Honesty is the Best Policy

When employers make the difficult decision to conduct layoffs, it creates anxiety and tension for employees, mainly because they are unsure of their personal job security in the organization. Studies have shown that perceived threat of job loss is highly correlated with turnover intention. When employees feel that their jobs are in serious jeopardy, they inevitably start looking at other employment opportunities in which they can find stability. Feelings of uncertainty and intentions to leave the organization lead to unproductive behavior and ultimately affects business in a negative way. How can employers minimize the frenzy that goes on following the announcement of a layoff? 

Often times, employees act spontaneously based on assumptions and incorrect information from the rumor mill. If employers can engage in honest, clear communication with their employees, they can effectively diminish assumptions and eliminate unnecessary anxiety. Even when they have to deliver unfortunate news, it is beneficial to give employees a realistic idea of what is to come in the future so they can plan ahead and focus on necessary tasks. If there is no news to deliver, management should honestly state that there is no news but give a time frame of when employees can receive an update. It is important for management to create a communication schedule that consists of frequent communication to employees following the announcement of a layoff. In order to reach out to all of the employees, there should be mixed methods of communication including emails, phone calls, informational sessions, and even one-on-one meetings. 

Inclusion of Employees During Downsizing

Downsizing in organizations inevitably lead to low morale among surviving employees. They often feel uncertain of their own fates in the organization, disengaged, and unmotivated to concentrate on productivity. Studies have shown that perceived control serves as an antidote to these types of negative effects of layoffs. While the remaining employees may not have much actual say in major financial and organizational decisions in the company, it is extremely important to include them in discussions on what is to come in the future. By inviting them to be a part of the change processes, employers are empowering them and giving them confidence that may lead to increases in both loyalty to the organization and work productivity. One way that employers can do this is by conducting open forums with two-way conversations where management shares information with the staff and vice versa. While it may not be feasible to consider everyone's input and concerns, it is a helpful way for the employees' voices to be heard and possibly make a difference. If it is uncomfortable to communicate in large crowds, management can run smaller focus groups that are a more comfortable environment for employees to openly and honestly share their opinions.

Pay for it Now or Later?

One of the issues that has emerged as a common and important factor in the study of layoffs is perceived fairness in an organization's practices.During a period of downsizing, employees are sensitive to the way that the organization approaches the matter and how those who will be let go are treated. Some areas of focus are on amount of notice given to employees, amount of information communicated, and amount of severance and extended benefits. Studies have shown that when survivors feel that their colleagues have been treated fairly, their levels of loyalty and productivity remain higher than when an organization mistreats or short-changes the layoff victims. Thus, it may be a good idea for organizations to start investing in longer benefit extensions and more competitive severance plans. Sure, the main reason that companies need to downsize are due to economic reasons, but these investments can lead to long term increases in productivity and employee dedication.

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