Effective HRM Strategies to Smoothen and Sweeten the Downsizing and the Layoff Process

Exits, Whether Voluntary Or Involuntary, are Inevitable

Organizations let go of employees for a variety of reasons. While voluntary exits or those employees who leave organizations to seek greener pastures elsewhere are at one of the spectrum in terms of process and the HR (Human Resource) strategies used, involuntary exits where employees are made to resign for indiscipline and violation of company policies as well as are downsized and laid off represent the other end of the spectrum in terms of the manner and the ways in which such exits are handled.

Indeed, given the fact that organizations routinely downsize employees on economic and business grounds means that HR Managers must devise innovative and inventive strategies when handling such exits.

Handling Mass Layoffs and Downsizing

For instance, when organizations downsize for business reasons such as the economic conditions not being amenable to the firm and hence, they need to cut costs and let go of employees, such layoffs must be handled with care and caution lest improper and insensitive handling of such exits creates perception and legal problems for the organizations.

Indeed, the fact that downsizing and layoffs without sufficient grounds and reasons can lead to such employees suing the organizations as well as the media reporting on such events thereby leading to legal problems means that organizations have to have effective strategies to deal with such layoffs.

Botched up Exits can lead to Legal and Reputational Problems

As the recent cases of layoffs and firing of thousands of employees in the Indian IT (Information Technology) sector shows, layoffs must be handled properly since such employees have approached the labor commissioners and the courts alleging that they were laid off in a very rude and improper manner in addition to them asserting that there were not enough grounds to fire them.

The examples of Infosys, Tech Mahindra, and Cognizant Technologies shows, the legal route is much preferred whenever there are mass layoffs in addition to negative media coverage that can lead to the reputation and image of the organization taking a hit.

Some Strategies for Avoiding Such Problems

Thus, HR managers must establish sufficient grounds for layoffs and downsizing in conjunction with the business units before they embark on downsizing. This can take the form of intimating the employees who are identified for downsizing in advance and place them on notice so that the allegations of sudden and abrupt layoffs are not leveled against the organizations.

Apart from this, the employees who are to be laid off must be provided with sufficient monetary “handshakes” wherein a few months salary or a onetime severance allowance is given to them. Indeed, many countries have such explicit rule where it is legally mandated that employees being laid off for business and economic reasons ought to be provided with some benefit.

Also, the exit process must be handled with care and caution so that charges of insensitivity and indifference are not leveled against the organizations.

For instance, in the same examples of the Indian IT sector, there were many stories in the so-called “pink papers” or the business and economic newspapers about the HR managers terminating the services of employees in a rude and unprofessional manner.

The fact that some of these organizations did not even bother to talk to the employees in a polite manner was highlighted thereby tarnishing the reputations of the organizations.

Hiring and Firing are Part of the Game

Having said that, we are not making a case for an emotional sendoff or a lengthy and tear-jerking separation and exits. Organizations and businesses exist for making profits, and hence, there is nothing particularly different about periodic downsizing and then recruiting in large numbers. Indeed, as Corporate America shows us, hiring and firing are accepted as a fact of life by both organizations and professionals, and hence, there should not be any confusion about such processes.

What we are suggesting and recommending, however, is the professional handling of exits whether voluntary or involuntary.

After all, the employees have given their best to the organizations, and it is but natural that they expect some consideration for their services.

Thus, the approach should be one where neither the organizations nor the employees who are being laid off get the “short end of the stick” and hence, there must be an acceptance of the inevitability of downsizing from all stakeholders.

Professional Firms that Handle the Downsizing Process

This is the reason why some organizations in the United States hire professional and third-party agencies whose sole job is to handle the downsizing process.

These agencies are staffed with experts who are adept at handling the downsizing process, and their services include smoothening and sweetening the exit process through professional handling.

For instance, some of these agencies provide the downsized employees access to office spaces where they can utilize the facilities for searching for other jobs without having to find such facilities on their own.

Moreover, such agencies also address the employees who are to be laid off in Town Halls and other gatherings where the business case for the exits is made and where the terms and benefits of severance are explained.

Thus, we recommend firms in India and elsewhere as well to hire such agencies for handling exits in case their in-house HR staff finds itself inadequate to the task.

To conclude, letting go of any person whether in a professional or a personal relationship is always difficult and hence, such severance must be handled smoothly and sweetly lest they do not create additional problems for all parties.


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Human Resource Management