Layoffs Alternatives: A Personal Experience Towards Compassionate Alternatives

For the past 16+ years, I kept jumping between multiple companies in the quest to learn more about management styles, tips & tricks, and different approaches to the same problem. And that's exactly what I learned, and still learn.

When it comes to cutting costs, it is usually easiest to do a mass layoff, or to fix a mistake in your forecasting! However, from my experience, there are alternatives. The aftermath of layoffs often leaves a trail of decreased morale, diminished loyalty, and a tarnished company reputation. Having navigated these turbulent waters myself, I've come to understand and appreciate the profound impact of exploring alternatives to layoffs and how important it is to choose another alternative.

Here's what we are going to talk about:

• The unavoidable reasons for layoffs
• Embracing alternatives to layoffs
• Communication

The Unavoidable Reasons for Layoffs

Layoffs are a response to a variety of challenges: economic recessions that erode profits, technological advancements that render certain jobs obsolete, or strategic shifts following mergers and acquisitions. Occasionally, they are employed to deal with underperforming sections of the workforce. Yet, the question remains: are layoffs the only solution?

Embracing Alternatives to Layoffs

During a particularly challenging period, our leadership (in multiple companies) faced the dilemma head-on. Instead of defaulting to layoffs (which happened in some cases), we/they explored several compassionate alternatives.

I have personally seen each of the alternatives below in one of the companies that hired me.

Hierarchical Salary Reductions (Reductions or Layoff?)

A structured approach to salary reductions can be implemented through a hierarchical model, in which higher salary brackets are subject to larger percentage cuts compared to lower brackets. This methodology recognizes the greater financial obligations typically borne by individuals in the lower tiers, who have less discretionary income, thus providing limited scope for reductions. Moreover, a 10% reduction in the salaries of higher-tier employees results in a more substantial cost-saving measure compared to the same percentage reduction from lower-tier salaries.

In one of my former companies, they did a 35% reduction to the Cx level, decreasing each tier till the manager level, where the non-managers had no reduction. Then they followed up on this with an e-mail addressing the "personal commitments" and the "leadership responsibility" and ending with "lead by example".

You can just think of the impact of that approach on employee morale!

Strategic Expense Management (Ideas!)

Another approach — and it is the typical approach but with a twist. Instead of the top leadership applying the cost reduction and layoffs on their own, they can make it a company-wide practice with a drop-your-idea approach.

In one of my former companies, we always said that "it is about the people", and we followed that slogan even into that situation. So we made it a company-wide practice where each and every one of us dropped ideas about where we could do cost cuts — including the lifelong employees who immediately proposed salary reductions for themselves and not for their departments, and shifting the cafeteria team into an internal service that helps the employees with their errands for extra money!

Again, what do you think about the employees' buy-in for the cuts happening?

Training Employees for New Technologies (Shift)

In the face of technological advancements that threaten to make certain roles obsolete — I know it is not always an option — you can train your employees to shift to a new technology or work in a new area with some training.

In one of my former companies, we had a mobile team working on Xamarin (cross-platform mobile development using C#), and instead of letting them go, we gave them the option to learn to work on backend development; we chose to invest in our employees. By providing training and upskilling opportunities, we equipped our team with the skills needed for the technologies our company needed.

How grateful do you think the mobile team was? BTW, some of them continued working on backend stuff in other companies.

Re-hiring Internally (Move Them Around)

If it is a group of companies, they can relocate their employees from one company to another or from one department to another.

One of the companies had to hire a call center team with specific skills that the current team didn't have. While company B in the same group was growing its team, it sounds perfectly fitting to move the current call center team from company A to company B and then hire a new team for company A. Some resistance was there, but at the end of the day, they were grateful that they found another job immediately.

In another company I worked for, they moved the data entry team from one department (IT) to another (sales or marketing, I don't remember TBH).

Creative Outsourcing (Turn It into Revenue)

You hired a team based on a market opportunity; then you don't need the team anymore for one reason or another. The easy answer is to fire them all, while there is another opportunity where you can outsource them for the price of their cost.

In one of my previous companies, they hired a big team (200+) for a project, and the project was terminated after a couple of months due to unforeseen political problems. The solution was outsourcing the team to multiple clients, which made it easy to sell with a promise of on-site support (or remote arrangements between the employees' preferences, the client's needs, and the price offered).

It was a win-win situation for everyone!

Offering Career Transition Services (With Dignity)

For those affected by unavoidable cuts, you can at least offer them a decent layoff/exit strategy. For example, offering a career transition service or a good layoff package that leaves them satisfied and covered, and makes it easy to hire them back with minimum impact on the company's image in the market.

In one of my companies, they partnered with a career transition service. This provided the affected employees with the support needed to find new opportunities and conveyed a message of care and respect, extending beyond their tenure with us.

Communication

The means of communicating what is happening is very important, and it differs from one company to another. Also, it is very important to effectively address all the gossip: collect the information through informal channels, and then address it in a formal channel. Uncertainty is fertile soil for gossip, where it can grow easily and can take the team's morale down easily, making the problem bigger by affecting their productivity too. I wrote a follow-up on exactly this: how to communicate during uncertainty and layoffs.

I saw that in three of my former companies. The first one didn't healthily address the situation, so one day, one of my colleagues was going to start her own business (during that uncertain period of layoffs), and she went to the CTO and talked with him about her motives, her idea, etc. and asked for his support. At the end of the meeting they both stood up and shook hands, and she left his office, collected her stuff and left. On the morning of that day, she told me what she was up to; during their conversation in the transparent glass office, everyone saw them shaking hands and smiling, and then she left. Outside the office and between my colleagues, I saw the gossip snowball forming and rolling down the slope, getting bigger and bigger out of nothing!! My colleagues started talking about how bad that CTO was to fire her, that he definitely didn't give her all her rights, and that he definitely did this and that… and it was all because of the ambiguity and uncertainty of the situation that was not addressed.

The second company had an open-door policy (for real!) and had the CEO walking between the team and sitting with them, talking to them, writing down their fears and concerns, and then he addressed it in his meetings. Later on, it became practice: people drop him e-mails, notes, or anything they are concerned about, and he would address it in the monthly/quarterly meetings.

The third company planned the layoff for a decent amount of time, then did the layoff in one shot, and then made it clear that no more layoffs were coming.

A Call to Rethink Traditional Approaches

This journey taught us an invaluable lesson: in times of crisis, companies have the opportunity to affirm their values and commitment to their employees. Organizations can foster a culture of loyalty, resilience, and shared responsibility by choosing alternatives to layoffs.

I encourage leaders to view economic challenges as a catalyst for innovation in people-centered strategies. It's about looking beyond the immediate financial relief layoffs might offer, and considering the long-term benefits of nurturing a committed and motivated workforce.

As we move forward, let us rethink our approach to organizational challenges, always prioritizing the well-being of those who drive our success. Together, we can create a more compassionate and resilient future for all.

References

• All personal experience

Where Taqdim fits

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Originally published on Medium on 23 Apr 2024.