1.Propose three (3) ways that a manager can cope with any negative emotions that may accompany an employee layoff. When the economy — or a company’s business — goes south, the quickest way a company can chop its costs is by laying off its employees. It’s never popular and often companies will try other cost-cutting measures long before they have to cut workers, but if you’re among those who get the pink slip, you don’t really care. You just lost your job. For many, being laid off is something that will be unexpected and shocking. Unless you work in a seasonal industry where layoffs occur with annual regularity, a layoff is akin to having the wind knocked out of you. You become a powerless pawn in a company’s efforts to cut costs. And while it’s never about a single employee, it doesn’t make it feel any less personal.
Following are some proven ways for management to reduce the negative effects on staff of cutbacks, reorganizations and layoffs: Positive attitude from management. Managers set the tone as to how the staff will react to the stress and challenge of unwelcome change. Consider how when you are on an airplane flight and there is significant air turbulence, one looks to the pilot and the flight attendants for guidance and reassurance. For your staff, you are the pilot and flight attendant. Your behavior and attitude are critical elements in steering the group successfully through the transition. A positive attitude does not imply that you should deny the difficult and unfortunate aspects of what might be happening. Rather it involves reassuring your staff that you are all up to the challenge.
Communication. When staff are in a state of anxiety, especially about something as basic as layoffs and job security, it is normal for them not to hear and take in everything you are telling them about what is going on. You cannot communicate enough and in too many ways about what is happening during times of difficult change. When you are sick and tired of hearing yourself say the same thing time and time again, you may have finally gotten the information across to your staff.
Communication by management that is clear and comprehensive about the source and reason for changes, the process to be used for making decisions about staffing, reorganizations and layoffs, facts about the schedule and dates for implementation and how it will be done, etc. is the best antidote possible against generalized employee anxiety and the destructive “ rumor mill”. Employees who have useful information will feel less out of control and more empowered. They will also be more able to attend to their daily job duties instead of worrying unnecessarily.
Visibility and support from management on a regular basis. Taking the time to show your presence among your staff and provide words of encouragement will do a lot to reassure your workers. During times of change, employees can get anxious if they do not see their management. They may start to imagine that things are going even worse than expected, and that is why management has been absent. Using the airplane analogy again, what would you start to think if the flight attendant disappeared into the pilot’s cabin for a long period of time.
Acknowledgement to staff of difficult times and normal reactions. There is a common misconception that if you acknowledge that times are difficult or stressful that it will make things worse. The opposite is true. The more we “normalize” employee reactions, and let employees know that we understand they are affected by budget cuts and uncertainty – the more they will feel understood and cared for – and be able to function well. It is also a good idea to talk about how emotions can be more intense at times like this, and that we all need to be especially kind and patient with each other. 2.Describe a step-by-step process of conducting the dismissal meeting. Unfortunately, if you are a business owner with employees, you will eventually be faced with needing to terminate an employee. No matter how strong your recruiting, hiring, performance management, and management practices are, employee terminations are an inevitable part of owning a business. Terminations can result from employee misconduct, performance issues, and changes in business.
Termination meetings tend to be stressful for both the employee and the person delivering the message. Nonetheless, there are some key steps to follow that can make this meeting easier:
Step 1) Above all else, treat the employee with respect and kindness and remain calm no matter how the employee reacts. Do not argue with the employee. Be compassionate and respectful.
Step 2) Conduct the meeting in private and keep it brief.
Step 3) Have another witness present – preferably someone from HR or in management.
Step 4) During the meeting, discuss termination meeting, benefits, and references: Focus on the real reason for the termination. Being vague can lead the employee to draw their own conclusions regarding the reasons. The purpose of the meeting is to communicate the message, not to discuss the reasons, or rights and wrongs, behind the decision. You should avoid discussing anything not relevant to the employee’s conduct or reason for termination.
Review termination benefits, if any (i.e., severance, vacation pay, insurance continuation) and, if applicable, review the separation and release agreement, which typically goes hand-in-hand with severance. Let the employee know if you are willing to give him/her a reference. Give the employee the termination letter per your company practice and/or state requirements.
Step 5) Immediately following the termination meeting, allow the employee to retrieve personal items from their workspace, but be sure to stay with the employee. This allows the employee to get their personal items and helps to mitigate claims that you did not give them these items. It also is a respectful gesture.
Step 6) Gather company property (e.g., badges, keys, credit cards, phones, laptops, parking pass) from the employee.
Step 7) Give the employee his/her final paycheck as promptly as possible, no later than the next regular payday or sooner. Be sure to pay the employee in full for their last day of work regardless of the time of day that he/she leaves and to pay the employee for any accrued vacation or paid time off per your state’s requirements and/or company policy.
Step 8) Have the employee leave the premises immediately following the termination meeting and gathering of their personal belongings.
Step 9) Document the termination meeting. Note any comments made by the employee. (Brown, J., People Tactics, August 30, 2013) 3.Determine the compensation that the fictitious company may provide to the separated employee.
