This is a confusing economic time. Layoffs are happening but unemployment is at record lows. We are figuring out what the new normal is. It’s a lot to navigate as a business leader, and some everyday concerns are not getting the attention they deserve. Your reputation is likely one of them.
So as your organization is making critical decisions about the future, don’t forget to inoculate against reputational damage as those plans are being made and operationalized.
Here are some things to consider, focusing on reputational risk management:
Layoffs need to be handled quickly but with sensitivity.
Layoffs are happening and happening loudly. With some notable exceptions, this is never an easy decision. They need to be handled with care as we all know that layoffs cause significant personal and organizational disruption for both those let go and those that remain.
Internally
Once you’ve decided that this is the path, make a plan for who will be let go, how they will be told, and what benefits and support you will provide. Then, communicate these changes quickly and clearly. Some specific considerations are:
Clearly communicate to all staff that there need to be layoffs. In the communication, explain that line managers will speak to every staff member, no matter their future.*
- Schedule 1:1 meetings with staff, prioritizing those who are being let go, as soon as possible after the announcement.*
- Train your managers. Laying off people is likely not something someone has had to do multiple times or even at all. Give your managers the right tools to handle the conversations with clarity and grace.
- Meet in person where possible and do not conduct layoffs en masse, particularly remotely, or via email blast, or by cutting off access to company resources like Slack before announcements are made.
- Provide details on support the company will provide for them, including transition assistance, severance pay, and the benefits they are owed. Stress that the layoff is not their fault.
- Remaining staff also need to be told that they are being retained, so there is no uncertainty. Explain how their job will change (if at all) and what changes are coming to the department/company.
- Try to conduct layoffs in a single batch. Do not roll through multiple phases over several months.
- Once the layoffs are over, communicate that clearly, remind everyone why it was necessary to do something that painful, then reorientate them to the firm’s mission.
*These two actions should happen almost simultaneously and be carefully choreographed. You don’t want your staff sitting around wondering if they should be updating their resume.
Externally
As hard as you may try, keeping a large separation of employees in house is highly unlikely. So as we do in most instances, hope for the best and plan for everything else. Here are some key facets of a good plan:
- Monitor Social Media. Unhappy former employees will take their frustrations to various social media platforms. Treating people with humanity can go a long way to curtailing online talk but it is something to keep an eye on.
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- Expect media inquiries. If the layoffs are concentrated or in large numbers, someone in the media will take notice. Even if you are not a household name, at least a reporter or two will take notice. Be prepared with a statement and identify your spokespeople. There’s no excuse not to be prepared for this – you knew it was coming.
- Partners and stakeholders need to be told. You don’t want the people that you engage with to hear it from anyone but you.
- Tell your Board. Your board will likely be involved in the decision or at least made aware of the decision by your leadership. Confirm that and be sure that they are aware of your communications plan and talking points.
- When needed, notify regulators. Various jurisdictions have reporting requirements when a staff reduction is done. Be sure you know the requirements for every location that you have employees and at every level of government.
Uncertainty = opportunities for mischief.
The threat of layoffs can lead some employees to behave maliciously towards the company, particularly if layoffs drag on over an extended time. Mischief can be as simple as trying to embarrass the firm through a leak of sensitive but not crucial information, such as pay scales or internal memos.
However, this is also when some staff may take more drastic action, such as embezzlement, theft of intellectual property, or engaging in / assisting with cybercrimes. These would pose a significant challenge to firms during an already difficult time and require substantial time and attention to manage correctly. You should prepare for these types of malicious events and keep your crisis response capability at a high state of readiness.
Uncertainty = distraction = mistakes.
During periods of uncertainty, workers at every level are unfocused, meaning that standards slip and mistakes occur more frequently. The most obvious will be operational and/or safety issues because people aren’t paying attention. However, people across all departments will be distracted, meaning that warning signs of trouble get missed, or procedural guardrails are ignored.
Sometimes, the problems simply arise from staff being distracted and not thinking things through, which might result in careless statements or doing things that are tone-deaf. The sooner you can reduce uncertainty, the better, but this is a time to increase oversight and governance, not reduce it.
As above, you need to keep your crisis response capability at a high state of readiness to account for the increase in events you will have to manage.
As you make critical decisions during uncertain times, consider the reputational impacts of those decisions – this will not only help guide your decision-making but also prepare you for any crisis or reputational damage that may arise.
