Abstract: The staff cuts are very actual in the context of searching ways for reducing the labor costs. Unfortunately if not done properly they could have many negative effects. The present article presents some recommendations for careful and purposeful management of these effects.
Keywords: lay-offs, management, personnel.
The staff cuts are very actual in Bulgarian organizations in the context of searching ways for reducing the labor costs. In fact they directly unburden the organization in financial aspect, but at the same time if done not properly they could cause enormous damages upon its effectiveness and profitability in short-term, as well as in long-term. Many investigations and publications show that unfortunately the stuff cuts are often done in a wrong way and therefore have many negative effects. The work force remaining in the organization is desperate, suspicious, confused, suppressed, offended, unsatisfied, overloaded, with low motivation and productivity, and negatively disposed towards the upper management . This means that it is necessary to elaborate the process of making lay offs in order to manage its effects more elegantly and successfully.
Explaining the necessity of lay offs
The employees are not always sure that the staff cuts are excusable and really necessary. Although the crisis inevitably leads to a drop in the activity, often according to the employees it does not need so great cuts in the staff. This is a precondition for doubt arises and lack of confidence in the competencies and good intentions of the upper management. Since the necessity of layoffs is not discussed with the employees, the mass protests against them often happen.
Lay offs are most of all a means of realization of the organizational strategy. If this strategy is wrongly defined, they could hardly resolve the short term and long term problems of the organization. Besides this, it is quite possible the reduction of the expenses to be reachable through others, not so drastic and painful variants.
Principally the subordinates are inclined to resist to all decisions, in which they have not participated and which are imposed to them in authoritarian manner. This is especially valid when the lay offs do not affect the upper management levels, and only “the cheapest” employees, which gives a signal that the organization probably does not have so serious financial difficulties. When the subordinates are not sure that the staff cuts are really necessary, and perceive them as a result of incompetence of management or its ambition to realize savings at all costs, this creates preconditions for dissatisfaction, resistance and loss of confidence in the upper management.
Quite often the forthcoming staff cuts and the necessity of them are not discussed with the employees. In conditions of lay offs the management body often reacts through blocking the communications and withdrawal from the work force. But this strategy is absolutely wrong, because exactly at that moment people feel the strongest need to learn concrete details for the near future, concerning their personal fate, as well as information in connection with the fate of the organization as a whole in more distant future. In this sense the facilitated access to the managers is very important – it shortens the communication channels and prevents their deformation. In any case a clear and adequate explanation about the reasons causing the necessity of lay offs is necessary. On one hand, some of them may be unknown for the employees, and on the other hand – the fact that the management devotes time and efforts for this (despite the concrete contents of the explanation itself) symbolizes respect for the dignity of the subordinates.
Organizing group meetings for discussing the changes, connected with the lay offs, encourages the people to share their reactions. Of course these meetings should be organized and guided by people with good interpersonal skills and sensitivity. Really they are connected with some loss of working hours, but having in mind that the productivity of the labor force already suffers because of its absent-mindedness and lack of motivation, in fact the benefits of these meetings could many times exceed the expenses from the lost working hours.
It is also desirable many channels for transmitting the information to be used. Since during periods of stress and uncertainty the people often are influenced by the reactions of their colleagues, i.e. they incline each other, the informal leaders have a key role because of their strong influence upon the others. This requires making efforts for their persuasion in the real necessity of the lay offs.
Clarifying the criteria for making lay offs
Almost all organizations (except the smallest ones, may be) have written procedures for selection of employees in cases of staff cuts. Nevertheless it turns out that in most cases the employees are not clear about the criteria for selection of the discharged or accept them as not fair - perceive the choices as a result of the personal negative attitude and biases of the managers towards certain subordinates.
The criteria used in the selection of the discharged are never fair enough for everybody. First of all justice is a very vague subjective concept – if the lay offs are made on the basis of the length of service, this is accepted as fair on the part of the senior personnel. Analogously, if they are based on the appraisals of the work performance, this is fair for the best performers. Although the criteria are a question of management policy, in any case it is necessary clarity and strictly sticking to them with respect to all categories of jobs and management levels.
The using of work performance as a criterion for staff cuts requires very precisely to define these employees, which give to the organization less productivity, in comparison with the received salary and additional benefits. At the same time it is absolutely obligatory the appraisal of the work performance to be clear and perceived as objective by the subordinates, which requires the improvement of the system for personnel assessment in the organization.
Timely warning of the discharged
Quite often there is no practice to notify the discharged in advance – they are informed through presenting a written order, which has an absolute character, is not a subject of discussion and comes into operation immediately.
On one hand the discharged obligatory should be timely informed about the forthcoming job cut (in one month). On the other hand, keeping “informational eclipse” (probably to overcome the possible resistance on the part of the work force) is in fact impossible, since it activates the informal communication network and rumor channels. And when this network turns into a basic informational source, the spreading of untrustworthy information could easily go out of control, storm the fantasies of the potential victims, create preconditions for resistance and discontent and finally seriously harm the organization.
Showing sensitivity while announcing the lay offs
Lay-offs are a painful subject and have a high economic and social price for the discharged, because the job loss directly worsens their well-being and life standard. At the same time taking care for easing their consequences is an expression of socially responsible behavior, as well as a legal engagement on behalf of the employer – paying compensation at least four times higher than the last monthly gross remuneration is regulated by the labor legislation . Most of the Bulgarian employers compensate the discharged in this amount, but there is no practice to demonstrate recognition and respect through organizing some activities with ceremonious character (such as official “Good bye” party or giving some present, for example).
Although the financial aspects are undoubtedly important, the cares for the discharged can take many other (intangible) forms besides the pure material expression, which successfully keep their dignity and professional self-confidence. The details and the way for presenting the information to the subordinates - subjects to lay-offs, must demonstrate the engagement and respect of the managers towards them. Of course its content is unpleasant and painful enough, but the careful choice of the moment for its communication, as well as the means of expression could alleviate the sufferings of the discharged to a great degree. For these reasons the managers must be especially careful towards their communication style. Besides this, according to the sociologists the important changes in the peoples lives must be accompanied by some formal (official) ceremonies, which help them realize and respectively accept them easier.
Re-designing the processes and methods of work
Quite often lay-offs lead to significant changes in the work situation and especially to work load increase (because of combining several previous job positions), which not rarely corresponds with longer working time and shorter leaves. This overloading creates stress, predisposes to mistakes and worsens the quality of work.
That’s why in order to reduce the work load and to increase the effectiveness of work it is obligatory to do re-design and re-structure the activities and processes. For example this could be done by removing a part of the previous work duties, which already are not perceived as useful or important (i.e. of low value), as well as by preventing the unnecessary doubling in the duties.
It is recommended to gain the participation of the subordinates with suggestions and creative solutions for more effective organization of the working environment. It is possible to provide rewards for this, although their inclusion in decisions concerning their destiny is motivating enough, since it restores their feeling of control over the situation.
The process of making lay offs is difficult and the management should be prepared to clash with a broad range of emotions on the part of the discharged, as well as on the part of the remaining employees – anxiety, anger, resistance, guilt, etc. Nevertheless many of them may look illogical and irrational, they are in all cases destructive for the organizational effectiveness, which requires their careful and purposeful management.
1. HRMA. The Impact of Forced Layoffs: How to avoid the negative consequences of laying off staff. Available at: http://www.hrma.ca/wp-content/uploads/2012/07/rb-forcedlayoffs.pdf.
2. Labor Code. 2012. Available at: http://balans.bg/