, before posting externally. Consider training team members to shift into areas of greater need. The cross-functional expertise and deep knowledge of the company will benefit both productivity and innovation, as well as improve the employer brand as a company that supports learning and growth, which can drive retention and attract future talent.
Creatively (and temporarily) reduce compensation: Other cost saving measures to consider include: temporarily reducing salaries starting from the most senior positions and slowing moving down as needed, deferring discretionary bonuses, implementing state-sponsored work-share programs, shortening the work week, or conducting temporary furloughs.
Leverage the CARES Act and consider other sources of relief: New avenues for accessing cash have recently become available under the CARES Act including the Economic Injury Disaster Loan and Paycheck Protection Program. Crowdfunding platforms are another option, some of which are offering grants and free coaching during the COVID-19 crisis.
There are a myriad of ways to cut expenses that could have a significant collective impact. This list is not-exhaustive nor synchronous. Phasing in cost saving measures will be a strong signal to employees that the leadership team has considered all other options before layoffs.
If a layoff is the only option, prioritize compassion for everyone in the company.
After assessing all other options, conducting a layoff may be the only recourse. Leaders need to approach layoffs with care and compassion. Managing a layoff well will make it easier to maintain the trust of remaining employees, gain support from users, and potentially, rehire impacted team members once the company recovers. It is imperative that the process is fair and impartial with no disproportionate adverse impact on one group over others based on protected status e.g., race, gender, age.
Align on the message
It is critical that leaders quickly communicate the same message to every team member (whether impacted or not). The company only has one opportunity to get it right: inconsistent and delayed communication breeds speculation and deteriorates trust. Every leadership team member needs to be aligned on the message. Employees can astutely discern if a leader does not agree with a decision which will influence their trust in the process.
While crafting the message, leaders should include:
Context: Why are we having a layoff? How did we get to this decision e.g. what are the facts and projections? What other cost-saving steps did we take before landing on this decision? How did our values guide our decisions?
Near Term: What exactly is changing? What is the new structure? Who is responsible for what under the new structure? What other changes are taking place? When are the changes happening? What won’t change and why, given the crisis?
Vision: Where do we want to go in the new normal? What do we know? What do we not know? How will we learn together?
Recognition: What have the impacted teams/team members accomplished during their tenure and how has this helped move the company forward?
Develop a Cascading Communication Plan
All communication should be planned in advance so that the day of the announcement there are no surprises. Every leadership team member should have a written, cascading communication schedule including:
Who is being informed: Is this an impacted team member or a remaining team member?
When they will be informed: Will impacted team members be informed first during a 1:1 followed by a team or company meeting after?
What is the key message: Are they being laid off? How was this decision made? Are other team members being impacted?
What is the venue for the message: Is this via video conference, phone or if not restricted by shelter-in-home policies, face-to-face?
Layoffs are tough, no matter what. Leaders should be human: authenticity and vulnerability will be appreciated by impacted team members.
Share the news with the terminated employee directly and at the start of the meeting, followed by appreciation for their impact and how they will be supported as they exit the firm.
Be prepared and leave time for questions.
The leader’s goal is to communicate the message in a manner that would encourage the employee to want to come back.
Continue to support every laid off employee until they find their next job.
Reach out to personal networks and offer to make introductions.
Offer a resume review and interview coaching from the recruiting team.
Set up a subscription with Bravely that provides 1:1 coaching and emotional support.
Send a weekly note to impacted team members and ask how the company can help.
Care for the “survivors”
Leaders need to recognize that everyone in the company will be impacted by the layoff and each team member will experience their own emotional journey whether they are directly impacted or not. Remaining team members will also experience fear, anger, and anxiety and may experience survivor’s guilt for not being laid off, especially given the severity of the COVID-19 crisis. This can impact remaining employees’ already strained engagement and productivity.
Leaders should individually connect to every remaining team member, reiterating the company vision and strategy and how these difficult decisions were made. It is essential each surviving team member understands how their individual contributions align with the new priorities. Leaders can help remaining employees gain a sense of control within this evolving crisis by engaging these survivors both in crafting the new future at the company as it works towards sustainability and staying focused on clear tasks. Leaders should also provide frequent updates on business progress, learnings, and the road ahead.
Layoffs are tough and it’s hard to do them alone without guidance. At People Runway, we have developed a detailed playbook on how to conduct a compassionate layoff that will help companies live their values and preserve their culture. COVID-19 has completely shifted the global economic landscape for all of us. While no leader could have planned for the ensuing challenges, with thoughtful consideration, they can successfully take their teams through the crisis and into the future. If you are seeking guidance on how to manage a compassionate layoff or recommendations on any of the topics covered in this series, please reach out to us at LetsTalk@peoplerunway.team.