If you Must Downsize, Ask this Key Question First

“For some of the hardest hit organizations in the most pandemic-affected industries, the question is simple: is there a way I can reduce the number of people I have to lay off to ensure that I can keep as much top talent as possible?”

John Morgan, EVP & COO, Americas, LHH Tweet

After 15 years in leadership at the world’s leading provider of outplacement services, I have identified two inescapable truths about layoffs.

First, layoffs are sometimes a necessity for organizations that need to transform the way they do business, reduce costs, incorporate new technology, or optimize the use of their talent.

And second, some of the world’s most successful organizations are responding to these very same challenges while minimizing layoffs.

Why would a leading provider of outplacement services want to highlight strategies to minimize the use of layoffs in some situations? It’s a good question that I am facing more and more in my conversations with client organizations.

I tell our clients that one of the advantages of being an industry leader is that it allows us to see the emerging trends before a lot of other players. In this instance, employers are rethinking downsizing strategies to include not only a well-thought-out transition plan that provides outplacement, but also identifies alternatives that can minimize the impact to the workforce.

One thing is certain: post-pandemic, we need to reimagine a better approach to layoffs that not only provides a framework of support to employees through this crisis, but also provides a framework for organizations to build a highly skilled workforce that’s prepared for the future.

The new reality around layoffs

When organizations transform or economies deteriorate, layoffs are an inevitable result. Today, we see some of the world’s biggest companies that found themselves on the wrong side of the “essential services” equation have seen their prospects disappear overnight.

Companies in the retail, arts and culture, airline, hospitality, and tourism industries have been forced to undertake swift and severe reductions in costs that inevitably resulted in widespread layoffs.

But not every company is facing the same drastic economic pressures. Many others have seen their business models profoundly disrupted, but not decimated. These organizations need to transform what they do, how they do it, and the people they employ.

In the past, outplacement services have played an important role in helping organizations manage workforce transformations to produce the best possible outcomes for both employer and employee. However, during the 2009 financial crisis many companies clearly cut too aggressively, making recovery painfully slow. Today, we see many organizations have learned from this experience and are adopting a strategy that balances cost cutting to survive today and investing to grow in the future, positioning themselves for success after recovery.

Most of the CEOs or CHROs I talk with already know that this is the best way forward.

The global skills shortage that existed pre-pandemic has not disappeared with the arrival of COVID-19. Shedding people now in the hopes that you can replace them with employees better suited to the future may not be a viable strategy.

Organizations may also neglect to consider the costs of layoffs that go beyond expenditures on severance and separation. In a world where harsh verdicts come swiftly from traditional and social media, a poorly communicated or poorly managed layoff can do irreparable harm to a company’s relationships with its employees and customers.

The key question all business leaders need to ask themselves

For organizations faced with a need to downsize, the question is simple: can we reduce the number of layoffs and, instead, build a workforce of the future through reskilling, upskilling and redeployment?

The best news I have for organizations facing this question is that there is a win-win scenario here.

The holistic approach to downsizings

Applying the best practices of industry leaders in outplacement, and successful companies that have a reputation for a forward-looking approach to downsizing, there are three key best practices that must be undertaken as part of workforce planning before layoffs are triggered.

  1. Assessment. Large organizations often lack detailed information about the capabilities of the people they employ. They know who they are, a basic job description and some details on performance. But they don’t have a complete picture of all the skills their people possess. This is a blind spot. It’s also an easily reparable deficit. Assessment instruments to evaluate workforce skills can quickly create a map of your organization’s current talent capabilities and where you may need new or different people.
  2. Analytics. Assessment, on its own, will provide an excellent picture of the here and now. However, to understand future skill needs, you want to do a deeper analytical dive. This involves an intensive analysis of current job descriptions and a diagnostic to determine which are most likely to be affected by advances in technology, specifically what roles will disappear, what roles will be augmented, and what new roles will be added. Identifying those jobs that can be performed by machines is essential. But it’s about more than that. This analysis can then be used to identify current employees who have the attitude and the aptitude to transition, with an investment in reskilling or upskilling, into future-fit roles within the organization.
  3. Redeployment. If you have successfully undertaken the first two stages, then you’re ready to consider a more advanced stage. While some layoffs will still be required, you can proceed with confidence knowing you’ve done everything you can to minimize the impact. Many of our clients are finding that with some upfront assessment and talent mapping, they are now positioned to efficiently reskill and redeploy employees rather than lay them off. That not only quickly and cost-effectively fills talent holes but saves on severance and separation benefits. For those layoffs that prove impossible to avoid, you’ll want to offer the individuals outplacement services to ensure their transition into a new position is smooth. That will help contain severance and separation costs, limit any damage to employer brand, and get employees back to work faster.

