The do's and don'ts of employee layoffs and terminations

'It comes down to a lack of cost control or a lack of courage from senior leadership': chief people officer

The do's and don'ts of employee layoffs and terminations

When it comes to laying off employees, there’s a right way and a wrong way of going about it.

Speaking to HRD, Naveen Bhateja, executive vice president and chief people officer at clinical technology giant Medidata, warns HR leaders to be considerately cautious in mass terminations.

“You shouldn’t be rolling out multiple layoffs in a short period of time,” he says. “Take a recent tech giant, for example. Last year they announced they were laying off thousands of employees, now they’re saying there’s more coming – to me that’s not OK.

“You shouldn’t be doing this in multiple rounds — you should do it in one go and be done with it.”

Another major mistake is laying off for the sake of laying off – something that, while it may sound ludicrous, is actually rather common, says Bhateja.

“Don’t make redundancies just because you see other companies doing it,” he says. “I’ve been in organizations in the past where executives would say, ‘Oh, Google’s laying off so many employees – should we follow suit?’ The answer is no, definitely not.”

‘Appreciate the optimism, don’t appreciate the lack of planning’

Bhateja warns against these sort of knee-jerk reactions to unexpected news – explaining that HR leaders have to be methodical in their planning and their process before any job loss decisions are made.

“Look at your strategic priorities, your business priorities — and decide what you really want to shift. As changes happen, adjust your company structure accordingly.”

Some layoffs are happening as a result of over-hiring in anticipation of continued growth. Earlier this month, Spotify CEO had to admit that he was “too ambitious” in investing ahead of their revenue growth, and as result the company will be cutting six percent of their global staff base – approximately 600 employees. And it’s the same story all over the tech industry. Project revenue growth since the pandemic was expected to continue, leading to a talent rush mentality.

“If you look at startups in the U.S. in 2021, they raised around $330 billion – almost double of what they had in 2021, says Bhateja. “This led to a hiring spree, with organizations recruiting a lot of candidates without realizing whether or not they’d be able to sustain and materialize that same level of growth.

“And while I appreciate the optimism, I don’t appreciate the lack of planning. From a business standpoint, it comes down to a lack of cost control or a lack of courage from senior leadership to do these multiple layoffs because they don't want to rip the band-aid off in one go.”

Survivor syndrome in mass layoffs

And while it makes sense from a business perspective to cut staff in order to remain profitable, for employees it can be devastating. Bhateja recommends employers take time in their decision-making process and avoid making sudden, sweeping changes if they’re not properly planned.

“More mature, established and progressive companies understand that the layoff process could start as early as six months in advance,” he tells HRD.

“That’s well before you implement the layoff and before you make any announcement about layoffs. Ensure that you review your business strategy, objectives, and the rationale for any job losses beforehand, and make sure your executive team determines a new financial target and vision in advance of any layoff.”

A lack of alignment leads to bad business practice and miscommunication — something no one wants in the midst of a layoff period, says Bhateja. Instead, HR leaders need to ensure that everyone’s on the same page – reading from the same playbook – to allow for a smooth and respectful exit for any impacted employees.

“I call it a ‘compassionate detachment’ proces.’ At the end of the day, it’s about people losing their jobs – which impacts them very seriously. They have families who’re their priority. And, even if you see it coming, you're likely still not prepared,” he says.

“So, while it’s important to have the business and the strategic rationale intact, don’t forget to address the compassionate side of leadership — don't let the employees linger in the unknown.”

The employer’s role doesn’t end on the worker’s last day – it should extend into the weeks following the separation. Once you’ve determined severance packages and health benefits, HR needs to look at support systems. This could involve counseling sessions, resume workshops and outplacement guides, says Bhateja.

“Think about how you can give employees a softer landing,” he says. “Make sure you’re looking after the employees left behind – the ones that still have their jobs — through a ‘survivor syndrome’ lens, which can really derail morale and cause anxiety and fear to spike.

“Some companies expect people to be productive the week after a layoff, without having any sensitivity or support. I think that’s just missing the mark.”

Rebuilding trust after mass layoffs

Remember, how you handle your employees when they’re leaving will directly impact your future talent stream. One of the lesser-anticipated effects of mass layoffs is recruitment and brand management. As Bhateja tells HRD, when employers make poor decisions regarding layoffs, they risk derailing morale and hurting their image — something that could come back to impact them when they go to rehire.

“If you’ve treated employees well, even if they’ve been laid off, they could come back,” he says. “That boomerang effect will have an impact if their trust has been eroded. If employees feel that they’ve been poorly treated, they’re not going to return if or when you come calling. That’s something leaders really need to keep in mind.”

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