Experts Share Their Top Advice for Business Owners Facing Layoffs
COVID-19 Resources

10 Experts Share Their Top Advice for Business Owners Facing Layoffs

Mar 31, 2020

This article is part of Raydiant’s Coronavirus Small Business Resource Center which aims to provide actionable insights, ideas, and resources to business owners struggling due to the current Coronavirus outbreak. 

We’ve collaborated with different executives, business owners, and thought leaders to crowdsource insights and expertise that will ensure this content is as actionable, timely, and helpful as possible. 

If you are a business owner looking for a specific question to be answered or if you an expert and would like to have your insights included, please email Emilia@Raydiant.com.  

If a business owner needs to lay employees off due to Coronavirus, what advice would you have for them?

Josh Bersin, Global Industry Analyst and Dean of the Josh Bersin Academy

Josh BersinIt’s very painful and difficult to lay people off. Not only does it hurt the individuals involved, but the survivors also suffer (research shows a 20% reduction in productivity for those who remain). I would suggest a few things to consider:

Consider pay cuts or furloughs before layoffs, you can make other decisions later.

Make sure people who lose their jobs get a generous exit package – everyone is under tremendous stress.

Treat everyone equally and fairly – workers who leave represent your brand and may become customers later.

Make a company announcement and don’t keep this a secret – people want to know what’s going on.

If you’re a small company, give everyone a “virtual hug” – the fact that you care goes a long way.

Lauren Blair, Lawyer and Writer for FreeAdvice.com

Lauren BlairEmployers must be careful that reductions in force (RIF), commonly called layoffs, don’t turn into employment discrimination claims. When determining who to lay off, employers must use non-discriminatory, objective, legitimate business criteria.

The selection process should include criteria of the performance, skills and abilities needed to maintain the business. Then, the employer should document which employees’ performance, skills, and abilities will or won’t be needed and why.

As part of any RIF, employers must conduct a disparate impact analysis to ensure the selection doesn’t create a disparate impact on employees in a protected class.

When feasible, a key strategy is to provide severance pay in exchange for a signed agreement not to sue the employer. If severance is impracticable, provide reference letters. At a minimum, let employees know their eligibility for unemployment benefits.

Finally, tone is important. Delivering news of a RIF with honesty and compassion helps employees move forward.

William Tincup, President, RecruitingDaily

William TincupIn theory, a business is a family. Most businesses are run with that mindset be it spoken or not. So, my best advice is that we’re going to get through this break in business continuity like we’ll come together again (hopefully sooner rather than later) like a family would. We need an extra dose of empathy with every business decision we make and, clearly, it’s not a normal time so normal conventions of business wisdom should be shelved. My parting advice for business owners is to think about treating employees like you’d prefer to be treated (if roles were reversed). 

Angela Dunaway, Sr. HR Consultant for strategic HR Inc.

Angela DunawayReductions in force (RIF) are difficult, but sometimes unavoidable in times of financial crisis, mergers, acquisitions, loss of product demand and other scenarios. If you determine that your organization needs to move forward with a RIF, first consider federal and state regulations such as the WARN Act, ADEA and OWBPA to ensure compliance and avoid litigation risk. Utilize an objective and fair process for selecting employees to layoff (temporary or permanent) or furlough (anticipates a return to work within 120 days). Position criticality, seniority and performance are solid criteria to make unbiased decisions and avoid adverse or disparate impact which is “employment practices that appear neutral but have a discriminatory effect on a protected group.” Determine severance packages and benefit coverage keeping in mind ERISA requirements. And lastly, train supervisors/managers on legally defendable processes for selection of displaced workers and the importance of performance documentation and record keeping.

Orin C. Davis, Ph.D., Principal Investigator of the Quality of Life Laboratory

Orin C. DavisThe number one move I recommend is to tap your network and see who is in a good position to hire or place your departing talent. Offering those connections and references when having to deliver the bad news gives the cloud a silver lining, and the employee is at least leaving with some idea of what’s next.

This is going to be very rough news both to give and to hear, so it’s important that the employees leave with a clear understanding that the layoff is not in any way related to their competence. One of the best ways to drive this home is to provide a letter of reference (or at least, offer to be a positive reference, and provide a few examples of the good things you are planning to say).

If at all possible, provide some severance, as well. Even a day’s wages or some things to take home is better than letting people walk away empty-handed.

Diana George, President, By George HR Solutions

Diana GeorgeHere are a few tips during this time that will help eliminate the stress of the situation:

Have a strategy –Ask yourself do we need to lay off everyone, or is it necessary to have a few staff in place that can continue to do necessary while the business is closed. Have a plan in place to be able to bring staff back to work as soon as possible.

Communicate – Be transparent even if you don’t have answers, communicate to staff that you understand their concerns and are working on solutions and answers for them. If you don’t communicate with them fear takes over.

Resources – Do the research and have resources for employees that you can send them to. (unemployment, food banks, etc.)

Follow-up – Check in with staff to make sure they are okay.

Chad Hill, CMO of Hill and Ponton Law

Chad HillLaying off employees due to coronavirus could be the least option a business owner could do, considering the fact that the employees will double their household expenses because of the lockdown. However, since some small businesses are considering closing their operations for good, affected employees are on the ground. The business owner must have open communication with his/her employees in every aspect that the business is facing so that the employee could have an understanding of how a decision is made. Letting the employee know that the status of the company could give them extra preparation for the next days for them to figure out to still provide for their own households. Just make sure that once the company has decided to lay off employees, corresponding pay should be ready since employees will have nothing to expect but the time will be allotted to look for other ways to earn.

Bradley Steven, Founder of LLC Formations

Bradley StevenWith the extended epidemic crisis, companies are laying off their employees with or without any further notice. The imposed lockdown by the state showed an uptick in the unemployment activities related to the coronavirus.

The state government also holds the policy of paid leaves for the ones that are affected by the virus, and for the rest, it has asked companies to let their employees work from home. So if any business, small or big, needs to lay off its employees, they should check for the hard and fast rules associated with it.

If in case employers don’t lay off the sick employees with paid leaves, employees should directly ask for it with the eligible applications, and the rest should work from home to reduce the transmission of the virus.

Lauren Milligan, Career Advancement Coach, ResuMAYDAY

Lauren MilliganMake sure your management team sticks to consistent messaging. You can’t have one manager saying this is permanent, and another manager saying to wait it out a few weeks. Everyone has to be on the same page, no matter the message.

Offer outplacement services to the displaced employees. That could include a new resume, interview coaching, an updated LinkedIn profile. These are stressful times. Not offering a lifeline will make a bad situation worse.

Explain to these employees any kind of preventative steps you considered before the layoff. Remote working? Cutting hours? Changing functions? Your employees want to know that you didn’t immediately opt for the nuclear option.

Assure your employees that you’ll provide a great reference. Let the employee know their good traits that you’ll be happy to share with potential employers.

Scott M. Behren Esq., Attorney, Behren Law Firm

Scott M. Behren, Esq.DO ensure compliance with new Corona Family First Laws extending FMLA and paid sick leave.

DO take into account disabilities and other protected traits under Title VII and local discrimination laws.

DON’T attempt to contest unemployment claims.

DO attempt to provide some severance with a general release. At least don’t have to worry about employees suing later.

DO pay whatever wages, commissions and accrued PTO owed upon termination.

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