Layoffs change with the times

Job cuts can be tricky in the modern work world, with more teleworkers and innovative programs to save jobs, but old-fashioned dignity, respect still in style
By Sarah Dobson
|Canadian HR Reporter|Last Updated: 01/21/2010

Layoffs are an unfortunate part of the boom and bust nature of the economy. But they’re not as cut and dried as they used to be: Sometimes, they can be postponed, thanks to initiatives such as work-sharing programs and voluntary reduced workweeks. Sometimes, the logistics can be a challenge, with employees working at home or spread across the country and around the world.

But the one thing that hasn’t gone out of style is treating employees with respect and dignity, say experts. With the last economic downturn, generally viewed as the worst since the Great Depression, some firms and industries that never had to deal with downsizing were faced with difficult situations.

For Anderson Water Systems, 2009 started off as a busy year. The company had a backlog of multimillion-dollar projects and had even hired engineers to cope with the demand. But when the market crash caught up with the industrial water treatment system company, it was struggling like everybody else.

The conundrum was new, said Cindy Smith, an HR manager at Anderson in Dundas, Ont., a subsidiary of Degremont Technologies with 58 full-time and five contract workers.

“We’d been through cycles before but, in this particular case, (the challenge) was to try and figure out how we could keep our intelligence during this economic crisis and we’ve got head office breathing down our neck saying, ‘You have to let people go.’”

The company became involved in the federal work-sharing program and also encouraged employees to bank overtime, should layoffs occur. But, in the end, the company had to lay off 15 workers, based on seniority.

“I know some companies use an economic downturn like this as an excuse to clean house, but that wasn’t our case,” said Smith.

The layoffs were done in one day and people did not know they were coming, she said. Since no security risks were perceived, the laid-off workers were allowed to go back to their desks and gather their personal things.

“We want to handle these things as gracefully as we can, and with dignity and respect,” she said.

Being treated fairly is part of an employment brand — you want individuals to speak highly of your company, said Monika Morrow, vice-president of career management for North America at Right Management in Toronto.

That means not marching a laid-off worker out of the building but, increasingly, allowing people to say their goodbyes before they leave their place of work.

“If it’s a function that won’t result in any sabotage to the organization, we certainly encourage the employer to allow the individual to say their goodbyes, if they want to,” she said.

Handling layoffs for teleworkers

When it comes to at-home workers, they often have weekly or quarterly meetings at the office or a district manager regularly meets with salespeople in a sales territory for planning meetings — those are the times companies should deliver the unpleasant news, in person, said Morrow.

But sometimes layoffs have to be done over the phone.

“It’s a difficult situation because the individual is then at home, there may be no support there, we have no way of really getting under what’s going on emotionally, you can only hear the voice,” she said.

“That’s why we encourage the face to face as much as possible.”

While many people work from home, organizations are still meeting with a person to let him know of a termination, said Hanna Dunn, president of Dunn People Strategies in Mississauga, Ont.

“Doing that is as important as paying the person the right amount. The danger is that you could have all your ducks in a row and pay the person the correct amount of severance and have all your paperwork properly done and meet all of the legislation under the employment standards but if you do not terminate the individual with respect, they can sue you for that.”

Work-sharing programs delay layoffs

Workers at Innotech-Execaire Aviation Group were allowed to retrieve personal items when about 10 per cent were laid off from the 700-employee company in 2009. Innotech was involved in the work-sharing program and had offered a 50-50 program, with the employee given a day off at short notice and the company paying 50 per cent while the other 50 per cent was not paid (or pay is foregone by the employee). But layoffs were inevitable, said Alistair Price, director of HR at the company in Dorval, Que.

In actually delivering the news to workers, the key is to keep the message short and sweet, not get into a long dialogue, he said. You don’t want to get into a big debate but wish them well and, if they’re distressed, let them calm down and collect their belongings.

“It says a lot about your company, the way you do this, that’s why it’s very important to treat people with dignity,” he said.

However, “Why?” is the biggest question heard from laid-off workers, according to Dunn, and employers are often too careful in orchestrating a termination, failing to provide real answers.

And many times it turns out a worker was set up to fail, having not been trained properly or given proper standards, or because he lacked the necessary skills, she said.

“Companies are a little quick to say, ‘They’re not working out, let’s get rid of them,’” said Dunn. “Companies are a little ruthless sometimes.”

Tough decisions by HR

There are more dilemmas for HR in dealing with business issues versus HR ideals, said Harold Ekstein, a principal consultant with Harold Ekstein & Associates in Toronto, a firm specializing in organizational and talent development.

The ideals are not out of line — they’re based on trying to establish a degree of logic and respect and fairness in the treatment of people, he said.

“But the issue now, despite all the things senior managers say about people being an important asset, is they are just another resource and they are the most expensive resource on the books.”

That means companies have a tendency to squeeze people out instead of firing them. Rather than being straightforward about changing needs, a senior manager or president can make the life of an employee “absolutely miserable” so she leaves, said Ekstein.

There are also more people working on a matrix or project basis, with no dedicated place when the work is done, so they are let go or others are hired to replace them at half the price, he said. That’s the mentality — once they’ve outlived their usefulness, no thought is given to keeping the know-how and proprietary information, said Ekstein.

“People are being hired in knowing full well what they’re doing is a project, it’s not a full-time job,” he said. “Senior people are submarining in and out of the workforce, in and out for a couple of years.”

But workers are more familiar with the prospect of layoffs, it’s really par for the course, said Price, and the stigma associated with a termination has lessened. The loyalty’s gone, there’s a different type of working relationship now.

“Very few people, successful and unsuccessful, are going to go through their work life and not get laid off along the way,” he said.

Workers are more astute about the world of work, they recognize the signals, said Morrow.

“They know the challenges organizations are facing financially, so it’s not as unexpected as it used to be. There’s still a shock people go through but it’s not as unexpected as it was five years ago.”

However, support for laid-off workers is declining. There are probably more “clawbacks,” she said, meaning if a laid-off worker finds a job, he gets 50 per cent of the remaining severance. There are also more working notices and fewer lump-sum payments.

Outplacement programs are also definitely shorter, said Ekstein, who lost his job in 1990 and had a program worth $15,000. Now, people are supported with $1,500 to $5,000 programs, even senior people, he said.

These shorter programs mean people are receiving less support in a more complex market, said Ekstein.

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