WORKPLACE: Organizational Change Strategies, Part 2

Editor’s note: This is the second in a two-part series. The first part appeared in January PCT.

If you’re left with no alternative other than cutting staff, then what? Improperly handled layoffs, poor communication, hurt feelings and economic hardship often lead ex-employees to allege discrimination based on age, sex, race or some other protected class after a job cut. There’s no question that layoffs are fertile ground for legal liability. Let’s look at some pointers for reducing the risk associated with layoffs.

LAYOFF RISKS. First, resist the temptation to soften the blow of a termination by calling it a “layoff.” Your half-truth will come back to haunt you and will raise questions about your credibility if, later on, you must defend your decision and confess the “real” reason for the separation. If you have a job-related reason for letting an employee go, then you have nothing to fear. Be honest and tell the employee why you’re letting him or her go. Document your rationale and tell the truth.

Second, plan ahead! Do not implement a layoff without working through all of the issues. Remember, not only are there employment implications associated with a layoff, there are also public perception and communication considerations. You must be prepared to address your constituents who can include: customers, the media, public markets, the remaining workforce and others who may be impacted by the loss of your employees.

Obtain professional consultation to help plan your strategy and act as a “jury” for testing your decisions. This is especially important if: 1) the WARN (need explanation) Act requirements apply (employers with more than 100 employees are subject to WARN requirements if a plant closing involves more than 50 employees or a layoff involves more than 500 employees), 2) you are considering the use of a release and waiver from employment discrimination claims, 3) a disproportionate percent of employees being laid off fall into one or more protected classes, 4) there are collective bargaining agreements, 5) individual employment contracts exist or 6) you have a qualified retirement plan covered by ERISA (need explanation).

Third, be prepared to prove the overall “big-picture” business-related need for the layoff. If your decision is ever challenged, you must be able to show by means of records, reports, financials and other documents that the need for a layoff was legitimate.

Fourth, carefully consider which departments and positions will be affected. A layoff decision can be based on a number of job-related factors including, but not limited to, length of service, performance, economics, future need for particular positions, skill and ability of individuals or others. You must determine the proper criteria upon which to base the layoff and it must be job-related and consistent with the business situation.

For example, if performance is the basis for a layoff of employees in a given department, you must be able to prove (through valid performance-related documentation for all employees in the department) that you retained those individuals with better performance. This is not necessarily easy, but would be required if a charge of discrimination was filed by one of the affected workers.
Remember, if a group of employees is laid off and, by a fluke, they all happen to be 75-year-old pregnant females, while younger male counterparts are retained…well, you get the picture. Be prepared to prove your reason was nondiscriminatory.

Fifth, avoid inconsistent layoff rationale between departments. For example, if you use “performance” as the criteria in one department and “length of service” as the criteria in another department, you should be able to establish the business-related reason for the difference. The more consistent you are, the fewer the questions your decision will raise.

Sixth, be ready and able to answer the “Why me?” question. This is especially important when you retain people who are in the same position and department as the employee selected for layoff. Again, if your rationale is job-related and compliant, you should be able to answer this question. There’s no need for an emotional debate, just a straightforward, honest answer. (Hint: Preparation for this discussion is vital!)

Seventh, be prepared to address separation issues such as COBRA and other benefits, final pay including bonus and commission payments, non-compete agreement reminders, outplacement support, severance pay (Note: There is no law that requires severance pay), security measures and others.

SEASONAL LAYOFFS. The same liabilities exist for seasonal layoffs, with the added concern of recalling employees. If you lay off and then recall employees at a later date, you should have a job-related, nondiscriminatory system for whom you select for recall and when. The concept is the same: you must be able to establish a legitimate, nondiscriminatory reason why you recall some employees and not others. If employees are recalled based on length of service, for example, the employment records should clearly establish who has the greater length of service.

MANAGING AFTER THE CHANGE. Don’t make the mistake of waiting until after a change to try and revive morale! With careful and pro-active planning, you can reduce the trauma of an organizational restructure. Be prepared to take the following action:

Develop a Change Message. You should be able to capture your story of organizational change in a few succinct sentences. This message should be compelling and should include the reason for the change (market changes, declining revenue, etc.), a view of the future and the desired outcome of the change and a commitment of what will not change (for example, the quality of your products, your business values or your first-class service). Senior team members must buy in to this message and must commit to promoting it at all times. In essence, this message should become the cornerstone for the company’s future.

Appoint a Change Leader. To help convey the message of change, appoint an employee to be a spokesperson to advocate the positive aspects and key points of the change. Don’t necessarily select the person with the dynamic “cheerleader” style. Instead, opt for the person who the employees trust — the one with credibility and longevity. Think “calm,” “steady,” and “balanced,” when you appoint this person. This individual’s role is to listen to co-workers and to confidently, peacefully and regularly discuss and promote the positive aspects of the organizational restructure and the future.

Stabilize Key Employees. Immediately after a change, senior leaders in the organization should meet with key employees to restate the company’s confidence in them, the need for their talents and the bright vision for the organization’s future. These conversations must be honest, straightforward and sincere and will help determine who’s on board and who’s not.

Continually communicate. After a change, it’s imperative to keep people informed. Don’t allow rumors to dictate your message and don’t assume people understand your intentions. Talk with employees candidly, openly and often. Plan regular briefings or meetings to update people, send e-mails, forward articles and don’t go into hiding. Remember, the willingness to talk openly and to allow others to talk openly about the changes (without violating confidences, of course) will help rebuild trust and reduce the fear associated with uncertainty. (Note: Don’t make promises you can’t keep, such as “no more layoffs.”)

INVEST IN SURVIVORS. Following any organizational restructure, positions, duties, responsibilities, goals and expectations typically change. Involve front-line employees in redefining new boundaries and competencies and keep in mind that any performance expectations should be directly linked to the new business goals. Consider revamping any commission or bonus plans to drive new revenue objectives. Help keep survivors focused on the future.
Spearheading organizational change is never simple, but a carefully planned approach and smart execution can minimize risk and trauma and will go a long way toward driving out fear and, more importantly, building trust. 

The author is president of the Winter Park, Fla., consulting firm, Seawright & Associates Inc. She can be reached at 407/645-2433 or jseawright@pctonline.com.