Leading Through Layoffs: Advice for Managers and Executives (Hint: Reskilling)

It feels nearly impossible to read the news these days without seeing an article announcing more layoffs. With the last economic downcycle hitting over 16 years ago, this is the first time many in the workforce are experiencing the revolving door of “bad news” headlines. And that can feel overwhelming – for good reason. Tech layoffs impacted 216,000+ employees in 2022, roughly 4% of the total sector.

Unfortunately, layoffs are one trend for 2023 that seems here to stay. But take heart, these headlines cast a discouraging shadow, today’s blog is going to attempt to dive into why job prospects aren’t nearly as dire as they appear and share advice from leaders on how to navigate this employment cycle with empathy and awareness.

Not Everything is on Fire 

First off, it’s important to note that government data revealed December had the lowest amount of layoffs than any month during the two decades before the pandemic, and the current unemployment rate, at 3.6 percent, is the lowest since 1969. This explains why so many HR recruiters feel like they’re facing an overall talent shortage: demand for talent still outpaces current supply levels. This dynamic makes it difficult for many back-office teams to find, let alone retain, quality candidates for high-demand roles. (Example A: 73% of CIOs are worried about IT talent attrition.)

Still, with no signs of ending soon, and new headlines from major companies this week, layoffs remain top of mind for many HR leaders today. If your team is hit with layoffs this year, use this blog for best practices and insights on how to guide your team through this difficult season.

Layoffs as a Last Resort: Look for Opportunities to Reskill First 

As individual industries and markets shift, organizations and the roles they hire must also evolve to keep pace. This is true across every vertical but felt acutely by the tech workers directly impacted by the sector’s seesaw of boom and bust cycles. Although many tech teams today opt for layoffs as a way to quickly cut down their costs, more and more experts recommend reskilling employees as a powerful alternative.

Ironically enough, Microsoft released new research with Boston Consulting Group earlier this year detailing ways for teams to bridge skills gaps and talent shortages by bolstering internal training and creating skill competencies – right before announcing layoffs for 10,000 employees and despite listing 800+ open roles on its website.

So why then are tech companies so keen to jump to layoffs, rather than reskill the workers they’ve already hired to fill open roles? Lance Haun, a Leadership and Technology Columnist for Reworked, argues that firms like Microsoft lose a unique opportunity to upskill people into new roles by simply relying on massive job cuts. He urges, “It’s time companies and shareholders understood that reskilling, upskilling, and talent mobility make the type of fiscal impact that layoffs have been positioned to achieve for decades.”

Mbula Schoen, Senior Director Analyst at Gartner, has taken a similar stance, pointing out that the current demand for tech talent is much greater than its available supply. With Gartner forecasting this deficit to remain until at least 2026,  Schoen advises teams to hold tight onto their skilled workers while they can, and go on the offensive to further build out their teams: “Now is the time for CIOs to take action to strategically acquire top IT talent, rather than stalling in response to market noise.” 

She brings up a good point that, albeit counterintuitive, now may be a crucial time for teams to come out ahead of the hiring curve. We’re currently seeing the tech sector rebalance itself after extreme growth and inflated hiring competition that took place during the beginning of the pandemic. Recent layoffs demonstrate a certain rebalancing taking place in the sector but also serves as an opportune time for new teams to snatch up highly skilled tech workers.

Allstate Insurance and the Department of Veterans Affairs are just two of the numerous organizations that have publicly announced their plans to recruit laid-off tech workers, in an attempt to jumpstart internal innovation and digitization. More firms are sure to follow suit. The LA Times recently noted that the current business landscape appears similar to that of the early 2000s when we saw the crash of the dot com bubble, redistributing expert software engineers back into the job market and ultimately catalyzing the industry’s current trajectory. A similar disruption may in fact be closer than we think.

