This paper examines best practices for managing employee layoffs, with a focus on the dismissal meeting process. Drawing on human resource management literature, it identifies three strategies managers can use to cope with the negative emotions associated with separations: offering generous severance packages, providing outplacement services, and offering psychological counseling. The paper outlines a step-by-step procedure for conducting dismissal meetings, evaluates appropriate compensation for separated employees, and proposes a sample disbursement timeline. It concludes by assessing three ways that improperly handled layoffs can negatively affect the organization, including reputational damage, increased survivor stress, and higher unplanned turnover.
One of the inevitable consequences of the human resource management function is the periodic need to lay off workers as a result of downsizing, termination for cause, or other reasons. A growing body of research confirms, however, that jobs mean more to most people than just a source of income. When jobs are lost, people experience a wide range of negative emotions and reactions that can adversely affect their health or provoke other undesirable responses, including violent reactions. Clearly, laying people off requires a careful, step-by-step approach that takes these and other issues into account in order to facilitate the process and achieve an optimal outcome for everyone involved.
To this end, this paper reviews the relevant literature to identify three ways managers can cope with the negative emotions associated with the separation experience and outlines a step-by-step process for conducting the dismissal meeting. An evaluation of the compensation a company may provide to the separated employee is followed by a proposed timeline for the disbursement of that compensation. Finally, an assessment of three ways a layoff may affect the company is provided before the conclusion.
For many people, jobs mean far more than just a paycheck. Jobs often represent security, status, and identity, and when people are laid off for whatever reason, there is a concomitant loss of these important aspects of the human condition that invariably produces negative consequences (Stewart & Brown, 2012). Moreover, the process of laying people off can have adverse effects on the surviving employees as well as on the managers who carry out the terminations. In this regard, Lin (2012) emphasizes that "it seems downsizing is a two-bladed sword — employees laid off along with managers laying others off feel distress" (p. 131). Formulating effective strategies for helping both employees and managers deal with layoffs is therefore a critical aspect of human resource management (Lin, 2012).
Three ways of coping with the negative emotions associated with employee layoffs include the following:
Many authorities agree that helping terminated employees stay focused on their job search while avoiding the negative fallout that can result from being laid off can improve their chances of finding new employment while minimizing the anxiety and grief that often accompany the process (Lin, 2012).
Although every dismissal meeting will be unique in some respects, there are negative reactions that can reasonably be anticipated in virtually any such meeting. An important point made by Stewart and Brown (2012) is the potential for reactions that may escalate out of control. According to these authorities, "Outplacement services can help alleviate some of the anxiety associated with job loss. Nevertheless, the actual event in which a person is told that his or her employment is being terminated is highly stressful" (Stewart & Brown, 2012, p. 276). There are several step-by-step procedures that lay-off managers can follow to help minimize these negative outcomes.
One key recommendation is to conduct the meeting face-to-face and to avoid scheduling dismissal meetings on Fridays. According to Stewart and Brown (2012), "Most experts agree that employees should not be dismissed on a Friday. A late-week dismissal leaves the terminated employee with two days of time before actions can be taken to recover from the bad news" (p. 277). By contrast, dismissals conducted earlier in the week give dismissed employees more time to regroup and begin their job searches in earnest (Stewart & Brown, 2012).
Most authorities also agree that it is useful to have a third party present during the dismissal meeting to serve as a witness, and to notify company security in advance that a termination is taking place. This ensures that sensitive materials are recovered and that the potential for violence is minimized (Stewart & Brown, 2012). It is also important to be forthright in communicating the bad news to the terminated employee and to avoid vacillating about the termination decision. In addition, Stewart and Brown note that the due process followed in most organizations means that employees will already know they are being terminated and why; accordingly, they recommend keeping the dismissal meeting brief.
Stewart and Brown (2012) also cite the need to provide the terminated employee with the opportunity to vent following the official notification of their layoff, as this is a natural reaction. An important caveat, however, is to avoid engaging the laid-off employee in debate about the reasons for the termination. Rather, the manager should allow the employee the chance to speak their mind and communicate their perspective. Finally, Stewart and Brown recommend providing the laid-off worker with a written summary of the meeting, along with guidance concerning the return of company equipment, the last day of employment, and how to continue any available company benefits such as health insurance.
If employees are separated for cause — such as theft or violence toward coworkers — it is likely that no compensation will be offered (Stewart & Brown, 2012). In other cases, the company may provide separated employees with compensation, particularly when the terminated employee agrees to forgo any legal action resulting from the separation (Stewart & Brown, 2012).
The compensation offered to employees at the time of termination is intended to help them meet living expenses during their search for new employment (Stewart & Brown, 2012). The amount of compensation will therefore depend on the employee's pay scale, the potential for reemployment in the local community, and the employer's financial ability to provide such compensation. A representative disbursement timeline for a hypothetical employee earning $500 per week with good prospects for locating a new job within nine weeks is set forth in Table 1 below.
"Severance evaluation and sample weekly payment schedule"
"Reputational, stress, and turnover impacts on organization"
The research showed that three ways lay-off managers can cope with the negative emotions associated with the separation experience include providing laid-off employees with severance packages, providing outplacement services to help laid-off workers find new jobs, and offering psychological counseling to help them deal with grief and anxiety over their job loss. The research also showed that there are important steps lay-off managers should follow during dismissal meetings, including conducting the meetings face-to-face with a third party present and alerting company security so that arrangements can be made to ensure safety and the return of sensitive company equipment and information.
You’re 75% through this paper. Sign up to read the remaining 2 sections.
Sign Up Now — Instant Access Already a member? Log inAlways verify citation format against your institution’s current style guide requirements.