The following is a transcript of our podcast conversation with Janet Cho. You can listen to the full episode on Spotify or Apple Podcasts.
Sarah Wilkins
Welcome back. With the continued news of reductions across companies, we wanted to discuss how to handle reductions in force and reorgs in a respectful way. This topic is difficult and requires companies to be thoughtful in their planning, communication, and support during and post a reduction in force. The following principles that I’m going to share we believe are critical to handling a reduction in a respectful and healthy way.
Sarah Wilkins
First, you need to be really thoughtful about when and how you communicate. During the planning stages, there’s a lot of emphasis on budget and numbers, but remember, we’re talking about people. Remember to stay focused on when and how you communicate with the team and keep communication lines open.
Sarah Wilkins
Really need to demonstrate respect and empathy. When you reduce staff, you have a dramatic impact on people’s lives. It’s imperative you treat each person with as much kindness and respect as possible. Prepare leaders and managers to handle these conversations with the care that’s required.
Sarah Wilkins
Now, to go deeper into some practical advice on how to actually handle a reduction or reorg with respect and dignity, we are chatting with Janet Cho, a Reverb Senior People Operations consultant. Welcome, Janet. So glad to have you today.
Janet Cho
Thanks for having me.
Sarah Wilkins
Thanks. Well, let’s just launch into some questions. So first I want to start by talking about alternatives to reducing headcount. Will you share some approaches that can potentially be used to avoid a layoff?
Janet Cho
Sure, and hopefully companies are already thinking about it and have tried to, but clearly payroll is the largest expense for the most part. But are there other expenses that can be reduced significantly enough to avoid going into a layoff situation? If not, can you maybe offset your predicted attrition that you have every year against the layoff potential? Can you transfer people into open roles that you have? Can you consider offering a flexible work arrangement? Anything you can avoid doing to implement a layoff would be ideal. If you do have to go into a layoff, my advice to clients is don’t continue to do it. Try to do it in one tranche versus continually, because that will really significantly impact morale if people feel unstable after you’ve done the layoff.
Sarah Wilkins
That’s a great point and really segues into my next question was like, you must reduce headcount. How can you handle it thoughtfully, really plan for it and do it in an unbiased way?
Janet Cho
Yeah, I think it’s really thinking about the business, the direction it’s heading, what roles and people are critical in the new state that you are predicting or projecting out, but being objective about it. Right. And making sure that your selection criteria and there should be a documented selection criteria of how you made those decisions. I’m not saying you have to write a long book, but just have something noted so that everyone can remember, okay, well, how did we make these decisions? Why did someone who only had three months of tenure, why were they picked over someone with five years of tenure? Can you really justify those types of decisions? So really make sure that you are as unbiased as possible. It’s hard to separate people from the roles, but if you are anchoring around people, really make sure that it’s unbiased.
Sarah Wilkins
And then what are some common pitfalls companies make when doing a reduction and how can they avoid those?
Janet Cho
Yeah, I think it’s to the point I made earlier of not continuing to do layoffs. People tend to think only about maybe the first few months. They’re not thinking about the six to twelve months out or even longer. And typically when companies do a lay off, you don’t want to rehire the role 60 days after you’ve laid someone off. That just optically and it just doesn’t make a lot of business sense. So you really have to think of, okay, is this a role that we can live without for the next six months or longer? And if it’s not, then the question is, why are you doing this layoff? And back to are there other things you can do to offset that?
Sarah Wilkins
Yeah, so not making quick, rash decisions, but really taking the time and looking forward many months or a year in advance.
Janet Cho
Exactly. Projecting out and also about people anchoring around the right reason for keeping someone versus, well, they’ve been with the company a really long time, or letting outside factors dictate why you’re keeping someone, but not really a business based decision, if that makes sense.
Sarah Wilkins
Absolutely. We’ve seen in the news many different ways in which companies have communicated layoffs, some in respectful ways and some, we would say, in inhumane ways. What can you share about best practices and handling communication with the care that’s required?
