This is one of the most challenging thing for any employers to have to do. Especially when it comes to laying off good people, effective employees and then having to question how they will continue earning an income to pay bills and put food on their tables.
We are all going through unprecendented times, at least for the most of us in our lifetimes. With the current economic situation, retrenchment is inevitable and will likely become more of a common theme in the coming months. So if you are deciding on matters or if you are put in a situation to execute the termination of employees, here are things you should think about.
What will it take for your company to survive and thrive?
AirBnB is one such company that had to go through the painful experience recently. It's unlikely for the company to exist beyond the Covid19 situation which forced them to layoff employees.
However, before they took the step, the management team got together to think about the potential opportunities they could explore and then instructed middle managers to identify talent within their team that could execute on the new direction.
So, first think about how or what your business can do to venture into new markets, to tap into opportunities that may still exists. Keep this short and fast. There will not be any uncertainty until you really organization gives it a go.
Creating a list
It's sad to have to put your employees or your team members into a list that will result in them losing their jobs. However, if your company is in a situation like this, choose to see the bigger picture. If the company fails, every one losses their jobs.
If the company fails, every one losses their jobs.
So here are some questions you could asks yourself before identifying individuals you have to layoff.
- Did they perform effectively before the pandemic happened? If they did not, don't expect things to change.
- How is the quality and speed of their work? At times like this, speed may be of greater essence. So perhaps prioritizing speed with a minimum acceptable quality.
- Are they team players? Team players are more important than ever. If an individual is not a great team player, it may be time to let the person go.
- Do they have the skills to contribute to the new direction the company is headed?
- Are they the type of individuals that will go above and beyond to get things done? These could mean many things, but the most obvious signs to watch for are, working over time occassionally if there are important tasks needed to be done, contributing ideas and expressing opinions. It doesn't matter if the idea is good or bad. What matters is that they show they care. Be careful, however, that some employees are perhaps less communicative, it does not always mean they are any less invested in your organization.
- Do you need people who can think differently? Sadly, majority of people would come out of this crisis worse off. But there will be people and organizations who will thrive and they are the ones who chose to think differently and execute with lightning speed.
Here is a copy of the checklist for you: Staff Evaluation List
There are probably many other questions you and your organization should ask. Creating a checklist will help you remain objective in your evaluation. Whatever you do, do not asks your team to evaluate one another. Now is the time to avoid internal competition but to create a sense of team spirit to better take on the upcoming battle.
Some Retrenchment Labour Law (Malaysia) HR needs to know
Malaysia's Ministry of Human Resources (MoHR)has provided statements on retrenchment of employees due to the pandemic and its impact on companies ability to operate.
Due to many fears of high retrenchment rates, MoHR has put forth a few requirements for companies to comply:
- Your business needs to be able to showcase genuine financial impact.
- Before opting to lay off staff, you must explore other options, such as hiring freeze, reducing work hours/ over time, reducing wages or even temporary lay-offs
- If laying off employees cannot be avoided, it should be "Foreign Worker First Out" before Malaysians
- If laying off Malaysians cannot be avoid, it should be "Last In First Out" where the most junior staff should be laid off first
- Only if you have strong justifications on why certain employees need to be laid off, you should follow the above
For salary reduction, you would need to obtain consent from employees, else it could potentially be brought to court by the employee.
Provide reasons for salary reduction or consider reducing working hours as a justification. Based on Donovan & Ho Law firm, you can explain that the salary reduction is to avoid full dismissal such as retrenchment.
Designing a good severance package
When designing a good severance package, a few things to consider:
Firstly, different countries have different labor laws. So ensure that you are up-to-date with the latest rules and regulations.
Secondly, be empathetic.
Think about the people who depended on you to provide for their families and themselves. Think of them as a human being just like you are. At the very least, give them at least a month or two to survive and find a new income source. Or better still, partner with upskilling institutions or HR agencies that can help make the transition easier for them.
NEXT Academy offers short effective upskilling programs in the business digitization space that can help with individuals finding new income sources in a time where businesses are forced to speed up their digitization plans.
Guiding them to future options is the least you could do.
Thirdly, be fair.
No one should be treated any differently. It's common decency but it's also good business. Do not create resentment amongst ex-employees. This can damage the brand you and your team have worked so hard to build.
Many don't have the right digital skills to survive today. Give them a fighting chance by introducing/ providing them the right re-skilling program relevant for today's world.
Check out NEXT Academy's special digitalisation program that puts together building a website, eCommerce and digital marketing.
When the time comes to execute, have your best HR individuals talk to each and everyone you are laying off. Acknowledge that it's not an ideal situation and keep it humane. Keep it short so that your HR team will remain psychologically strong to continue.
It is not an easy period for everyone because the pandemic and the economic situation forced the hands of many businesses to let go some of their best staff.
Many people will feel uneasy and sad to see some of their closest colleagues go. Some may even feel more insecure about their jobs. You will need to quickly rebuild morale and to rally everyone.
With your remaining team, have the CEO host a company-wide meeting to acknowledge that the situation is tough for everyone. Avoid using the word unfortunate. Keep it real, authentic and human-like. Do not allow this conversation to take place separately. Everyone should hear the news from their most senior management team.
Openly share the direction with your team and layout a plan on overcoming the difficulty.
End the meeting with along the lines of "this is going to be the greatest challenge we will face as an organization but what each and everyone of us do now onwards will make a difference and will allow us to continue our ability to make our vision a reality." Don't sugarcoat things but remember it's how you say it that will make a difference.
Keeping & Sustaining Morale
Your middle managers and HR team needs to be made available to converse with remaining employees that are anxious about the situation.
The key is speed.
Rapid progress is of utmost importance during this time. Everyone needs to be on their toes to pivot and react to many uncontrollable situations.
Here are some steps to keep the morale of the company:
- Create a work flow that enable employees to rapidly get feedback on their deliverables (This will vary from departments to departments)
- Create a culture of support. Even high performing staff may face a few hiccups during this time. Support each other so no one would feel alone and uncertain.
- Celebrate small successes. It could simply be a word of praise but it makes all the difference.
- No blame game. You can't afford to, not now.
- Have frequent team check-ins. This could ease everyone's fear of uncertainty as they feel that they are progressing well.
The team needs to be strong and fast for the company to get through this storm together.