The McKenzie Mailer

What's Your People Plan

Most of the business leaders we speak with are telling us that they have not seen the economy this bad since the early 1980’s. Some are doing whatever they can to keep their people by cutting back on hours. Others have laid off to the point that they have a skeleton crew forcing them to cancel all vacations. When things get as tough as they are now, a plan must be developed. The plan should include how you will deal with the economic situation.

Four months ago, the McKenzie Mailer article entitled, Don’t Make Tough Times Tougher, encouraged leaders to ask employees for cost-cutting ideas that do not involve people. However, sooner or later the time may come that there is no other choice than to lay off employees. The April article also stated that lean times are also a time to look at your current workforce and determine who your core employees are. If you are thinking of laying off some people, be sure you have a plan in place.

Here are a few things to think about if you are planning to cut your workforce.

Who Do You Need to Keep?
Take stock of the true keepers – the employees who serve as the core of your business. These need not be managers or executives. They are the people who can be relied upon to take the best care of your customers, work independently and know your business. These are the people you want to build your future business with. When finished with your list, run it past someone you trust to get their input.

This list is your starting point. Most employers first look at who they can get rid of. However, the best way to approach a downsizing is to do the opposite as you should be asking yourself, “Who do I need to keep?” After the keepers list is completed, then take a look at the “have to go” list.

Who Will Do What?
Once the keepers are identified, the next step is to determine how all of the necessary work will be completed. What operations can be combined and what can be eliminated all together? Take a close look at your workplace to determine what has to be done versus the tasks that are not absolutely necessary. Then take another look at your keepers list to determine what jobs the people on this list can perform – even if it is outside of their normal work duties.

Cut Back as Far as You Can
It is better to cut too far and then re-hire some people than it is to not cut far enough and have idle time for the remaining employees or announce another lay off two or three months later. When employees are idle, the morale goes down. The idea is to keep the remaining people as busy as possible to make them feel better about their job security.

Offer Assistance to Laid Off Employees
The transition for the laid off employees will be easier if you give them an opportunity to go through some outplacement in which they can learn how to prepare a resume and job hunting skills. The way of finding jobs is much different in 2008 than it was just a couple of years ago. Give the exiting employees some assistance in this. Other things to think about are: Will you offer wages in lieu of notice or severance? Will you continue their insurance coverage or pay for their COBRA? If so, for how long?

Coordinate the Logistics
It is not easy to plan a layoff. There are many things that can go wrong and the entire process must be very well thought out. How many people are involved? How should we deliver the message and who will deliver it? Is it best to speak to people individually or in a group? How will you handle employees cleaning out their work area?

Make your Checklist
All company property must be returned including cell phones, computers, keys, uniforms, etc. Employees have to be removed from computer system, e-mail accounts and the telephone system. All remote access to the computer must be disconnected and if you have a card access system to the building, the card must be returned and the employee removed from this system as well.

Employment Compliance
If you have more than 100 employees, you may have to comply with the Workers Adjustment and Retaining Notification Act so be sure to contact a human resources expert if you have 100 or more employees before the layoff. Others things to think about are COBRA notifications, HIPAA notices from your insurance company, canceling all insurances, etc. An important thing to do is to look at the percentages of minority and female employees and those over the age of 40 before and after the layoff to see if there are any major changes in the percentages of protected groups within your workforce. If so, be sure to look at the documentation of performance and attendance records of all current employees to see if you can justify laying off the people you select. If you will be offering severance, consider having the employees sign a release under the Older Workers Benefit Protection Act.

The Message
Individual meetings are the preferred way to communicate a lay off. The message to the employees should be short and to the point. There is no need to prolong the discussion whether it is delivered individually or in a group. It is best to have a manager deliver the message in a private setting in the presence of a human resources representative. Once the message is delivered, the manager should then leave the room and allow the human resources representative to discuss the severance package. A word of caution though as one never knows how an individual will react to a notice that they are losing their job, so the manager should stay close to the door in the event the discussion gets out of hand.

Never on Friday
A lay off notice should never be done on a Friday and especially not on a Friday afternoon. Mid-week in the morning is best as it gives management time to communicate the changes with the remaining employees and give the employees a few days to acclimate themselves to the changes. A Friday layoff allows the rumor mills to take hold over the weekend.

Employees who stay will worry about what they have in store for them when they return to work on Monday.

Communicate to the Keepers
Once all of the people being laid off are notified and leave the building, have an all-employee meeting to inform them of what happened, why it happened and what the plans are for the future. Immediately following this meeting, individual departments should meet to discuss how the work will be performed and the new duties of each of the employees.

Reward the People Who Stay
If you have been holding back on granting wage and salary increases and if it is possible financially, grant an increase to the employees who are staying. You want these people to know they are the core of your future. Sometimes it is best to lay off people to allow you to have the resources to reward your best performers.

In Summary
Lay offs are never easy, but they are often necessary for the ongoing viability of the company. A well thought out and well planned downsizing will go a long way to ensure this viability. A lay off without a plan is a plan for disaster.

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