Layoffs, downsizing and restructuring January 2011

Layoffs, downsizing and restructuring by Toronto Training and HR January 2011

Contents 3-4 Introduction to Toronto Training and HR 5-6 Definitions 7-8 Implications of poor termination practices 9-20 Meeting details 21-23 After the meeting 24-25 Termination letters 26-30 Downsizing 31-36 Outplacement 37-39 Separation and severance policies 40-42 Career motivation 43-44 Tackling survivor syndrome 45-46 Layoffs in the US 47-48 Avoiding pitfalls 49-52 Case studies 53-54 Conclusion and questions Page 2

Introduction to Toronto Training and HR Toronto Training and HRis a specialist training and human resources consultancy headed by Timothy Holden 10 years in banking 10 years in training and human resources Freelance practitioner since 2006 The core services provided by Toronto Training and HR are: ,[object Object]

Training course delivery- Reducing costs ,[object Object]

Improving employee engagement & morale

Services for job seekers,[object Object]

Definitions LAYOFFS DOWNSIZING

Implications of poor termination practices

Implications of poor termination practices INCREASED legal compliance issues and litigation (time and $ saved) likelihood of sign-off on termination package (time and $ saved) NEGATIVE IMPACT ON corporate brand (maintain $ revenue and $ saved) remaining employees (maintain $ productivity/employee)

Meeting details 1 of 11 LOCATION Confidential room on-site Away from employee’s work area Away from manager’s office Additional or dual exit access

Meeting details 2 of 11 TIME Earlier in the week is ideal (Tues/Wed) Earlier in the day is ideal Avoid employee birthday or anniversary date Avoid significant holidays

Meeting details 3 of 11 ATTENDEES Direct manager should deliver the message HR or another manager to support the process is ideal Leverage skills and experience of outplacement specialists Define roles and scripts ahead of time

Meeting details 4 of 11 OTHER CONSIDERATIONS Will security be an issue? Will medical conditions create a risk? Create a termination checklist for network and software access, laptops, cell phones, pass codes, voicemail, etc.

Meeting details 5 of 11 POSITIONING STATEMENT Be honest – don’t set up the meeting under false pretences “George, I’d like to have a conversation with you about your performance. Can you come see me in the ABC room?” Do not schedule meeting too far in advance

Meeting details 6 of 11 DELIVERING THE MESSAGE Get right to the point Reinforce decision is final – do not negotiate Be brief, but respectful – 2 to 3 minutes Keep the discussion in business terms Move the conversation along to a discussion of next steps –this will take longer

Meeting details 7 of 11 REACTIONS TO PREPARE FOR-SHOCK AND DENIAL Allow them time to react Repeat the message if necessary Probe gently to ensure they understand the message

Meeting details 8 of 11 REACTIONS TO PREPARE FOR-ANGER AND HOSTILITY Remain calm, keep it business Do not argue, debate or take sides Acknowledge their anger but bring discussion back to next steps “You can schedule a time to discuss it at a later date with xxx/me. However, my purpose today is simply to communicate the decision, provide the package and introduce your career transition expert”

Meeting details 9 of 11 REACTIONS TO PREPARE FOR-NEGOTIATION Acknowledge their suggestion Reinforce alternatives were considered but decision is final

Meeting details 10 of 11 REACTIONS TO PREPARE FOR-RELIEF AND ACCEPTANCE Probe gently to ensure they understand the message Reinforce next steps Inform outplacement expert and HR of “controlled” reaction

Meeting details 11 of 11 BEST PRACTICE Never mention names of others affected or remaining Escort the employee out of the building – they can connect with co-workers and clean up desk at a later date (if applicable) Ensure the employee is capable of returning home – assess and offer alternatives if necessary – leverage outplacement expert

After the meeting 1 of 2 DELIVER THE MESSAGE TO THE SURVIVORS They may go through similar emotions Reinforce decision and support employee(s) is receiving Outline how work will be allocated/replaced Outline how calls/emails/clients will be managed Reinforce the importance of their jobs

After the meeting 2 of 2 BEST PRACTICE-BE VISIBLE AND ACCESSIBLE Demonstrate objectivity and empathy Utilize change management resources – HR, Employee Assistance Programs, team meetings Have more senior or other managers “check-in” with remaining employees

