There are many layoff lessons I learned from my past experience. This article discusses the layoff overview, layoff process, layoff management, layoff risks and layoff benefits. This article is one of the longest ones I’ve written and if you just want to read about the layoff benefits, go to the last section of this article.
Layoffs can occur in any company for many reasons such as to reorganize and stay competitive, survive a long lasting downward economy, complete a merger or acquisition, extend business life in a dying industry, downsize after a rapid period of business growth, improve short term profit margins, outsource services, or correct management mistakes. In some cases, the overall layoff purpose may be multidimensional to achieve more than one business goal such as reorganize, consolidate business processes, outsource and reduce costs, all of which can affect the size of the new organization.
Although, layoffs have immediate and short term benefits, they also create additional or increased business risks, including lower productivity during the layoff process, lost loyalty, sabotage, bad reputation, and changing professional relationships among other things. Interestingly enough, companies must nicely package the layoff process as a way to sell the idea as a necessity to their employees, business partners and stockholders. Sometimes a layoff is an absolute necessity for the survival of a business regardless of what caused the need for the layoff. Although, those involved with the planning and execution of the layoff process are nicely rewarded, the process is never pleasant for any one. One of the layoff lessons observed from past history is that layoffs are short term solutions and the successful companies end up hiring more again, but sometimes, it may seem as if layoffs are business trends whereby successful companies which never laid off one single person in their history suddenly start laying off as a way to clean up the house during times when layoffs seem to be common occurrences and can go unnoticed.
Sometimes layoffs lead to outsourcing and off shoring of business services. In fact in such cases, the company decides that work must still be done but not by existing employees but rather employees working for another company. In such circumstances, companies nicely package the layoff as a necessity to deliver faster, better and cheaper services to their customers. One typical sacrifice in such cases is the Information Technology (IT) group. IT is usually placed on top of the list to be sacrificed when it comes to cost cutting, outsourcing and layoff. What makes it even worse is that Information Security is typically part of the IT group in most companies and also gets negatively affected. Some outsourced IT services are subsequently off-shored to India and other countries where labor cost is low, however, due to the distance and communication barriers, the layoff can hardly be justified for faster and better services. As far as the layoff justification for cheaper services, it’s a short term justification because when the living standards slowly but surely increase in those countries and the living standards decrease in the United States, the price justification disappears and management decides to bring those outsourced services back in house but not before company reputation, employee loyalty, stock prices, and a handful of families are destroyed along the way. There are other short term solutions that could be considered for keeping costs down, for example, companies may consider improving their business processes to be more efficient, ask employees to take a pay cut, and consider laying off a smaller percentage of their employee population as a result of their cost cutting and increased efficiency efforts.
A layoff process has three main phases; layoff planning, layoff execution & communication and post layoff management.
Although, the second and third phases of the layoff process are very important, the most critical decisions are made during the first phase which will affect the entire layoff process. Once a layoff decision is made following the business justifications that we discussed above, typically a committee is established to decide what the organization should look like at the end of the organization restructuring. The representatives of the reorganization committee are usually select management members of the organization. Sometimes and for obvious reasons, the members of the committee may be biased and attempt to save themselves and the most faithful staff if they can rally enough support, but the main goal for some is self preservation and the most politically savvy members usually succeed at securing a position in the future state of the organization for themselves and some of their group members. Some management members who lack intelligence, talent, credibility, support, respect and provide the least value within the organization usually lose the survival battle and may even sacrifice their own group members in a last attempt to save themselves. Unfortunately, as the business justifications have little or no meaning to the employee population, only individuals at the highest levels of the company who either founded the company with a sense of ownership or those who have some sort of vested financial interest tied to the successful execution of the layoff remain loyal during the layoff process.
Sometimes, layoffs are not planned properly or don’t go as planned requiring constant changes and delays. Let’s explore some of the things that can go wrong from our layoff lessons:
1- Management in charge of the reorganization may not have adequate experience to properly plan or execute the layoff. As such, the right decisions might be taken too slowly, or the wrong actions may be taken too quickly leading to constant corrections in an unorganized fashion causing chaos, stress, and prolonged uncertainty among the staff or even some management members.
