Tips for Tough Conversations About Layoffs and Furloughs

Eric Mochnacz
April 2, 2020

Over the past two weeks, businesses around the world braced for the impact of the coronavirus outbreak.  Businesses were required to move quickly in workforce reductions through layoff and furlough, with unemployment claims skyrocketing. On the other hand, some businesses had the capability and cashflow to take a more measured approach in making difficult workforce decisions.  

They sought HR support on how they could keep the lights on in their business while still keeping their people employed, even if in a different capacity.  But, with at least another month of anticipated social distancing measures, employers may begin to recognize the reality of the situation and find themselves in the position where they need to layoff or furlough their employees.  

Last week, Red Clover provided guidance on how to approach your decision to restructure and the importance of developing a clear communication plan for when it’s time to start speaking with your workforce about their employment future.

Here are some tips and HR solutions on how you can effectively manage tough conversations with your people when you have reached the point where you need to layoff or furlough.  

A note –

Generally speaking, a furlough maintains the employment relationship, but the employees are not expected to report to work, therefore they don’t get paid.  The employee is eligible to apply for unemployment benefits. The employer may also maintain any health benefits (plan specific, of course) for the furloughed employees, as demonstrated by Casper Mattress.  Traditionally, the decision to furlough employees is time-bound, and when informing the employee of the furlough, the employer indicates when they expect to be able to return to “business as usual” and reinstate their full employment.

A lay off generally means you are terminating the employee relationship permanently, including any health benefits the employee receives.  The employee is eligible to apply for unemployment insurance payments.  

Organize and Prepare

We will work under the assumption that you have done your due diligence in assessing the financial situation of your business and the decision to reduce your workforce, whether it be a portion of your headcount or the entirety of it.  Since these decisions are intentional, how you deliver the message to the employee should also be intentional.  

These are serious conversations that will have a long-term impact on the individual and your business’s reputation and employer brand.  If leadership approaches the conversation without the appropriate preparation, it could be misinterpreted as if the organization doesn’t care.  To prepare and organize for a furlough or layoff meeting demonstrates you are treating the decision (and the employee) with the appropriate amount of respect.  

Anticipate any practical questions the employee may have about health benefits, unemployment, and potential for rehire and have the answers readily available.  If you receive any unexpected questions that are pertinent to the employee, provide a timeline as to when you will get back to them. If there are any documents the employee needs to sign, have them in the meeting and be able to thoroughly explain what they are signing.  

Be Open, Honest and Direct

It is crucial in these circumstances when the discussion ends that the employee is clear about their future with the company.  When delivering the messaging and informing the person they are laid off or furloughed, the person delivering the message needs to be clear and direct.  It may be blunt, but even in normal circumstances, our recommendation is that you are clear with the individual that it is their last day. Beating around the bush accomplishes nothing and could lead to confusion for the person sitting across from you.  

Also, when considering message delivery, you need a skilled communicator who is comfortable with delivering clear, direct messages.  Leadership may want to delegate this to their managers, but if you have a manager who fumbles with honest communication or cannot be empathetic while being direct (see below), then it may mean that senior leadership takes the responsibility for this one.  In fact, to keep communication consistent, when embarking on this road, the organization should identify one person who will be the point person for layoff and furlough discussions, as well as questions.   

Demonstrate Empathy

I recently received a request to be quoted in a human resources article, and one of the questions posed to me was “Should employers demonstrate more empathy at this time when they are laying off employees?”  My first response was that every lay off should be treated with empathy. Telling someone they are no longer employed is jarring in the most normal of circumstances, but when things are so unsure for everyone, it can be even more disruptive.  

It’s important that when delivering the message, you do so in a way that demonstrates you can relate to the feelings of the person sitting across from you.  If they have an intense emotional reaction, you aren’t expected to react in kind, but if you want to demonstrate empathy, you give them the space to express those feelings. 

It’s possible that your employees may react in anger, with tears, or an unnatural sense of calm.  It’s important that if they do react in a way that’s not ideal or unexpected, you recognize the emotional component of losing one’s job and to not take it personally as the messenger.  

