A mass layoff is loosely defined as a single employer laying off at least 50 employees. The statistics are measured by new filings of unemployment insurance benefits for each month.
In October of 2007, Indiana had 29 mass layoff events and 5,129 initial claims for unemployment. This past October, Indiana had 63 such events and 7,961 initial unemployment claims.
The majority of these companies are still in business. Recent studies have revealed the effect down-sizing has on the survivors. We have all heard doing more with less.
Sirota Survey Intelligence, a New York based HR Consulting firm conducted an employee attitude study of almost 500,000 people in 2000. It was followed with another study in 2002 (post-layoffs primarily resulting from the 9/11 tragedy). The study revealed higher stress, less teamwork, greater employee insecurity, and employees feeling less valued. Employees who felt valued in 2002 dropped to 44%, compared with 67%% in 2000. Cooperation and teamwork between departments fell from 69% in 2000, to 40% in 2002. Other areas including opportunities for advancement, having too much work, believing the company is innovative showed a similar pattern, but not as severe. Doing more with less with a workforce that feels under-valued and doesn’t trust the ability of management is overwhelming.
The University of Wisconsin-Madison conducted a study demonstrating higher voluntary turnover after a layoff and the voluntary turnover increased proportionately with the percentage of workforce laid off.
Increased litigation is likely in a poor economy. Jobs are harder to find, making terminated employees more inclined to make claims. Often suits arise from a mixed message within a company that may reduce employees in one department, yet hire in another.
Measure twice and cut once. Identify the purpose of the RIF and explore options. Determine the number of employees who will have to be laid off to meet the business’ goal. Consider offering a severance in exchange for a release. Select objective methods for selection which include the ability to continue operations with the survivors.
Open communication about the state of the company is critical for all companies. Silence brings fear and gossip. Let employees know the truth. A briefing for all survivors is essential after a RIF. Ask for ideas of ways to do things differently. Let the survivors know they are valued; engage them.