It’s important to note that many of our clients who invest in assessment and analytics ultimately find they can significantly reduce the number of people they are letting go. Armed with relevant data, they have a complete picture of all employees and future roles they may be able to fill. This ensures that organizations are bringing out the most value out of their people, both for now and well into the future, while minimizing severance and separation costs.

Business leaders have come to understand that drastic times require drastic actions. In the past, that has meant swift and sometimes significant layoffs to address financial pressures.

However, during the unprecedented economic challenges we now face, it’s time we rethink our downsizing playbook.

That will mean reimagining our approach based on assessments, analytics, business intelligence and redeployment. This is the future of workforce planning and there is no better time to get with the program than now.

OUTPLACEMENT: Taking Care of Your Employees that are Terminated Due to Change

I started in the Outplacement business here in the Philippines back in 2001. Until today, I still get the surprised look when people ask me what I do. “You mean companies engage your services to help terminated employees? They already received the severance package mandated by law.” Yes, companies in the Philippines have been using Outplacement services.

It was not always this way. In the early years, only the multinational companies used Outplacement because it was required by corporate head office especially those based in the US and Europe. Slowly word got around of the benefits of Outplacement. HR leaders who have implemented Outplacement were the biggest change agents as they brought this mind-set when they transferred to other companies. Around 2010, we had our first totally Filipino company to use this service. Today, selected Filipino companies use Outplacement.

What is Outplacement? Outplacement is a structured approach towards helping terminated employees move on to their next career paid by the company initiating the change. It is a way for companies to show that they care for these employees as part of their “malasakit” and corporate social responsibility.

In the age of digital disruption and business transformation, companies have to constantly change business models just to survive. Many large companies are now going through very difficult times. Change is a must and no longer an option. Unfortunately, some of these changes will include loyal, hardworking employees to lose their job. We must not forget that; 

These employees did nothing wrong. It is not their fault that they are laid-off.”

Outplacement has benefits to both the Company and to the impacted employee. The most significant for the Company is that it supports employee engagement. By taking care of the employees that leave you take care of the employees that stay. We have plenty of examples of terminated employees sending back thank you notes to their former Company. Messages that warms the heart and gives strength to the remaining employees to say; “This is the kind of Company I would like to work for. If it happens to me, they will also support my transition.” Other benefits to the Company are protection of the corporate brand especially in social media.

The terminated employee will feel at a loss what to do next, what to say to people and how to behave. The Outplacement process gives the employee the framework he/she badly needs. The period of transition is also the time to make a choice. Shall I find another job, start a business, retire, immigrate, study, etc. Outplacement helps the employee to stand back and perform a rational career decision. Finally, Outplacement has shown that those in the program find a job 50% faster.

In the age of digital disruption, companies need to be quick in making a decision and execute the changes without hesitation to remain competitive. Unfortunately, people issues have often delayed the process. Best practices have shown that by adopting Outplacement as part of the change, companies are more agile while doing the right thing for the employees especially those whose jobs have disappeared.

LHH helps individuals in building better careers, better leaders and better businesses.

About the Author

Vicente Kilayko LHH Philippines

Vicente KILAYKO - Director, LHH Philippines

Vicente “Binky” Kilayko is a Director of Lee Hecht Harrison (LHH) Philippines. LHH has more than 7,800 customers around the world and we are the global partner to 50% of the Fortune 1000 organizations. For over 20 years, we have helped companies in the Philippines reorganize by taking care of employees that are laid-off find their next career.