Being empathetic doesn’t mean allowing yourself to be swayed in your decision because of someone’s emotional reaction.  If you’ve made the decision on sound financial footing and with an even-handed rationale, be confident going into the meeting that you are making the best decision for the company.  

You can feel for the person who reminds you that they are the sole provider for their family, but empathy doesn’t require you change your position because you feel for the person.  It means you acknowledge their feelings and allow them to express them, while remaining steadfast in your decision.  

This should go without saying, but this type of notification should be done in-person.  Obviously, with social distancing guidelines, that may not be possible. With that mind, we recommend delivering this message over a phone call.  Web call is also an option, but we recommend only doing this if the technology is top notch to avoid sound issues, delays, or the potential for video freeze. 

Sending a generic email is never best practice, even if you’re attempting to be expedient with your time.  And speaking of time, these conversations deserve your undivided time and attention. Allotting ten minute time slots for these conversations isn’t advisable, as you want to provide the employee time to process and ask questions.

Be Flexible

Although we are mainly discussing layoff and furloughs, your organization may find it financially viable to either reclassify your workforce from salary exempt to hourly non-exempt or enforce a reduction in hours for your hourly non-exempt employees.  We advise doing this with the guidance of a skilled, strategic HR firm and in consultation with an employment lawyer.  

Either way,  if you decide to go this route, it’s possible that some employees may find it more reasonable to resign from their position and collect unemployment.  If this ultimately helps your company manage its cash flow, consider if you’re in the position to allow the person to leave their position and choose not to contest their claim if they file for unemployment.  

Another way you can be flexible when furloughing or laying off is acknowledging everyone is doing their best to say safe and “flatten the curve.”  It’s possible your employees have brought company supplies and technology home with them if you implemented temporary remote measures. Although you want to get company assets back, and you take a risk keeping it in the possession of a recently laid off employee,  it may be inappropriate to require an employee take non-essential travel and put themselves at risk so you can get the company laptop back.  

Recognizing the reality of the situation, you may need to relax your return policy.  However, all employers should still take measures to end any employee access at the time of termination.  If you are concerned about the safety and security of business property in the possession of ex-employees, you need to be proactive and develop a method by which you will reclaim these items.  

Remember Your Retained Workforce

For some companies, they aren’t in the position where they need to let go of all their employees.  Some may be in the position to keep essential employees onboard as they weather the storm and prepare for when the business can operate at full capacity again.  But, with the layoffs and furloughs of their colleagues, your retained workforce needs attention and support as well. More than likely, they are taking on additional work that was the responsibility of your laid off employees.  

Also, if you’ve been transparent and upfront throughout this entire process, your remaining team members may begin thinking their job is on the line next.  Most people are able to recognize that a “first round” of layoffs and furloughs may be just the beginning. So, to the extent you are able, keep the remaining employees informed about the future of the company and their individual futures.  Never make promises, but be able to assuage any fears of your retained workforce. 

Employers also have a responsibility to work to keep these retained employees engaged and committed to the company.  Yes, they are most likely grateful to still be gainfully employed, but they shouldn’t be taken for granted. These are tough times for everyone, and treating employees like they should be grateful to still have a job is never a good approach to people management.  

Stay Informed

Ultimately, you need to make the decision that is best for the long-term viability of your company.  However, as you work to determine the impact coronavirus has on your business and your employment decisions, it is essential you remain updated on legislation as it passes and as the Department of Labor clarifies lingering questions.  For example, the Families First Coronavirus Response Act outlines employer responsibilities for workers impacted directly by COVID-19.  As you make employment decisions, you always want to make sure they are legal.

No company should attempt to restructure their workforce alone and without the proper guidance.  Red Clover is uniquely equipped to assist businesses develop a sound workforce strategy during this time of upheaval.  Reach out to learn more.  

Written by Eric Mochnacz

Learn more about Eric on LinkedIn.

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