The new business plan must obviously address the cost of labor, both direct and indirect. Once the basic plan has been outlined, the money allocated for labor will be apparent. Management then needs to address the company personnel with an outline of what the impact will be. The first item to put on hold is obviously any planned pay increases and promotions. Perhaps the employees need to absorb a higher percent of their health costs. There may be employees near retirement, and early retirement options can be offered. Identify those employees from your staffing review who will be given a permanent layoff.
Any permanent plant or division closings that have been identified in the plan need to be conveyed at this time with the timeline for these events clearly outlined.
Does the company have a well-defined termination policy in the company handbook? Surprisingly, many smaller companies don’t have an up-to-date policy. Be sure you have a clear policy on what an employee given a permanent layoff is entitled to. Not untypical is to provide one or two weeks of pay for every year of employment.
Handle all the permanent layoffs on the same day. What’s the best day? In my own experience, Mondays are best. That clears the air early in the week and gives the remaining employees the rest of the week to adjust to the impact. Fridays, I think, are the worst. It casts a pall over the following weekend without the time for the remaining people to discuss the consequences on their department. It’s also tough on the laid-off worker.
Don’t hand out the “pink slips!" Managers need to talk individually to all those being permanently let go. It’s the right thing to do. It is hard to do, but people deserve that one courtesy. Have all their paychecks and other information from Human Resources ready to give them at this time. It is best to have a witness with you at the time of the discussions so there can be no unfounded repercussions. Answer any questions they may have about what they may take with them and other issues. Have clear company guidelines for this.
Don’t walk them out the door through the department with a box in their hands! That is too demeaning. Give them some time to part with the friends they have made in the department. That goes for shop and office personnel. Obviously, in the shop, schedules must be maintained, so disruptions have to be minimized. Have the meeting in the morning, and let them leave by lunch time. Some may storm out immediately – so be it. Remember, memories of this day will linger, and one never knows what the next bend in the road will bring.