2- Poor and prolonged execution of the reorganization by inexperienced people can lead to delays causing key employees with business knowledge to leave the company too early.
3- In times of rapid reorganization and outsourcing, there might be differences in philosophy, culture, strategy, and theme for the change. For example, a) you may be told to approach senior management directly if you have questions or when in conflict with your direct management and subsequently get punished for doing so, or, b) you might hear conflicting messages from senior management members about the direction of the change or the reasons for them, and c) senior management actions may contradict their words of promises. For example, they might express cost cutting needs asking everyone to contribute but yet they fly first class for business reasons.
4- Contract negotiations with the service providers may not go as planned. For example, negotiations may only be made with a handpicked vendor and when the deal fails, the company is subsequently forced to start engaging other companies delaying the layoff process by weeks or months. Or, the contract may not properly address the scope, timing and cost of the outsourced services.
5- Exclusion of key stakeholders from the decision making process may occur accidentally or for some hidden reasons. For example, internal information security managers might be excluded from the vendor selection process. This is another example of an incomplete due diligence process. Similar to other risks, inexperienced management with a complete lack of respect for certain areas of the business such as information security, may fail to perform a timely and complete due diligence analysis presenting unnecessary risks to the company. This would be OK if the company were small, did not collect personal information of millions of people, was not a public company, and was not obligated to comply with any security laws and regulations.
6- Employee communication may not be effective. Sometimes, when layoffs are mismanaged and there are differences in opinions as explained above, employee communications may be infrequent, ineffective, appear misleading or confusing.
Layoff Business Risks
There are many negative consequences when management fails to properly manage the business risks associated with a reorganization including but not limited to reduced or vanished shareholder value, lost productivity, lost employee and customer loyalty, ruined business image, lawsuits, non-compliance with regulations or even business death.
A chaotic reorganization of massive magnetite presents many negative consequences and risks:
1- Theft of physical and information assets by disgruntled employees,
2- Higher turnover rate than expected potentially leading to the loss of the most talented employees as they can easily find other jobs or start their own businesses,
3- Morale and productivity may decrease over time due to extended planning and execution of the plan unnecessarily leaving employees in the dark for too long allowing false rumors to spread which in turn create more problems for management to solve internally as well as externally such as flooded internet message boards feeding customers and investors false or confidential information,
4- Computer network costs may increase due to increased time spent by employees on the Internet to surf and look for jobs,
5- Less employee cooperation may lead to a series of business issues such as bad customer service, and lower productivity for others within the company and external partners,
6- For self preservation reasons, groups and individuals may take on projects that rest within the jurisdiction of another group which they might consider a surviving or even a thriving group within the end-state,
7- Prolonged layoff process may lead to plan manipulation, backroom deals, and favoritism,
8- Preferential treatments and delays may lead to the loss of talented employees and market leaders. Management may hand pick the most obedient and faithful staff for its future organization for self preservation purposes at the expense of the company, its talented employees and shareholders,
9- Egoism and disrespect for others may increase in the workplace as some people are given undeserved leadership power,
10- Sensitivity to the format and content of some emails at workplace may increase which might have been widely accepted as "workplace socializing" before the layoff climate,
11- Friends and "lunch buddies" may suddenly stop interaction not saying hello or replying to emails, changing camps as soon as their new masters have been identified. In fact, it’s some of the friendly people around you that should worry you the most during the layoff process as they may be fishing for information for their new management. They might even keep information away from you or provide the wrong information as a way to mislead the masses,
12- Emails suddenly become short sometimes including just one word or even blank with the message typed in the subject line, vague and incomprehensible, and lastly
13- Email distribution lists may be manipulated to remove previously included recipients from email communications in order to exclude certain parties who happen to be relevant to the entire discussions.
Effective reorganization and business changes which have an impact on the corporate population require a) effective management, b) well drafted plans, c) speed and accuracy of execution, d) damage control and management such as protection of confidential information, limiting and monitoring of personal email usage and Internet surfing, and e) honest, consistent, and timely communication.
