RESEARCH TRIANGLE PARK – Although many business leaders see layoffs as a means of essential cost-cutting and short-term financial gain, workforce reduction is difficult emotionally, taking a toll on those directly impacted and the employees still on staff. The outcome is far-reaching across organizations and communities. Some people are left reeling and never fully heal.

Despite the pervasiveness of layoffs in American business culture, however, most organizations still bungle them. For example, Elon Musk infamously fired nearly 4,000 Twitter employees with a mass email sent out at 9 p.m. on a Friday. In 2022, Carvana cut 2,500 employees – many were informed via a group Zoom call. 

There is a better way to approach layoffs – one that capitalizes on the positive gains in culture change via a diversity, equity and inclusion (DEI) lens. People leaders should be thinking about their roles as drivers of culture-centric organizations when contemplating the human and societal pain caused by mass layoffs. Today’s mismanaged or indelicately handled incident may cause long-term or permanent damage to a company’s most important asset – its brand reputation. 

Ironically, many organizations that took a stand committing to “doing better” on diversity in 2020 have used the difficult economy as rationale for dismantling their DEI initiatives, despite analysis that proves diversity is an essential part of today’s business landscape. These programs might seem like an easy cut if numbers are the only factor, but DEI is integral to a company’s core values and brand. Decreasing or eliminating DEI initiatives risks reputational damage that will be difficult (or impossible) to repair down the road. 

Economic conditions can change quickly. C-suite executives should hesitate when considering slashing resources in areas like culture where both internal and external stakeholders are demanding that they do more. Rather than simply follow the outdated model of crisis-driven behavior, leaders today need to take long-term implications into account. 

7 WAYS TO CONDUCT LAYOFFS AND DOWNSIZING WITH COMPASSION

How a company treats people during the downsizing process may be a key factor in its success when the economy improves. Inclusive principles, fair-minded actions and authentic communication will help organizations maintain their reputations, even as employees are let go. DEI principles should also guide the actions of managers who must deliver the bad news.

These tips outline how to manage layoffs fairly, while maintaining DEI standards based on communicating with empathy:

  • Maintain workforce diversity. Some companies follow the “last-hired-first-fired” principle, cutting newer employees and retaining those who are longer-tenured. Others focus on cutting from certain departments or certain roles within all departments. Some let contractors go while retaining full-time employees. Still others decide who to cut based on utilization rate metrics. While all of these methods merit consideration, remember to also consider the diversity of the remaining team members. Creating a scenario where individuals from historically marginalized groups appear to have been targeted by the layoff process will damage credibility and call into question its ongoing commitment to diversity. In some cases, the organization may even face discrimination lawsuits. 
  • Communicate honestly. Transparency is best when outlining the company’s financial performance and market pressures it faces. Transparent communication allows people to emotionally prepare for changes even before layoff announcements are made. Although some employees might quit when management begins talking about layoffs, it is a better policy to ensure employees are aware of incentives to stay, like severance pay or retraining opportunities. Inform all employees on the same schedule about leadership’s plans for budget-cutting and downsizing. Distrust and anguish are generated when organizations inform a select group in advance, while leaving others to worry or guess. 
  • Share the news one-on-one and in-person. Sharing layoff news is difficult, but each employee deserves an in-person conversation with a manager. Provide the information directly, both verbally and in writing, and describe what support the company will provide.
  • Offer Employee Assistance Programs. Layoffs are traumatic for everyone. Both former and retained employees need extra emotional support. A company’s mental health partners can help to manage the psychological impact of transitions. Before implementing layoffs, leaders should ensure that appropriate Employee Assistance Programs are in place, along with plans for severance packages, logistics, FAQ responses, and other means of support. 
  • Encourage networking and other support methods. Even though the company is no longer able to employ them, the organization and its staff can continue to provide goodwill and assistance as former employees pursue their next endeavors.
  • Keep DEI councils and ERGs active. Diversity councils and employee resource  groups (ERGs) support the organization’s mission, vision and goals, while providing support. Ensure that these groups stay active and functioning, even if there are fewer participants.
  • Continue to provide DEI training to employees – and DEI leaders. Budget-cutting doesn’t have to mean a reduction in DEI training. There are many free resources to facilitate education efforts. Employers can also take advantage of low-cost, high-value training like the MicroVideos developed by The Diversity Movement. 

Companies that have created positive cultural change via DEI initiatives realize that integrating empathy into the fabric of the organization includes how it handles layoffs and other crises. If downsizing is necessary, a culture-centric leader is going to put diversity at the center, communicating authentically and ensuring that the emotional toll isn’t magnified by doubts about its fairness. A culture-centric organization should conclude its relationship with employees with the same level of integrity and professionalism that guide all its employee interactions.

About the Author

Kurt Merriweather, VP of Innovation at The Diversity Movement and a Certified Diversity Executive, is an accomplished product strategist and marketing executive with a passion for helping leaders and organizations identify and implement growth strategies. Before co-founding The Diversity Movement, Kurt was VP of Strategy and Transformation at Walk West. His expertise is in developing strategy based on creative thinking and data analysis. With over 20 years of experience, Kurt has worked for global brands like Discovery, AOL and Procter & Gamble. Connect with or follow Kurt on Linkedin to learn more.