It will be interesting to see how far the ideas travel across the pond. Quite a few years ago I worked in industrial relations and was responsible for acting as the hatchet man. Few organizations and employees then expected to be involved. However, the UK government introduced legislation on consultation over layoffs way back in 1970s, which has had an impact. In the UK I think there has been a sea change in the way in which organizations are approaching layoffs/ alternatives in this current recession, at least as reported in the press and in surveys by organizations such as the CIPD.

Well done of the recognition of your blog – it is thoroughly deserved

Thanks so much for your thoughtful comment and for sharing what’s been happening in your organization.

As much as I have been railing against layoffs as a concept, I do understand that sometimes they are necessary. I’m realizing that my concerns center on when layoffs are chosen in a cavalier manner, and/or when the decision-making process is closed and/or unfair.

When layoffs must be done (and sometimes they must) a caring, open, fair, approach that spreads out the pain (rather than concentrating it on the folks at the bottom) really makes a difference. Not only does the research support this, but also we know in our hearts as managers that caring about how organization members are involved in decisions that affect the organization can make even the hardest decisions easier to bear.

It’s good to hear that in your organization was able to handle the decisions around layoffs in a way that feels fair to you and others. Just knowing that managers considered other options helps … which reminds me that some folks have overlooked how Paul Levy & the employees of Beth Israel have in fact laid off around 150 people…. even in that ‘model’ process, layoffs were chosen. The good part is that the number of layoffs went way down from the 600 that were initially expected.

On a different angle, you raise the question of how/when/if to return to the way things worked before ‘alternatives to layoffs’ were chosen. This is important because I bet most folks don’t want to trade off sick days, vacation time, overtime pay, pension benefits, etc. forever. We don’t want a situation where compensation and experience are voluntarily reduced to ‘help out’ and then become institutionalized. I’ll keep my eyes open for some research & examples on that.

Surely, hopefully, we’ll need to talk about going back to full-staffing, full-compensation *soon*. ….

I currently work in an organization that has made a decision that – in addition to other cost-cutting measures – layoffs are required to ensure the long term health of the company. The messaging from our executive team has focused is on operating margins specifically. In addition to looking at benefits packages, temporarily reducing salaries & compensation was discussed as an alternative to layoffs. However, the executive team seemed to feel that such an approach would create a degree of uncertainty across the entire organization “when will we be back to full salary?”, etc. The decision was made that it was preferable to let a small number of people go (5-6%), and to impact to the bottom line in a sustainable way. Based on my experience, in the end, fairly handled and consistently communicated layoffs seemed like a preferable decision.

The executive team has been very open about the difficult choices they faced, and how they have come to their decisions. While the process has been unpleasant (even for those of us left behind), I would agree that how the process has been handled has made a big difference in terms of employee perception and morale.

Thanks so much for highlighting some of our research on layoffs. In some of our other research, we do investigate how organizations can postpone and sometimes even avoid the inevitability of layoffs during periods of cost-cutting and retrenchment. In that research, we concur that HOW you go about reducing costs matters as much as WHAT you do. We recently published a ten-year retrospective and update on our downsizing research in the latest issue of Sloan Management Review, entitled “Downsizing the Company without Downsizing Morale:

http://sloanreview.mit.edu/the-magazine/articles/2009/spring/50310/downsizing-the-company-without-downsizing-morale/

Aneil Mishra

Failing certainty, I think openness is something much desired and often missing when layoffs are on the table. Absent some depiction of the linkage between talent, resources, strategy, etc., there’s almost no way to make a decision that does not produce unintended consequences. If the thinking behind these decisions isn’t made explicit, the reaction from employees is often the same as if the thinking were not there at all.