Human Capital Management during COVID-19: Conducting Compassionate Layoffs

Why avoid layoffs? Previous research shows that they often result in negative outcomes such as loss of skills, learning, productivity, and innovation; low employee morale; and brand reputational risks,² as well creating the risk of a slower recovery.³ Knowing this, CEOs at some leading companies (e.g., Morgan Stanley, Citigroup, Visa, FedEx, Bank of America) have taken a stand and committed to not conducting layoffs.⁴

Although many organizations have decided to keep all employees in the short term, the longer the COVID-19 crisis lasts, the more companies in survival mode may feel compelled to make the tough call. In the US alone, over 16 million people filed unemployment insurance claims in the past three weeks (ending April 4, 2020).⁵ To make layoffs less painful and damaging in both the short and long term, The Conference Board suggests employers take the following seven actions to conduct layoffs more compassionately:

1. Leverage strategic workforce planning. Strategic workforce planning (SWP) plays an important role in determining the criteria for layoffs and ensuring adequate talent remains to sustain day-to-day operations. The SWP team, along with other HR and business leaders, needs to (re)identify critical roles based on current business needs, assess costs, and evaluate the difficulty of replacing laid-off employees. A data-driven layoff strategy will ensure fairness in the process. SWP should also help develop internal mobility plans to improve organizational agility and maintain operational efficiency.⁶
2. Communicate that all other cost-containment measures have been considered and that layoffs aren’t about personal performance. Both downsized victims and survivors will be much more accepting if they understand that their companies have exhausted other options before implementing layoffs. In one of the sectors hit hardest by COVID-19, Marriott International found itself needing to close hotels around the world. When CEO Arne Sorenson recorded a widely viewed video explaining the steps the organization had to take, including laying off 15,000 workers, he announced that his salary would be suspended and his executives’ pay reduced 50 percent.⁷
3. Implement temporary furloughs with benefits. A handful of organizations in the restaurant, hotel, and airline industries announced furloughs with benefits (temporary leaves with continued health care coverage) to prevent permanent job losses. For example, all the furloughed workers from Macy’s will continue to receive health benefits through May 2020.⁸ Companies should provide information about unemployment to the furloughed workers who may not realize they’re eligible. Some organizations (e.g., technology, grocery stores, medical suppliers) are also considering partnering with hiring companies to assist furloughed employees in the interim.
4. Provide training for HR and managers before conducting layoffs. Many executives and managers have never been trained on how to have difficult conversations, how to appropriately and compassionately conduct layoffs, or how to counsel remaining employees. It’s important to help HR and managers develop awareness of nonverbal behavior and enhance listening and responding skills before they conduct layoffs.⁹ Provide step-by-step guides such as sample scripts and responses to various employee reactions to help prepare for layoff notification meetings as well as conversations with unaffected employees.¹⁰
5. Demonstrate compassion to those who have been laid off. A personal touch from their manager and HR can help reduce the pain for employees who are laid off. Have a face-to-face conversation with each employee in a private setting and thoroughly explain the reason for the layoff. Provide space for laid-off employees to express their emotions, and listen to their feelings and needs with patience. One executive was shocked when an employee asked if she could hug him after their layoff conversation. Unless there are legitimate security reasons, don’t walk employees out—allow them to say goodbye to their coworkers and friends and leave the office with dignity.
6. Provide financial, health care, and career assistance to those who have been laid off. Offer reasonably generous severance packages to all laid-off employees, even those who have recently joined the company, and provide information on unemployment benefits in your state. Extend medical coverage for at least a month, especially during this medical crisis. To help employees alleviate financial difficulties, a US-based manufacturing company is also exploring foundations and funds to provide additional financial assistance. Many restaurant owners and employees are creating GoFundMe pages to help support their laid-off coworkers. Offer outplacement services, conduct virtual job fairs with outside employers, and connect employees to company alumni to help transition to new jobs.¹¹
7. Care for and engage remaining staff. Maintaining engagement is critical during a crisis, especially when organizations are forced to conduct layoffs.¹² Express empathy for the remaining employees, and actively listen through pulse surveys and focus groups to help them overcome their “survivor” guilt. Never implicitly or explicitly express that these employees are “lucky to have a job.” Monitor the new workloads of those who have not been laid off, as they may not be able to do the work of two or more employees for an extended period of time. To retain employees after the crisis, organizations need to find ways to persuade them to stay after the layoff.¹³

Related Resources

• “How to Manage Coronavirus Layoffs with Compassion,” Harvard Business Review, April 7, 2020.
• Kenneth W. Freeman, “A Guide to Being Compassionate during Layoffs,” Harvard Business Review, February 25, 2016.