Big Tech’s Job Cuts Are a Lesson in How Not to Do Layoffs
There’s no good way to let staff go. But recent layoffs at tech giants show that there certainly is a wrong way to do it.
When Twitter recently let go of about 50 per cent of its workforce in a mass firing campaign, former employees and experts decried the approach. Many of the staff impacted didn’t learn about their termination in writing or from HR; they discovered they were let go when they couldn’t access their company email. Others, who had been vocally critical of new CEO, Elon Musk’s direction for the company, were outright fired on the social-media platform. In the aftermath, several key executives resigned.
Twitter is an extreme example of how not to do layoffs, but many companies fail to provide the necessary transparency and resources to properly manage the situation. Leading with empathy and clarity can go a long way to help ease workers impacted by downsizing—and keep remaining employees feeling respected.
The harm in being inhumane
The ramifications of handling layoffs poorly can have wide-reaching consequences for businesses. Research has found that a cut of just one per cent of a workforce can increase voluntary departures of over 30 per cent in the following year—and it’s often because people don’t trust that more cuts aren’t coming because leadership has not done a good job of communicating a long term plan or strategy.
An unthoughtful layoff approach can also contribute to poor workplace culture due to the strain it puts on remaining employees. Those still left at Twitter, for example, have reported that the loss of so many engineers has put immense pressure on remaining staff, who struggled to keep the site functioning with reduced resources. Another study, out of Stockholm University and the University of Canterbury, found that after a company layoff survivors experienced a 41 per cent decline in job satisfaction and a 20 per cent decline in job performance.
There’s also always the risk that scorned employees will get litigious. But David Zweig, a professor of organizational behaviour and human resources management at University of Toronto, says if people are treated fairly and with respect during downsizing—being very clear about the reasons for the cuts can go a long way towards making people feel valued—they’ll reciprocate that behaviour in their response. “They are much less likely to engage in things like lawsuits or even physical or emotional deviance that can take place with people that really feel unfairly treated,” he says.
Businesses should, however, make sure they are familiar with—and follow—laws regarding layoffs or they could run into trouble regardless. Twitter is now facing a potential class-action lawsuit because their workforce in California was laid off without the mandatory 60-day warning. The length of working notice required depends on jurisdiction: In Ontario, for example, an employee with eight or more years of experience requires eight weeks of notice, in writing, of the termination of their job contract.
How to lay off staff with empathy
Handling layoffs with respect actually starts well before a downsizing period. Companies should be careful to develop a positive workplace culture where everyone feels supported so that when difficult times arise, employees are better equipped to weather the storm. “Codify your company’s purpose and values so that everyone understands the common goals of the organization,” says Jenn Lim, CEO of Delivering Happiness and bestselling author of Beyond Happiness. If and when downsizing occurs, leaders should make sure that those cuts are aligned with those same goals. That way, team members are more likely to be understanding of why layoffs had to happen.
“One of my clients, National Bank Capital’s CEO, Joe Camberato, did such a good job of fostering empathy and respect that an employee actually brought him coffee and donuts the day after layoffs,” says Lim. They were eventually able to bring the staff they had let go back when the business stabilized, and now they’re growing as one of the top employers in their region.
Having a plan in place that can help staff transition out of jobs more smoothly will also go a long way to fostering a good relationship with departing employees. “The past few years were difficult, and layoffs are affecting many people’s mental and even physical health more intensely,” says Lim. Extending health insurance, like Facebook did when it laid off 11,000 employees earlier this month, is one way companies can help. Other ways to ease the transition can include providing job search tools, personalized reference letters and emergency financial aid for employees in need.
“Giving outgoing staff the information about things like severance, answering questions that are immediately going to pop up, and giving them the resources that they need to recover is really, really important,” says Zweig. “All of those things help to mitigate the negative impacts of being laid off.”