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How to Handle COVID-19-Related Layoffs


The twin crises of a pandemic and a plunging market have pummeled a lot of businesses — many have already started laying off employees, and many more will need to soon. It’s never a pleasant situation for anyone, but there are ways to mitigate both the financial and the psychological fallout.

Although layoffs aren’t new, some experts are offering advice especially tailored to the current environment.

Zillow founder Spencer Rascoff has a detailed plan for reducing layoff pain, based on his own experience:

    • Do it just once. Instead of prolonging the pain and anxiety of several rounds of layoffs, with everyone wondering if they’re next, reach your target size the first time.
    • Be nice. Not only should you provide severance but treat each departing employee with respect and dignity. Offer outplacement service.
    • Give a choice. Some people may want to leave if they get a good severance package, so it makes sense to find out who they are before letting go someone who really wants to stay.

However, before you even get to that place, consider some alternatives:

    • Sabbaticals — unpaid time off. Sabbaticals or furloughs may be offered to skilled workers who would be difficult to replace and for employees of seasonal businesses who reasonably anticipate that the slowdown in work may be temporary.
    • Reduced workweeks — reducing the number of days worked per week. Reduced workweeks may shift some full-time employees to part-time hours or decrease part-time hours.
    • Job sharing — two employees share one available slot. Job sharing may also coincide with flextime, in which employees work flexible hours according to their availability and job needs. If you can keep valuable employees working at least part time, they’ll likely be around when you’re back up to speed.

A recent article in Harvard Business Review magazine gives some additional advice for making difficult decisions:

    • Make it fair. You’ll build a lot of resentment if you let go employees earning $50,000 while keeping executives making $250,000. HBR recommends heavily slashing the salaries of C-level executives so it’s clear the company is sharing the pain.
    • Involve everyone. Maybe there are cost-saving ideas you haven’t thought of. Set up a system to solicit ideas from all employees, not just managers, and consider them seriously — don’t just treat this as a pro forma exercise. If employees see they’re really involved, they’ll be less resentful when painful decisions need to be made.
    • Always communicate. This is not a time for the cloak of secrecy. “Instead of forcing your employees to second-guess what might be in store for them, be utterly clear with them about the financial health of your firm and what goals you will prioritize.”

We hope you can weather the storm without losing staff, but if it becomes essential, be sure to make decisions with a great deal of thought and care.