The New Rules of Layoffs


The recent announcement by McDonald's Corp. about temporarily closing its U.S. offices and conducting layoffs has sparked debates among HR departments on the best way to terminate employees. With the ongoing wave of layoffs in white-collar jobs, companies like Goldman Sachs Group Inc. and Inc. are employing various approaches to minimize the impact of the process. However, employers face six key questions, including whether to conduct one large layoff or several smaller ones, both of which have their own set of risks.

In today's job market where filling positions is challenging, companies may unintentionally cut crucial units or personnel while implementing large-scale job cuts. However, taking a slow approach to assessing the financial situation can create anxiety and instability among employees. Amazon recently announced additional job cuts, following earlier layoffs. In the past, it was believed that delivering bad news in person was the humane approach. Due to Covid-19, executives are rethinking this approach and considering whether notifying employees of a layoff via Zoom is actually easier and more humane, especially since full office attendance is still rare. Some executives believe it is cruel to ask employees to commute to the office just to let them go. Andy Challenger, a senior VP at Challenger, Gray & Christmas Inc, an outplacement firm, agrees.

According to recent trends, midweek is becoming a more popular day to carry out layoffs instead of Fridays. This allows employees more time to talk to HR representatives or benefits providers during business hours in the days following the announcement. One mistake that managers often make is telling the employees how hard it is to let them go, as this can come across as insincere. Instead, it is recommended that managers be transparent with their employees about the health of the company leading up to the layoffs so that nobody is caught off guard. Some executives have opted to provide employees with several months' worth of pay, while others provide less.

According to corporate advisers, it is suggested that companies provide at least a month of severance pay to laid-off employees, although some employers have offered even more. When Salesforce announced its layoffs in January, CEO Marc Benioff promised a minimum of five months of pay plus benefits to US workers affected. However, smaller companies may face criticism from employees if they don't offer sufficient exit packages. HR advisers recommend companies be as generous as possible while developing a severance policy that can withstand scrutiny. Deciding which employees should be let go can be a complicated process, with multiple departments and managers involved. Relying on seniority is now less common as companies prioritize skills and recent performance. To avoid any discrimination, HR officials will review the layoff list to ensure fairness. Despite ample preparation, some HR veterans claim that layoffs are always difficult. Gregory DeLapp, who worked in HR at Carpenter Technology Corp, stated, "There is no good way to do this."

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