Planning for a Workforce Reduction

Now that many municipal lockdowns have lifted, businesses and organizations have begun ramping up in-house workforces. While some restrictions (such as occupancy limits) still linger, the goal is to gradually reestablish as much of the in-office workforce as is safe. However, new cases are on the rise again—and it’s adversely affecting how much staff employers can bring back.

For some organizations, there’s no infrastructure for remote work. Others aren’t seeing pre-COVID-19 demand for business and don’t have a reason to recall workers. Still more face the need to downsize in the face of mounting headwinds.

The uncertainty of a recovery timetable and return to “normalcy” might mean the tough decision to temporarily or permanently reduce your workforce (or, at a minimum, reduce hours). If your organization is at this decision point, what do you need to consider?

Determine Demand and Act Accordingly

There’s a big difference between cutting someone’s hours, furloughing them and laying them off.

  • Layoffs: Termination for non-performance-related reasons.
  • Furloughs: Temporary leave without pay due to economic conditions.
  • Reduced hours: Reduction in weekly hours (e.g., from full-time to part-time, reduced part-time schedule, etc.).

Consider the ramifications of each workforce reduction method. For example, you may still be responsible for paying benefits for a furloughed worker. Likewise, a former full-time (now part-time) employee may qualify for unemployment due to reduced wages. Discern what the impact of each reduction option looks like for your organization and the employees in question.

Once you decide exactly how you plan to cut back, be clear about it when addressing affected employees.

Consider All Factors When Designating Staff

Who will be affected by workforce reduction? Employers need to determine where these cuts are coming from and how they affect various departments and teams. Can two accountants do the work of three? What happens to projections if you cut your sales team from 12 to eight? Should you cut management and consolidate teams under broader leadership?

Before reducing workforce, consider the long-term ramifications of your decision. While it’s easy to think in terms of reduced expenses, workforce reduction is more than just a numbers game. The last thing you want to do is up-end operations with short-sighted cost-cutting initiatives. If you resume normal operations in four months, can you recall or replace the workers lost due to a reduction?

Redistribute Work and Consolidate Teams

Create a contingency plan for reallocating work and consolidating teams. Simply removing employees from the workplace will only create gaps. If you don’t fill them, things will start to slip through the cracks.

Make proactive transitions during a workforce reduction whenever possible. If Kathy and Pilar are the only members of an eight-person team that will remain, reassign them and help them acclimate as quickly as possible. If Christopher’s team of subordinates doubles from five to 10, he’ll need as much time as possible to get everyone situated and integrated into a workflow.

Don’t just reassign and leave people and groups to figure it out for themselves, either. Provide clear instruction. Jenny will now report to Kellen for projects X, Y and Z. Maurice will inherit projects A and B, with three senior staff who understand the workflow. Don’t let teams languish; make sure they have support during the transition.

Humanize the Workforce Reduction Process

Act swiftly and with empathy when laying off or furloughing workers. Be clear about the path ahead to remaining staff. Look for opportunities to build structure wherever you can. The continued success of your organization rests in this ability to create stability.

A workforce reduction is never easy. It leaves many looking for new employment and creates unease and panic among remaining staff. An HR consultant can also provide much-needed expertise as you work through these tricky situations.

It’s up to employers to make the process as human as possible through transparency, honesty and humility.

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