Organizations let go of their employees for various reasons, including economic decline, mergers and cost-cutting. When organizations plan to reduce their expenses, they often prefer and implement the policies of staff cutting. Being responsible for laying off staff stands as one of the least pleasant parts of career management. When it is never easy for managers and leaders to get off their low-performing employees, think how harder it is to have a difficult conversation and lay off the hardworking and productive staff.
Therefore, it is important to think of the best possible ways to handle downsizing for the sake of the affected employees and the organization. Remember, poorly managed downsizing can damage morale. The employees who are working with the organization might experience anger, demotivation and hopelessness. While downsizing staff is always unpleasant, we, as managers and organizational leaders, must keep in mind a few things as we transition the organization’s change.
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Reasons for Layoffs
Enlisted are the primary reasons why organizations opt for layoffs.
The first and foremost reason to opt for layoffs is financial difficulties. When your organization struggles with its financial situation, you will naturally resort to layoffs to reduce the cost and keep functioning. Various factors cause financial difficulties, including a decline in sales, increased competition, high operational costs, and external economic downturns. Regardless of the reasons, your organization must remain profitable, which is why it decides to lay off to cover the expenses and earn profit.
Organizations relocate to get closer to their customers and clients to improve sales and business. Besides, relocation reduces operational costs. Irrespective of the reasons for relocation, it causes layoffs. When your organization moves to a new location, it becomes difficult for some employees to commute. In such a scenario, you might lay off those employees who are unable to relocate to the new location.
Change in market demand
Changes in the demand market are another cause of organizational layoffs, as the demand for products and services declines. When an organization experiences a decline in sales, it must reduce its expenses to remain profitable. One of the ideal ways to do it is by laying off employees. Often, an organization expects a short-term decline in demand and plans to rehire employees once the demand improves. However, if the decline in demand seems to become permanent, the layoffs would also be permanent.
Cost reduction measures often cause sometimes result in layoffs. When your organization experiences financial hardships, it might implement cost-cutting measures to reduce its expenses. The measures include layoffs, reducing employee benefits, reducing travel expenses, and outsourcing certain functions. Often, organizational leaders implement cost-cutting measures. It is the last resort, implemented after the exhaustion of other options, which are often temporary until the improvement of the organization’s financial situation.
Mergers and acquisitions
The term merger defines a situation when two organizations combine their operations into one organization. Two organizations might merge to boost their services, minimize the tax burden, reduce competition and boost profit. In several cases, organizations might experience mergers in job roles or duplications of functions between two organizations. To streamline operations and eliminate duplication, the combined organization might require laying off some employees. It is because the organization might require an employee to perform a role instead of two from different organizations.
Acquisition occurs when your organization purchases another organization. During an acquisition, an organization experiences changes in leadership and organizational policies, which might cause layoffs for some employees. With the introduction of new leadership, the organization might eliminate some departments and functions that are no longer necessary. Moreover, if acquisition results in financial difficulties for the new organization, leaders implement layoffs as a cost-cutting measure.
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Strategies Managers Can Adopt To Handle Layoffs And Downsizing
We know telling your best employee that their time with the organization has come to a close is the most difficult task. To help HR professionals clearly and effectively communicate to set their people up for success in the future, enlisted are some strategies managers and leaders can adopt when dealing with layoffs.
Prepare for layoffs
It is the first stage in managing any business layoff, where the management formulates a strategy for the procedure to go into effect. It determines how and when the employees will undergo the process of layoff. The management also requires creating an effective communication strategy. It helps in informing the staff members about the layoffs at the earliest. Besides, you must keep in mind that the hiring and layoffs depend completely on the financial conditions of the organization and not personnel. It means that we, as managers, must confirm that the organization’s funds are in line, and the layoff is essential to ensure the organization’s existence.
Investigate possible alternatives for downsizing
As managers, we must focus on all downsizing options before implementing mass layoffs. However, ensure to check the organization’s health, including whether any tactics required reformation, and determine whether it is possible to reshape the business plan. You can adopt some effective techniques to reduce the workforce without resorting the outright layoffs. These include:
- Exit incentives:You can give your employees a chance to quit on their initiative and encourage them with rewards, like severance.
- Furloughs:It refer to a period of unpaid leave. If your organization requires immediate savings, you can impose full-staff furloughs.
- Volunteer sabbatical:It refers to the unpaid leave taken by your employees. Often, employees take their time to seek education that helps advance their careers or focus on a passion project for a predetermined time.
These choices make your employees feel more in charge of their destinies. When your employees participate in the decision-making process, they experience a positive feeling about your organization when they experience a layoff. You can also inform your employees about the possibility of downsizing or layoff, and solicit suggestions from them. When you utilize employee feedback, you boost the sense of empowerment among your employees.
Communicate with the workforce
What is the crucial thing managers do? Yes, we are speaking of maintaining open lines of communication. As managers, we must understand what is happening within our organization and why. Managers must communicate all amendments to the existing plan to the employees. Your organization and your employees expect honesty, transparency and open communication. Never try to minimize the issue or hide the facts from your employees. During the difficult time, your employees will value your honesty and trust you.
Deal with the consequences
During a layoff, an organization faces several consequences. Your employees might harbor resentment and anger towards the organization or might expose their anger towards the old management for laying them off. Therefore, you must deal with the layoff effects at the earliest. It entails handling any rage or resentment faced by your employees. Moreover, it involves addressing any questions they might have about the layoff.
Support laid-off employees
Employees experiencing layoffs go through varieties of emotions, including fear, worry and uncertainty about the future. A manager or an organizational leader must support them during the period. You can assist them in finding new employment and put them in touch with services like career counselling, employee insurance and psychological care. Besides, you must remain available to respond to their queries about the layoff.
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Manage the remaining workforce
We must never forget our existing workforce and ensure to strengthen and assist them. Since losing a job can be emotionally draining, your existing workforce might become anxious or disengaged. It is the sole of the management how they must retain their existing employees as a part of the organization’s layoff strategy. These include:
- Presenting your staff outlining the new structure and the benefits of downsizing for the future of business.
- Offer opportunities for education and growth.
- Private discussions with the management allow the surviving workers to express their feelings about the layoff.
- Encourage a culture of openness and integrity. Also, ensure that your employees can communicate with you and have access to open lines of contact.
- Celebrate accomplishments by highlighting your employees in company-wide gatherings and messaging to maintain positive energy.
In today’s rapidly changing business landscape, you must manage downsizing and layoffs with utmost care and sensitivity. Besides reassuring the existing employees, it protects your organization’s reputation. As a responsible employer, you must stay informed on the latest news, vacancies and trends is crucial.