Strategy for socially acceptable and consensual layoffs

Sabrina Renz

15. June 2020

In times of constant change and global competition, offering employees new jobs or saying goodbye to them is regularly on the agenda of companies. For you as a leader, personnel restructuring is a question of competitiveness. In this way, conversion measures always help to secure the remaining jobs. In this article, you will learn how to design a socially responsible strategy for personnel layoffs.

Versatile reasons for downsizing

There can be many reasons for changes in your company. Understanding exactly why a downsizing is being carried out can be of great help in communicating your strategy for redundancies. The most common reasons are:

  • Restructuring. Willingness to adapt to the market and constant process optimization are prerequisites for successful business. For this reason, many companies are regularly restructuring. These often go hand in hand with layoffs.
  • Fusion. When two companies merge, redundant functions are eliminated. Such synergies are usually an important part of the business case of corporate mergers.
  • Change in strategic direction. New sales channels, the closing of outdated product ranges or the new orientation towards services instead of products may necessitate a change in the personnel composition.
  • Technological progress. The automation of work steps or, for example, the replacement of a printed paper catalog with a web shop requires a change in personnel.
  • Outsourcing or nearshoring. Lower wages for production in the Far East or for IT in the Baltic States free up some employees at home.

Socially responsible strategies for layoffs

Can personnel be reduced in a consensual and social manner? You should not see your staff as a name in a fixed box in the organization chart. Because employees are individuals with different capabilities, age, social circumstances and working hours. This opens up many factors for you to build an effective and good strategy for hiring people.

  • According to §112 BetrVG, if you have a company of more than 20 employees in Germany with voting rights and a works council, you are obliged to seek a balance of interests in the event of major changes in the company and to draw up a social plan. Use this obligation as an opportunity and, in dialogue with your works council, gain ideas for your strategy to free people.
  • Consider your options within the voluntary system. Some employees may be happy to agree to a termination agreement, reduce their working hours or retire early. In this way, you minimize the need for dismissals or forced transfers.
  • Maintain transparent communication with your workforce and, above all, with those affected. Disclose the criteria for dismissals or transfers – this creates traceability and greater understanding. In addition, your remaining workforce will also value that you communicate honestly and authentically when you cut staff.
  • Be proactive: The natural fluctuation helps you to cut staff if you do not fill the vacant positions. If you constantly keep an eye on the need for personnel compared to the direction of your company, you can even largely avoid mass layoffs with this personnel release strategy.

From termination to personal development

An employee who is surprised by his dismissal rarely sees it as an opportunity. However, as a leader, you can transform the layoff for that person into valuable personal development. On the one hand, you have the option of providing financial support and paying a severance payment. On the other hand, you can offer training or job rotation until discharge. This helps employees find a new job more easily. You can also let your contacts play and research vacancies in other companies to which he / she as an external applicant would otherwise have no access. You can also offer your employee outplacement. Here, the dismissed person receives support to process his / her situation and to emerge stronger from it.

Strategies for layoffs: step by step

If the need for staff restructuring occurs in your company, grant yourself an advantage in which you

  1. First analyze your situation thoroughly. What qualifications do you need and how many employees are required to carry out the tasks that will arise in the future hear?
  2. Then make a well-informed decision about how you will do justice to the new organization. How many employees must be terminated and for whom do you find other sensible solutions?
  3. Specifically plan who will be released or reassigned when and under what conditions. Make it clear to what extent you are ready to negotiate in the specific case.
  4. Announce the upcoming measures. Both the affected employees, the rest of the workforce and the general public have a legitimate interest in the upcoming changes as a consequence of a new strategic direction.
  5. During the job cuts, show respect to all of your employees through open dialogue. By listening and responding, you show interest and learn about the fears and worries associated with downsizing. With this knowledge, you can communicate in a more targeted manner.

With a well-thought-out strategy for staff layoffs, you can make job cuts yourself socially acceptable and amicable.

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