Layoffs in a Political Year: A Board’s Guide
Dear Valued Board Members,
At Boardroom Education, we understand boards’ immense responsibility when stewarding a company’s success, especially in a dynamic election year. This includes making difficult decisions like layoffs, which can significantly impact the organisation and its employees.
A Global Trend: Understanding the Layoff Landscape
The global economic landscape has shifted, leading to a surge in layoffs across various industries. From tech giants like Apple and IBM to diverse sectors like consumer goods and media, over 3,553 companies have announced workforce reductions since January 2024. Understanding this context is crucial when navigating potential layoffs within your own organisation.
Shareholders vs. Stakeholders in an Election Year
The coming election cycle brings heightened scrutiny towards employee rights and corporate practices. Boards must re-evaluate severance policies, retirement benefits, and HR best practices. The candidate who prioritises worker rights and fair treatment during layoffs might in the favour of voters and influence future regulations.
Balancing Business Needs with Employee Wellbeing: What Boards Need to Consider
When contemplating layoffs, responsible boards consider a range of factors to ensure a balanced approach:
Financial Necessity: Are layoffs truly essential for long-term financial stability, or can Alternative cost-saving measures should be explored.
Legal Compliance: Stringent adherence to local, state, and federal employment laws is paramount.
Ethical Considerations: Transparency in communication, fairness in selection criteria, and providing employee support is crucial for ethical conduct.
Building a Stronger Future: Beyond the Layoff Event Responsible layoffs go beyond immediate cost reduction.
Boards must consider:
• Impact on Remaining Employees: Maintaining morale, productivity, and workload distribution among remaining employees is critical.
• Strategic Alignment: Layoffs should align with long-term business goals and not undermine future growth.
• Retaining Critical Talent: Prioritize skills necessary for future success.
Lessons Learned: Case Studies in Successful and Unsuccessful Layoffs
By examining both positive and negative case studies like Honeywell and Better.com, we can identify best practices and missed opportunities.
Honeywell (2009): A Model of Success
What They Did Right:
• Strategic Planning: Honeywell implemented a well-defined plan, focusing on retaining critical talent for future growth.
• Communication: Transparent communication with employees, explaining the reasons for selection criteria and offering support.
• Employee Support: Generous severance packages and outplacement services aided affected employees in transition.
The Outcome:
Honeywell emerged stronger. A focused workforce and strategic layoffs helped them weather the crisis. Stock price and market position improved significantly.
Better.com (2021): A Missed Opportunity
What Went Wrong:
• Poor Communication: CEO Vishal Garg’s callous Zoom call announcing layoffs eroded trust and morale.
• Lack of Transparency: Unclear reasons for layoffs led to confusion and negativity.
• Negative Publicity: The insensitive approach damaged the company’s reputation.
Missed Opportunities:
• Empathetic Communication: A well-communicated plan and empathetic approach could have mitigated the damage.
• Enhanced Employee Support: Better severance packages and outplacement services could have softened the blow.
Boardroom Education: Your Partner in Making Informed Decisions
Boardroom Education, the leading global expert in corporate governance, empowers boards with the knowledge and resources necessary for strategic decision-making, especially in volatile election years. We offer in-depth resources and guidance on navigating layoffs effectively and Ethically.
Ready to Learn More?
Contact us today to discuss customised solutions and access insightful case studies on navigating layoffs in an election year.
Best regards,
Yusuf Azizullah
Global Board Advisors Corp
boardroomeducation.com
Dated September 17th 2024
