Navigating Mass Layoffs in a Business

Katie Ash

Nov 10, 2022

Many large tech companies have announces mass layoffs in the past few weeks.

Twitter started controversial downscaling after its acquisition by billionaire Elon Musk. The approach taken has been widely criticised, with many employees learning of their fate simply by loosing access to their laptops or work programmes. Twitter has also been hit with many legal challenges related to the layoffs.

Other companies such as Stripe and Meta have also announced widespread workforce reductions, but have taken a much more empathetic approach. In these companies, employees affected by the layouts are generally more positive about the experience, and they layoffs have been labeled as 'compassionate layoffs', kept as small as possible and only as a last resort.

Many other well known companies have been reducing their workforces considerably, and with economic uncertainly looming, there are sure to be more coming.

When companies get into situations where staff layoffs are necessary, what are the best ways to navigate communication with both affected and remaining staff?

Be Honest

If your company is considering downscaling its workforce, it’s best that employees hear it directly first. Knowing in advance that they may be effected gives them time to mentally prepare, and also consider other options for employment or their lifestyle.

When the time comes for the changes to be implemented, sharing the reasons behind the need for these actions, and what else the company is doing to reduce costs helps employees justify and accept the changes.

Make sure communication is honest and concise, and there is one narrative and communication source for all employees. If communication is muddled, it can lead to a bad experience both internally and externally, and may hurt employee retention within the business as well as future hiring prospects.

Be Fair

Before layoffs occur, ensure the business has fair selection criteria for which employees, teams or departments will be effected. Layoffs that appear discriminative in any way can cause major headaches for companies. Transparency about selection criteria justified about the needs and future direction of the company will be needed.

Pay severance if you can, and make it significant enough that employees will be able to cover costs for a long enough period to be able to find new employment. Paying out remaining holiday days, ensuring those on visas have enough runway before residency becomes an issue, and continuing to pay medical or other insurances for a period can significantly limit the burden on those newly unemployed.

It will also be remembered by employees who are staying on, knowing that their colleagues have ben treated fairly and with respects and are appreciated for their contribution to the company during their time.

Effected employees should also be spoken to individually, rather than only through mass communications. Their unique circumstances should be worked though with a manager or HR representative, and documentation, recommendations etc, should already be prepared for them in advance.

Be Mindful of Statutory Requirements

In Singapore, when employee are terminated, their final pay must be paid within seven days of leaving the company. This is something to consider when choosing the date of termination of employees.*

All CPF and other statutory payments, as well as year-to-date tax must be cleared. For foreign employees, tax must be withheld and paid by the employer. Employers are also responsible for the repatriation cost of foreign employees who they terminate.

*Swingvy Payroll allows for ad hoc payrolls to be run for selected employees at any period within a month, to ensure compliance with local statutory regulations.

Consider Those Staying

The impact of employees who stay after mass layoffs can be extreme, from added workloads to pick up the work of employees who have left, changes in job scope, reporting lines and team members. The loss of colleagues and friends within the business will also have large social impacts.

Ensuring there is adequate support for staff is essential. This should be considered when defining the criteria for cuts, to ensure no individuals or teams will end up burnt out picking up extra workloads. Proving benefits of wellness or mental health days to destress is also worth considering.

Remaining positive about the people who have left is also a good idea. When the company is in a better position, it may consider hiring back some of the employees who were let go.

When companies get into situations where mass layoffs are necessary it is tough on everyone within the business.

Remaining transparent as a company, and searching for other ways to reduce costs first should be the first step, but when team cuts are required, staying fair, honest, and compassionate to employees who have helped build your business is essential.

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