Janet Cho
Yeah, it’s definitely with the virtual workforce created an extra challenge, I would say. I think a company wide zoom, letting people know that they’re laid off, not a great message and it’s not great optics, All of that stuff. Ideally a one on one meeting with the manager, the leader in the group that’s aware of the layoff and can communicate it thoughtfully. Ideally having an HR representative, if it’s a large enough company to be able to be there to answer any questions, a one on one is definitely ideal. Now, the one offset I will say to a one on one is if you have several people that need to be let go, meaning in the tens or hundreds or whatnot, then clearly a one on one making someone wait hours to find out what their situation is, is not ideal. So in those cases, I have helped clients think differently about it, where we will set up a zoom if it’s a remote workforce, we’ll set up a virtual video meeting with the employees that are impacted and let them know in advance. We apologize that we’re getting you all together, but we’ve gotten you together because we, based off the company situation, have to let you go and we did not want you to wait hours to find out your situation and that’s why we’re doing it. I wouldn’t do it larger than a function, if that makes sense. A whole company? I don’t think that’s great. Email or a Slack, letting someone know, not ideal either.
Sarah Wilkins
Yes. And not just shutting off computer access before any communication happens.
Janet Cho
Yeah. I do recommend, unless there’s a security concern, to let people continue to have their electronic access at least till the end of the day so that they can say goodbye to people because it’s important that they get a chance to say goodbye. Rarely do I see people becoming very hostile or kind of acting out in a company wide communication setting. So it’s a nice, respectful way. You can lock people out of code base or intellectual property systems that you may be concerned about, but still letting them have email and slack type access.
Sarah Wilkins
That really recognizes the time they spent at the company.
Sarah Wilkins
How can you provide support beyond severance to affected individuals?
Janet Cho
Definitely for larger companies, but even for smaller sized companies, and I think the takeaway that I try to tell clients when they have to go through something like this is how you treat the people leaving will be remembered by those that are staying. And you really want to make sure that your remaining employees don’t have any kind of guilt that they weren’t part of that impacted group. So to offer as many resources for those impacted would be ideal, such as having a list where they can sign up if they want they don’t have to do it if they don’t want to, but opting in in case they want their information shared with the leaders contacts in terms of being able for other opportunities. Hosting a resume workshop if there are several people where you can help them make sure that their resume LinkedIn is up to date and is ideal for looking for a new position. Career coaching, either individually or in a group settings, there’s a lot of different things that you can do to make sure that the impacted people have as soft as a landing, as we call it, as possible.
Speaker 2
I like that you pointed out not just large companies but small companies. I’ve worked with people in the past where it’s a small company, less than 50 people, but they really cared about those. And unfortunately they were in the position where they did have to do a layoff, but they provided them with the career coaching and the support so they could land their next opportunity. So I think that’s important, that it’s something that you can do at any size of company.
Janet Cho
Yeah. And larger companies do the employee assistance program. Actually, most companies of any size really have an employee assistance program through benefits where they can get potentially counseling, some free counseling sessions, or perhaps at least a discounted session. Same for your remaining employees as well. And when somebody is leaving, in terms of employee assistance, keep in mind, typically companies with 20 employees or more we need to offer Cobra. Even smaller sized employees may offer that as well. Clients really try to make sure that they’re covered through the full month and depending on when the last paycheck is, perhaps even to the month after, before they can opt into Cobra. So just things to think about.
Sarah Wilkins
What would you say is a good kind of severance package or a package that would be supportive of the time someone spent at the organization and recognize the support they may need following the departure?
Janet Cho
Yeah, it’s a great question. And thinking of our more small to medium sized companies, not the super large companies have thousands of employees that can typically offer months of severance. I would say minimum, and I’m saying this minimum, two weeks of severance. But ideally, if you can afford to, four weeks of severance at a minimum would be ideal. Right. At least two weeks just seems like common etiquette, but if you can do higher than that, that would be great. I’ve had some clients who are in the under 100 employees who ask me, well, what about doing a tenure calculation on top of it? I’d say it depends on how old the company is. Right. This client was only a few years old, so the tenure clock wouldn’t really have added much time to people. So my suggestion is, well, if you have that budgeted, why don’t you just give everyone that extra money versus the people who’ve been here three years, if that makes sense. So try to be as equitable as you can for everyone so that there isn’t such a disparity.
