Layoffs Last Resort But if you must, keep these keys in mind

May 15, 2009 07:00 PM
Retraining existing employees and hiring replacements when business recovers will have their own set of costs.

It's something no manager likes to think about: Laying off employees can be necessary to keep the business afloat in tough financial times.

Even so, you'll want to move layoffs far down the list of the cost-cutting measures you employ for riding out a financial downturn, says Don Tyler of Tyler and Associates in Clarks Hill, Ind.

"In some cases, those affected will be neighbors or people you've known for a long time,” Tyler says. "And if you don't handle the layoff process just right, it can shake the confidence of remaining employees and affect the reputation of your business in your community.”

Other considerations come into play as well. "Someone else will have to do the work of the people you let go,”

Tyler says. "Once business picks up again, you'll likely have to hire and train new employees to replace employees laid off now. Both of those carry their own costs.”

For these reasons, Tyler advises pushing the pencil hard before opting for layoffs. "Do a thorough review of production costs to find any savings,” he says.

"You might find employees are taking too many trips into town and using too much gas. Maybe you have equipment that you don't use and could sell to generate additional cash flow. When employees see you taking these actions, they know you're doing everything you can.”

If you determine layoffs are absolutely necessary to ensure the long-term survival of the business, Tyler suggests the following:

Use objective and measurable criteria for determining who will be let go. Start by reviewing employee performance reviews, along with productivity records for various departments on the dairy. "The goal here should be to determine where you can
reduce staff without sacrificing production efficiency,” Tyler says.

Document the need for the layoffs. This will come in handy if a former employee decides to file a wrongful termination suit.

Determine what benefits you're able to provide. Beyond the termination benefits specified in your hiring agreement, you might want to offer additional benefits. From a legal standpoint, the key is to be consistent and offer the same benefits to every laid-off employee.

Offer to help find new employment. Check with nearby dairies to see if they have positions to fill and with local community groups to see what services are available to displaced workers. Convey this information during exit interviews. "Handing a letter of reference to the employee during the exit interview is also a good idea,” Tyler says.

Reassure remaining employees. "Let them know they should come to you with any questions or concerns. Keeping the lines of communication open is critical,” Tyler says.

Bonus content:

"The Complete Guide to Managing Agricultural Employees"

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