Advice for bad economic times
I have stopped reading the Baltimore Sun. In addition to being a bad newspaper,
it tends to side with the incompetent tax-and-spend government officials in the
mayor’s office and the statehouse.
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The Wall Street Journal, however, needs to be delivered with Prozac or some
other antidepressant. The newspaper contains very little good news these days.
At the very least, the economy is undergoing a serious downturn that could last
for quite awhile. Companies are laying people off or going out of business
altogether.
Even small businesses are cutting back on personnel. Therefore, I thought it
would be appropriate to discuss some of the do’s and don’ts of laying off personnel in an economic downturn.
Most companies, unless they have a written layoff policy or a collective
bargaining agreement that provides for a layoff procedure, tend to want to use
the layoffs to clear out the worst employees.
In other words, depending on how you look at it, the company is either keeping
the best performers, or getting rid of employees it should have fired long
before the need for cutbacks. Using seniority, the safest method from a legal
standpoint, is rarely the most attractive method, especially when the best
performer is the “new guy” you hired several months ago.
When one of my clients wants to lay off employees without regard to seniority, I
tell that client to do two things. First, start with a new corporate
organizational chart that covers each job from the top to the bottom, listing
essential positions and their duties. Then, start filling in names of those
essential employees — including the president — taking into account the skills and performance of the available employees.
When they are through, they should have a list of employees who do not have a
position in the reorganized company.
Second, if anyone on the list — namely, the people without a chair when the music stops — is a long-term employee, I tell them to consider whether there is a spot for
that employee in the reorganized business. Because long-term employees tend to
be older, giving long-term employees additional consideration allows the
employer to defend age discrimination charges. Further, it gives the employer
the opportunity to compare directly the skills of the long-term employee with
the less senior employee. That direct comparison is further insulation against
age (or other) discrimination charges.
Layoffs, however, should rarely be substitutes for disciplinary terminations.
While there is no legal prohibition against considering a person’s disciplinary record in a layoff decision, there are risks inherent in using
that as the sole basis for selection. It makes the layoff appear to be a
disciplinary action, rather than a business decision. Also, it creates other
problems when, based on relative skills between employees in the same job, the
employer decides to ignore the disciplinary record and lay off the less-skilled
employee with the better record.
Then again, there is no reason why an employer in bad economic times cannot
become more demanding of employees in the performance realm. Employees should
be told that times are tough, and that their future employment depends on the
company’s success.
Some companies avoid layoffs by meeting with employees to discuss alternatives.
If you have a good workforce, you will hear ideas you never thought to try.
Finally, in bad economic times, employees need to be reminded that customer
service, good work, and a conscientious attitude are even more important than
usual. Employers need to remind employees of this, in good times and bad, and
get rid of the employees who are contributing to, rather than fighting, the
economic downturn.
