Layoff announcements have centered around the number of people who will be let go. However, it’s important for companies to empathetically plan and conduct the downsizing. Leadership always needs to be mindful that these are human beings at the heart of this. They are anxious and fearful. In the current environment, with nearly 60,000 layoffs in January for just the tech sector alone, human resources and management must be delicately conscious of their concerns.
Before instinctively cutting staff, businesses can consider other options, such as redeploying people to other units, upskilling and training them for new assignments within the organization and reaching out to other companies that may have job openings to smooth out the transition. Managers should also be prepared with separation packages, details about health benefits and what will happen to their vacation and paid time off days. Offer career coaching, counseling, access to recruiters, recommendation letters and time to process the job loss without immediately ushering them out the door.
Enlightened executives will recognize that this is a painful experience for their workers. They need to treat everyone with compassion, dignity and respect. It’s critical to communicate on a regular basis what is and will be happening. Be upfront and honest about why the person was selected to be separated from the payroll. Instead of alerting the worker via email, actually offer the impacted employee the chance to discuss with the boss or human resources why this happened, so they can process the action taken and maybe learn something for the future.
For the person relaying the bad news, don’t make it about yourself. Focus on what you can do to ease this transition. The Society for Human Resource Management advises that it’s helpful for companies to build an online portal or platform that contains all the relevant information terminated workers need to know.
Attention also needs to be paid to the remaining staff. It’s natural for the remainers to feel some survivor’s guilt and worry about whether they’ll be the next one to go. Usually, the extra workload will be dumped upon the workers who were not downsized. If attention isn’t paid to this group, they’ll become overworked, stressed, disengaged and less productive. It would be a rational response for them to consider other opportunities outside of the firm.
Be Open, Honest And Communicate What Will Happen Next
During the early months of the pandemic, Airbnb cofounder and CEO Brian Chesky said in a message to employees, “Some very sad news. Today, I must confirm that we are reducing the size of the Airbnb workforce.” Chesky advised his employees that he would be transparent and offer details, so that everyone was fully aware of what was happening.
He was forthright and didn’t try to spin the narrative, stating, “We are collectively living through the most harrowing crisis of our lifetime, and as it began to unfold, global travel came to a standstill. Airbnb’s business has been hit hard, with revenue this year forecasted to be less than half of what we earned in 2019. In response, we raised $2 billion in capital and dramatically cut costs that touched nearly every corner of Airbnb.”
He also assured the impacted employees that the “decisions are not a reflection of the work from people on these teams.” Chesky thanked his employees by saying, “We have great people leaving Airbnb, and other companies will be lucky to have them.” Chesky promised that the company will take care of those that are leaving, writing, “We have looked across severance, equity, healthcare and job support and done our best to treat everyone in a compassionate and thoughtful way.”
What Not To Do
Vishal Garg, CEO of unicorn mortgage lender startup Better.com, bluntly informed his 900 employees that around 15% of the workforce would be fired in a cold, awkward, one-way video announcement.
He said, “This is the second time in my career I’m doing this and I do not want to do this. The last time I did it, I cried; this time I hope to be stronger.” Garg added, “If you’re on this call, you are part of the unlucky group that is being laid off. Your employment here is terminated effective immediately.”
Garg later issued an apology on the company’s blog, writing, “I want to apologize for the way I handled the layoffs last week. I failed to show the appropriate amount of respect and appreciation for the individuals who were affected and for their contributions to Better. I own the decision to do the layoffs, but in communicating it, I blundered the execution. In doing so, I embarrassed you.”
Unfortunately, this wasn’t the only misstep of Garg’s. In an email to employees obtained by Forbes in 2020, he brazenly wrote, “HELLO—WAKE UP BETTER TEAM. You are TOO DAMN SLOW. You are a bunch of DUMB DOLPHINS and…DUMB DOLPHINS get caught in nets and eaten by sharks. SO STOP IT. STOP IT. STOP IT RIGHT NOW. YOU ARE EMBARRASSING ME.”
Spotify CEO Daniel Ek laid off 6% of the company’s global workforce on Monday. In his communications, Ek offered a generous severance package. The music and podcast streaming service offered a “baseline for all employees with the average employee receiving approximately five months of severance.” Paid time off will be accrued, and unused vacation will be paid out to departing employees. The company will cover healthcare for employees during their severance period and provide immigration support for employees and career support, including outplacement services for two months.
However, Ek somewhat tarnishes his good deeds by making himself part of the story. In the memo to staff, he said, “Personally, these changes will allow me to get back to the part where I do my best work—spending more time working on the future of Spotify—and I can’t wait to share more about all the things we have coming.” By inserting himself and sharing his excitement for the future, it takes away from the challenges the laid-off workers will soon embark upon.
Companies are not obligated to offer severance packages; however, it is good practice to ease the financial pain of those departing. The extra money is helpful, especially as tens of thousands of white-collar professionals have flooded the market, making interviewing more competitive.
There is no one formula for severance packages. It often depends upon the company, sector and length of service. Generally, the impacted employees will receive financial compensation, an extended period for maintaining healthcare and benefits, part of the accrued bonus and an acceleration of stock options vesting.
Companies that care about their people when they are leaving will also provide outplacement services to help with preparing a résumé, learning interview and networking techniques and access to an alumni directory, career coaches and recruiters.
According to CBS News, Google, for example, offered some departed workers around 16 weeks’ salary, plus two weeks for every additional year at the search engine giant and accelerated stock vesting. The company will pay out the employees’ bonuses and unused vacation days, extend healthcare benefits and offer job placement services for six months.
Microsoft CEO Satya Nadella said in a memo about the benefits offered to his affected personnel, “U.S.-benefit-eligible employees will receive a variety of benefits, including above-market severance pay, continuing healthcare coverage for six months, continued vesting of stock awards for six months, career transition services and 60 days’ notice prior to termination, regardless of whether such notice is legally required.”