Layoffs: What’s the Right Thing to Do?
A few weeks ago, I was interviewed for an article in the Chicago Tribune titled “Layoffs could spell more trouble for Illinois“, and it put me into a self-reflective mood as to the best way to think about this topic from the perspective of a “values-based leader”.
As with all subjects, I try to approach the topic of layoffs from a “balanced perspective”. By that I mean it is easy to discuss layoffs from either extreme….that is:
(1) it is part of the “free market capital system”, so just accept it, deal with it, and assume the people who lose their jobs will get retrained and find another job;
(2) layoffs are unjustified and should not be allowed, or make layoffs difficult to do by requiring organizations to pay several years of compensation to a person who is being laid off (as in many countries in Europe).
Okay, here are a few opinions. First of all, despite all of the issues and challenges with the “free market capital system” (and there are many), I do not believe anyone has come up with a better system throughout the course of history. And, assuming people can be retrained, (which is often a big assumption) the overall economy can continue to grow and flourish. For an example, think of the progression from a predominantly agricultural economy to an industrial economy to a service economy.
Also, it is important to note that making it difficult to lay off people doesn’t solve the underlying problem because employers are less likely to build facilities and hire people in locations where it is difficult to lay off people.
Finally, if my organization has 500 team members and the economic reality is I can only afford 450 to be competitive in the marketplace, if I don’t lay off 50 team members, I am placing the entire 500 team members in jeopardy by being uncompetitive and being at risk of bankruptcy.
Okay, does this lead to the conclusion of “just accept it”, and ignore the issue…..I don’t think so. As I tried to point out in the Chicago Tribune article, when an individual is laid off, it doesn’t just affect that one person, it puts an entire family in jeopardy. And if the person is older, it may be very difficult to find another job. Nothing bothered me more during my career at Baxter than having to lay off team members.
In order to minimize the harm done in layoffs, I have two recommendations for organizations:
(1) I believe that before companies increase their workforce they should take the time to think through whether they really need to hire additional people. It amazes me to see the number of organizations that hire people and several years later lay people off. Why are they surprised? Did they take the time to plan what their real needs would be over the next several years? Are their needs permanent or just temporary?
(2) If you need to lay off team members, I believe you have a moral obligation to help those individuals find another position. This involves coaching, outplacement services, and treating each person the way you would want to be treated if you were being laid off. Not only is it the “right thing to do”, it shows the team members that remain in the organization how you treat people that leave the organization. This has an enormous impact on the people that remain in the organization after a layoff. At Baxter, we provided assistance to team members and we kept track of how long it took them to find another position. We were proud of the fact that 90% of those laid off were able to find another position within three months of leaving Baxter.
So that’s a few “opinions”….let me know what you think!