layoffs

Time to Rethink the Layoff

by
Eric Von Seggern/Shutterstock

Many companies use the layoff as a tool to manage their human resources capital, but it may be time to rethink that practice. Taking into account the efficiency and labour costs of their businesses, many CEOs use layoffs as the primary way to reduce costs, thinking it the most efficient way to do so. The costs of layoffs, however, may be more than CEOs ever anticipated, and HR professionals have to be able to convince their senior leadership teams of the true price of layoffs.

Some interesting research from an article in the Harvard Business Review (HBR), regarding what happens to companies after layoffs, shows that a 1% downsizing can create a voluntary turnover rate of 31% a year later. The article continues on to state that companies that were able to keep on employees during an economic decline actually did very well in coming out of a recession and beating their competitors by 10% in sales and growth.

What can companies do instead of layoffs? Here are some potential strategies for success that companies could implement before or during an economic downturn:

  • Preparation for an economic crisis before it hits; in other words, having a contingency plan in place.
  • Decentralization; decentralized companies do better than centralized companies in times of economic crises.
  • Implementation of alternative options to layoffs, such as reduced work weeks for employees.
  • Investment in technology; for better preparation in the future.

During this pandemic, businesses have been placed under tremendous economic pressures and millions of workers have been laid off. Organizations that can weather the storm and keep on as many employees as possible will be better off in the future, according to the HBR article.

Discussion Questions:

1. Research an organization that has been successful in avoiding layoffs during economic downturns and summarize the main strategies they used. Use that research to assist your presentation development for question 2.

2. Develop a 5-minute presentation to review the top ways to avoid layoffs and still reduce labour costs for your VP of HR.

Boom or Bust?

by

It may seem that the concepts of HR Supply and HR Demand come from an almost clinical approach.  This is most evident when we look at these concepts through a human capital lens and try to apply formulas to predict the ebb and flow of human resources supply and demand.

Words Boom and Bust on opposite ends of a balance
Source: Mark Carrel/Shutterstock

Predicting the patterns of potential employee movements are not isolated exercises – They are all connected and part of bigger picture circumstances.

For example, the overall economic situation in Alberta provides us with an excellent opportunity to consider how individual employees will be impacted by the changing economy.

Click Here to Read the Article

As we read in this article, Alberta was once the province offering an abundance of HR demand. There were lots of jobs and lots of opportunity.  Now, Alberta is the province facing the very real impact of too much HR supply – Increasingly fewer jobs and much less opportunity.  HR’s role will be critical in determining how this oversupply will be managed and, most importantly, how the individual employee will be impacted as a result.

We cannot forget that any HR supply and demand analysis is about people.  Analysis and formulaic approaches help us with planning predictions; however, we must remember that the implementation of these plans will have an impact on our fellow humans as we all move into a challenging and unpredictable future.

Discussion Questions:

  1. What types of compensation strategies would lessen the need for layoffs in Alberta?
  2. If you had to accept a wage reduction in order to have your work colleagues keep their jobs, what would you do?
  3. Identify three critical steps that the HR professional should be taking when considering staffing reductions due to economic indicators.
  4. What would be the biggest challenge for you when preparing an HR plan that includes staffing reductions?