Severance Eligible Employees
A non-Officer Employee is eligible to receive Severance Pay. A non-Officer Employee or Vice President who is terminated due to the following reasons is eligible to receive Severance Pay:
Reduction in Force
A non-Officer Employee with a base salary of $125,000 or greater or Vice President who is terminated for the following reasons is eligible to receive Severance Pay in addition to those noted above:
Loss of Confidence
Agreement and Release of Claims
If you are a Severance Eligible Employee, you must sign an agreement and release of claims which is provided by Freddie Mac within a specified time period as provided in that document agreement. You are not eligible for Severance Pay under the Severance Plan unless this condition is met. This agreement and release of claims absolves Freddie Mac from liability for any known or potential claims relating to your period of employment with the Corporation or your termination of employment and may include additional items at the Corporation’s discretion, such as non-competition, confidentiality, non-solicitation, non-disparagement and restriction/preclusion of re-employment by Freddie Mac. The agreement and release of claims is intended to satisfy the standards for a knowing and voluntary waiver under applicable law, including but not limited to the Age Discrimination in Employment Act.
4.Using Microsoft Word or an equivalent such as OpenOffice, create a chart that depicts the timeline of the disbursement of the compensation. Severance Pay may be paid in accordance with the Corporation’s standard payroll procedures, or you may elect to receive the Severance Pay in a single lump-sum payment. You must make your election on or before the date you sign the required agreement and release of claims. Failure to make an election upon execution of the agreement and release of claims will result in a lump-sum payment of severance pay. Severance Pay is subject to applicable withholdings.
5.Predict three (3) ways that this layoff may affect the company. Often, when businesses come into rough financial times, they consider layoffs as an easy way to boost the bottom line. Cut some overhead and reap the rewards, right? Not always. Layoffs often don’t pay off. So how does a company evaluate all of the short- and long-term costs involved to ensure that layoffs are the right action to take? In the near term, owners will incur the costs of severance and benefits continuance, but other indirect and direct costs come into play, which may make layoffs less appealing. And in the long run, the cost savings pale in comparison to what owners will spend on staffing once their businesses ramp up again. Companies conducting a layoff find that there is a price to pay in the short run for getting costs out. Besides a severance and benefits package, employers will pay out accrued vacation and outplacement-services fees. There are other short-term costs to consider. It takes time to process people out.
Managers have to take the time to sit down and break the news to employees, to assemble paperwork, to reallocate work to remaining employees, to train those survivors how to do the work they’ve absorbed, and to handle other employee issues directly related to the layoff — all of which eats managers’ and administrative staffs’ time and, therefore, money. The effects of layoffs on surviving employees have a less obvious, but still important, short-term financial impact. Morale directly affects productivity. Each laid-off employee will cost the company 50% of the person’s compensation and benefits for each week that the position is vacant, even if there are people performing the duties, and 100% of the person’s compensation and benefits if the position is left completely open. Other indirect costs include lost knowledge, skills, contacts, and customers, which are all hard to quantify but are real factors in determining the short-term costs of laying people off.
In the long term, a business’s initial cost savings can be obliterated by the cost it incurs to ramp back up. The most ludicrous thing I’ve seen is that companies might make the balance sheet look good in the short term but later have to hire people back. In essence, the cost savings only last as long as the company doesn’t need to rehire employees, and in most cases, that’s not a long period of time. The majority of companies that lay off employees find themselves back to prelayoff employment levels within 18 months. Rarely do companies see any long-term benefit from employment reduction. Looking at the implications of layoffs in the long term reveals some hefty costs to the company, especially if the organization decides that it needs to rehire employees.
The employer will pay a premium price for attracting valuable replacements, including the cost of recruiting and screening candidates. An employer also will have to orient new employees and make supervisors available to offer additional guidance and support while those employees get up to speed. Then there is an economic-opportunity cost incurred, which is the difference between the productivity the company would have enjoyed had they retained the laid-off employee and the productivity of the replacement while he or she is learning the job. Costs can run up to an amount equal to two or three times the annual compensation of the person laid off and is an additional cost above and beyond the annual salary of the replacement. Lastly, there are less tangible costs, which include low morale, lost innovation, fear of more layoffs, angry customers, and lost market share.
So does it really pay to layoff employees? At first glance layoffs seem to be an easy fix, but they don’t appear to be a strategic initiative that pays off in the long run. (Mathews, C., The Real Cost of Layoffs, Inc., July 19, 2012) I have been conducting terminations for the past 9 years at my current job. I have been involved in rewriting the policy, severance payout, etc. It is never an easy task. I consider it one of the hardest jobs in the company. You have to have tough skin in order not to take on the stress that this job can cause. Especially when you have to layoff a friend and you know what’s going on in their homes. As I listed above, there are steps that must be taken in order for the layoff to go smoothly. A manager’s reactions to the layoff can be detriment to the employee. We train our managers how to handles these types of situations, to avoid this type of behavior. Layoffs are never an easy task.
Brown, J., Steps for Conducting an Employee Termination Meeting, People Tactics, August 30, 2013. Gandolfi, F. (2008, April). Learning from the Past ‐‐ Downsizing Lessons for Managers.
Journal of Management Research
Mathews, C., The Real Cost of Layoffs, Inc., July 19, 2012.