Termination letters Should be clear, concise, direct and cover the important details Recognition of service and contributions can be added if applicable Not required to include details/evidence of performance issues or steps taken unless for cause Create a separate financial package

Downsizing 1 of 4 EFFECTS OF DOWNSIZING Job security Job satisfaction Organizational justice Organizational commitment Union commitment

Downsizing 2 of 4 REDUCING THE IMPACT OF DOWNSIZING Do it once – identify a group if necessary and get it over with. Handle the situation with sensitivity. Have a package ready - provide employees with information regarding their benefits, eligibility for unemployment insurance, any severance payments or other information you think they will need - before they leave the meeting. Communicate – communicate – communicate.

Downsizing 3 of 4 REDUCING THE IMPACT OF DOWNSIZING Prepare managers with information and a communication strategy for their role with their teams. If at all possible, offer an outplacement service to the employees being let go…this will buy you tremendous good will with them and the employees who stay. In the end you are left with those upon whom you will rely to work harder and smarter. Make sure they are your key contributors and that you work hard to keep their trust. Let them know you appreciate their hard work and communicate, communicate, communicate!

Downsizing 4 of 4 NEGATIVE IMPACTS Decreased morale Reduced loyalty Productivity/Quality Loss Damage to brand Turnover Absenteeism Lawsuits Negative image Stock price decrease Loss of customers

Outplacement 1 of 5 FACE TO FACE One-on-one sessions Group sessions Personality and career assessments Specialized webinars, workshops and networking sessions Personal finance consultation Personal image guidance Interview coaching Guidance on approaching organizations speculatively Small business options Education, retraining and retirement options

Outplacement 2 of 5 NON FACE TO FACE Discounts on a number of training & development courses Business cards

Outplacement 3 of 5 ONLINE Creation of a customized resume Creation of a customized cover letter Creation or revision of social media profiles Guidance on contributing to blogs and forums Database of contacts Access to a computerized career transition tool

Outplacement 4 of 5 RECENT TRENDS Key decision criteria for choosing an outplacement provider Which employees receive outplacement support, including global differences Factors considered when determining outplacement support Which employees get what level of support, including global differences

Outplacement 5 of 5 RECENT TRENDS The most important components of an outplacement program, including opinions of those in transition Circumstances in which outplacement support is increased The most important indicator of a successful outplacement partner The most important indicator of a successful downsizing Perceived differences of opinion from those inside and outside of HR

Separation and severance policies

Separation and severance policies 1 of 2 THINGS TO BEAR IN MIND Consideration of employees Compliance Protecting morale and commitment Corporate values Avoiding lawsuits Protecting brand Budget Return on investment

Separation and severance policies 2 of 2 TRENDS IN SEVERANCE POLICIES Which employees receive severance pay How severance formulae are determined Which employees get what level of severance, including global differences Minimum and maximum caps for severance pay-outs, including global differences Pay-out methods, including global differences Circumstances in which severance amounts are increased, including global differences Other benefits provided after separation

Career motivation 1 of 2 COMPONENTS Career resilience Career insight Career identity

Career motivation 2 of 2 SURVIVORS OF LAYOFFS Identification with layoff victims Perceived justice of the layoff Perceived planning Continuance commitment Trust in management Job insecurity Affective commitment Negative mood

Tackling survivor syndrome

Tackling survivor syndrome MASS LAYOFF STATISTICS PROGRAM 1421 mass lay-off actions in the last month (50 or more employees) involving 130000 workers National unemployment rate 8.9% Industries with the largest number of mass layoff initial claims

Lay-offs in the US MASS LAYOFF STATISTICS PROGRAM 1421 mass lay-off actions in the last month (50 or more employees) involving 130000 workers National unemployment rate 8.9% Industries with the largest number of mass layoff initial claims

Avoiding pitfalls Defining the pool for lay-offs incorrectly Not offering suitable alternative employment Absence of a genuine lay-off situation Failure to carry out a fair selection procedure Failure to consult properly on collective lay-offs Failure to inform and consult on an individual basis Failing to consider alternatives to lay-offs Not training managers on how to carry out the exercise Not accounting for the extra costs and resources involved Failing to account for the wider effects of the lay-offs exercise

Layoffs, downsizing and restructuring January 2011

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