Layoffs and business reorganizations require a special set of behavior and thought process on the part of employees if they want to use the process in their advantage. Every one has various options during or after the layoff process. We can be negative or positive depending on how long we want to stay in the problem. I suggest we take a positive approach to go through the problem as quickly as possible no matter how difficult the current conditions might be. I know it’s hard to imagine any benefit from a layoff, but I have identified six benefits and knowledge I gained from my layoff lessons that you might want to consider if your are laid off or are currently going through one now:
1- Don’t resent the process. It’s part of a natural business process especially during bad economic times. You have nothing to gain by feeling resentment but every thing to lose including your positive attitude which will ultimately and negatively impact your creativity, direction, purpose, values, and most importantly your relationships. The sooner you accept the conditions which by the way are out of your control, and proactively take actions to deal with the situation, the sooner you will get out of the problem. Your entire goal should be to get out of the problem as soon as possible and use the opportunity to find a more rewarding and friendly environment.
2- Embrace to become better. One of the most important layoff lessons is to take advantage of the opportunity and improve yourself. You can rethink your goals in life, discover your hidden talents, as well as your god given purpose in life. You’ll be surprised what you discover about yourself when you are forced to analyze yourself and your conditions. Most often, we go through life year after year without giving much thought to our deepest desires and talents. We get into the routine of working for money to pay the bills, and we do this for so long that we forget about considering the availability of other options including a better and fulfilling life. I know I am a better and different person now and this has been one of the best layoff lessons and benefits for me. In fact, I think we should be laid off every 3 to 5 years to reassess ourselves, our plans, and our relationships.
3- Don’t judge others. Everyone involved in the process is as lost, fearful and vulnerable as you are, trying to survive in a downward economy taking the safest routes and sides. However, this is also one of the best opportunities to separate your friends from your acquaintances. Every one has friends in good times, but the real ones stay with you during the bad as well as the good times. After my layoff experience, some people I considered friends did not even return my phone calls, emails and requests for information or job leads. I initially resented them and somehow I don’t think I will forget them, but not every one can be your friend nor do you want more friends that you can handle as maintaining friendships is hard work and requires dedication. I am now in peace with myself and those whom I now consider business acquaintances. As I said, tough times are good times to separate your friends from your acquaintances. The difference between the two is that I have certain responsibilities toward my friends that I must honor regardless of what they do or don’t do for me, however, with regards to both personal and business acquaintances; it’s a give and take approach. Life happens to every one and our acquaintances will have to live with the consequences of their actions in this life or next. I just can’t put any price on these important layoff lessons. Sometimes, I feel it’s a blessing to go through these tough times in order to get to know ourselves and people around us a little better.
4- Be grateful for every thing and don’t take it all for granted. As we go through our routines in life, we might take some things for granted including our jobs, friends, families, freedom, health, talents, and thus may not take full advantage of them. Remember to remember how fortunate you are in all areas of life. When one area of your life is not going the way you want it to, consider looking for other areas of your life that might be thriving. Life is not perfect, but if you look hard enough, you will notice more positive things about your life than just the few areas that are causing you problems.
5- Love people. Life is about people, and although some may decide to not have any thing to do with you during tough times, the smartest ones stay in touch and help others. Most people only start networking when they lose their jobs and I made the same mistake, but when they get a new job, they go back to their old routines of working for money to pay the bills and forget about networking and helping others. I will not make the same mistake. Layoff lessons have taught me that life is about helping others and contribution. I spend a lot of my own time writing free identity theft and career related articles for my blog readers hoping that if I can help even one person improve his or her life, the value I get from it is worth my time although if I can help more people and get financially compensated for my efforts, I would consider myself very lucky.
6- Always over deliver. I don’t care what line of work, business or relationships you’re in, always attempt to deliver more and better services. Even if you have a job, you are still providing services for your salary. Most people work from 8 to 5, or deliver only what they promised in exchange for money. Be different and deliver more. Every marketing specialist will tell you to be different if you want to stand out in the crowd and get better jobs, better contracts, better salaries, better friends, better spouses, better children, or even better acquaintances. In that process, you might even become a better person, dad, mom, writer, musician or any thing else you ever wanted to be.