by Tammy Giefer, SPHR
The weekly operations meeting has just ended with the reality that despite best efforts, your company will need to cut some positions to reduce operating expenses and stay on budget. How will this decision be made? What positions will be cut and what factors need to be taken into consideration before deciding who stays and who goes?
Before the decision is made to cut staff there must be a clear picture of where the organization is now and what it will look like after the downsizing. Considerations must be made regarding which departments are not meeting budget, which departments can continue to operate effectively with reduced staff, and which functions may be streamlined to take on the added workload from eliminated positions.
Once these factors have been considered it will be time to decide which employees stay and which ones go. This is never an easy decision for any manager, and a poorly executed strategy will often have a negative impact that far outweighs any organizational benefit gained from downsizing. Some factors to consider in the decision are:
- Employees with the least seniority
- Employees who are lowest performers of the group
- Employees with the highest number of disciplinary issues
- Employees with the lowest skill set who require more training
- Employees who make the highest salary and will have the greatest impact on the company’s bottom line.
A word of caution: Seniority is often used as a factor in deciding who stays, however it may not be the best factor. Just because an employee has been there longer doesn’t mean he or she necessarily has the skill set, is a great performer, or the most productive member of the team.
The position or positions eliminated MUST have a significant impact on your organization. Consider your best talent, and which employees will help the organization weather the tough times. The positions eliminated should be positions that the organization can truly get by without, either for the short-term or the long-term. The remaining staff members must have the skill set and know-how to take on the workload of the laid-off employee with a minimal amount of training and instruction.
Once it has been determined which positions will be cut, there will be other decisions to make: Will the organization be able to give the employee advance notice of the lay-off? Will severance be offered? If severance is offered, should the organization require a severance letter and a release of claims before issuing severance? Will the organization provide placement services? And, how will the changes be
communicated to the staff?
While each of these decisions is unique to the company, whatever action you decide on should be consistent between all affected personnel. As with any major decision regarding employment, it’s best to seek the advice of your HR team and/or legal counsel to ensure that you are following any pertinent employment laws. Certain State and Federal laws such as the WARN Act may require advance notice to employees being let go and require severance if advanced notice is not given.
Check back next week to see Part Two of this article with focus on communication of the lay-off to the employee and staff.
Tammy Giefer, SPHR, is the HR Manager for Client Services with Employment Enterprises, Inc. Over the past 7 years, she has worked with small to medium sized businesses to manage their human resource functions and maximize their human capital investments.