Sarah Wilkins
Yeah, absolutely. Thank you. Obviously, that’s a minimum, and to be as generous as possible with what you do have available is the key message there.
Janet Cho
Yeah, exactly. And think of what’s the stock if you’re offering stock, what’s the stock option or restricted stock timeline. Just make sure that you have all of those details buttoned up so that you can communicate. I think it’s important to remember that when you deliver this news, say what they need to hear in the first few sentences, because they’re going to be waiting to hear, well, am I impacted or not? Once they know they’re impacted, they’re really going to stop listening. So it’s best to have some kind of letter or some kind of web page they can go to after that answers all of the questions they have, okay, what was my stock option exercise period? How long am I covered through benefits? What’s my vacation payout if it’s not unlimited? Or the discrete PTO policy. So just keep in mind that people really just want to know what’s happening to me, and then they’re processing that versus that they’ll hear everything that you cover.
Sarah Wilkins
Yeah, that’s important to note, having that information available to them so they can go back and read it when they’re able to kind of after the message is given. You kind of mentioned earlier employees remaining at the company and seeing how you handle a layoff. But employees remaining may experience, uncertainty, guilt, sadness. These are their colleagues, their friends. It can really lead to low morale and potential issues with retention. What advice would you give to support employees remaining at the company?
Janet Cho
Yeah, I definitely think it’s a good best practice to get those remaining together, either at the end of the day or perhaps the next day. And note, it is a sad day. Right. And it’s a sad event, and we should mourn it and be honest that it wasn’t something that you wanted to do. I don’t think I’ve ever worked with a leader who relished having to let people go, especially if it’s several people, but paint the picture of, okay, well, why should I stay with this company? What is their compelling to move forward as a group together, and how have you honored the people who have left? Right. And really, hopefully leaders? I doubt that they would be disparaging, but it really is to make sure you’re setting the right balance of tone in terms of you’re optimistic about the future. You can’t guarantee that you won’t have future layoffs, but you really try to make sure that doesn’t happen as much as possible. And this is why employees should be excited about staying with the company and helping move it in the new direction.
Sarah Wilkins
This made me think a little bit about how leaders can express the right level of empathy and support and kindness and all of that, but without making it about themselves.
Janet Cho
Yeah. My biggest tip, because all leaders, they have different personalities. Right. To me, practice makes better in terms of I really strongly suggest that the people involved in communicating the news, whether it’s in the function, the CEO, the entire leadership team that they get together and practice what they’re going to say and that the people in the meeting are honest with each other. Of, I think maybe you’re a little too optimistic with this group. Maybe that should be for the remaining group. But a dry run, as I call it, is a great way to make sure that you are better practiced in communicating what needs to happen. People tend to when they’re nervous, especially Ramble. And back to my point of get what you need to tell the group across as quickly as possible, but empathetically and thoughtfully practice that because if you just wing it, it will not go well. Very few people can just wing it. I’ve had leaders who will read from something that they’ve written, and that’s fine. I would just say, if you’re going to do that, do two things. Say upfront. I’m going to read because I want to make sure I don’t miss the key points that I really want to convey to this group. And the second is make sure you’re looking up periodically so that you’re just not reading, especially if you’re in a virtual environment, you need to be looking up and just pausing.
Sarah Wilkins
Any closing thoughts you’d like to share, maybe that we didn’t cover that you really want to hone in on at the end here?
Janet Cho
Hopefully people will not have to ever have to go through this either impacted or delivering the news. But my parting thoughts would be just be as thoughtful as you can. Treat people as thoughtfully as maybe not what you want, because maybe you’re okay being very direct and to the point and dry, but not just a common level of empathy.
Sarah Wilkins
Yeah, absolutely. Thank you, Janet. And thanks for chatting with me about this difficult topic, but I thought it was important that we said something about how to do it in the right way if you do have to do it.
Janet Cho
Yeah, happy to.