Leading Through Layoffs: Best Practices For C-Suite Execs

The best leaders shine during times of intense uncertainty. If and when layoffs hit your team, it’s absolutely vital to guide the business with a clear strategy, along with an honest voice and deep regard for your people. Here is a list of other best practices for executives to calmly and confidently lead teams through layoffs:

1. Foster the psychological safety of your team. Your team is the firm’s most expensive asset, accounting for as much as 70% of overall business costs. Treat that investment carefully by tending to your team members with honesty, integrity, and support. From your communication plan to your severance packages, everything related to the layoffs should be done in a way that keeps employees informed and feeling heard. Transparency is another key factor in fostering psychological safety for your team. Clearly, there are confidentiality constraints when it comes to layoffs, but nothing ramps up anxiety amongst remaining staff more than overly restricting information surrounding company strategy and performance post-layoffs.
2. Prepare a clear communication plan. Leaders must prepare a strong communications plan and create a clear message for management, departing staff, and the entire team. Make sure to provide managers with a detailed talk track to keep the facts and tone consistent across the company. Stay in the loop by checking in on managers after they talk with their teams, so you can hear feedback across all levels of the org.
3. Treat the departing team members well. This one should be a no-brainer, but do your best to make departing staff feel heard, valued, and seen during layoffs. When possible, offer a comprehensive severance package, including severance, benefits, and references. This not only benefits the departing staff but also reassures remaining folks that the company takes care of their employees during hard times.It’s also a good idea to prepare a packet with all relevant information about the layoff including: updates on their last paycheck, 401k account, COBRA coverage, and any other required notices. This one-stop shop will provide more clarity for the employees, lessening the anxiety that often arises due to the uncertainty of layoffs. Share this document with departing team members as soon as possible after alerting them of the layoff, so they can review the papers and follow up with further questions as needed.
4. Enlist your career center to help departing employees find their next role. Do your best to support departing team members as they explore their next career move. Ask yourself: can your team help provide references, source open job postings, or endorse your team members and their skillsets on LinkedIn?Organizations can also help departing team members explore new career options in other verticals. The New York Times recently noted how tech layoffs provide traditional industries — like healthcare, government, and manufacturing groups –  a unique opportunity to scoop up skilled high-tech workers.As we mentioned previously, many laid-off tech employees find new roles relatively quickly, with 40% of previously laid-off tech workers finding jobs in less than a month. That said, the right support will further expedite this process and ease departing staff’s transition into their next roles.

Leading Through Layoffs: Best Practices For Managers

As the links that connect leadership to the rest of an organization’s staff, managers are a crucial component to any layoff strategy. We’ve already covered that leadership teams must first ensure that managers have the right toolbox to communicate layoffs and subsequent company updates as they arise.

But what else should managers do to keep calm and carry on during layoffs? Here are three steps to guide your team with tact and care after layoffs:

• First, schedule a meeting with your team. It sounds simple, but it’s important to publicly acknowledge the layoffs and whether or not they directly impact your staff. Use this call to reiterate messaging from the leadership team, field questions from the team, and share your sympathies.

• Next, offer to meet 1:1 with team members to help them process the news. This allows for more open dialogue without inadvertently stirring open-ended group discussions during a team call – which can lead to misguided conversations that ultimately heighten anxiety across the entire team.

• Assure the team that you’re there to see them through and follow up over the next several weeks. Be available for and patient with your staff as they process the news. Decreased levels of focus and productivity, increased distraction, and stress are all common responses to layoffs. As such, it’s important to support your team by continuing to offer 1-1 meetings and connecting staff with resources like EAPs and mental health benefits where appropriate.

Keep Your Team Competitive

We’ve just covered a lot on what to do after you’ve made the decision to downsize on staff, but we’d be remiss not to mention proactive practices to help your team long before there’s any whisper of layoffs.

First and foremost, it’s crucial that people managers have meaningful career discussions with their staff on a regular basis. This entails checking in routinely to discuss the employee’s overall performance, current skill set, and most importantly, opportunities for growth. Use these conversations to set goals for your employee that align with the organization’s needs and overall business direction. This will ensure their skills remain relevant to the firm as they progress in their career. Once you’ve identified goals and areas for growth, it’s also a good idea to look for available training or professional opportunities to help bridge any gaps.

These 1-1 check-in conversations are also an opportune time to discuss the overall state of the business with your direct hires. Share information regarding the company’s overall performance, current department performance, and any pertinent updates from leadership. Keeping your team informed on overall business developments and updates can help minimize shock and surprise if and when layoffs come down the pike. While team members may be upset, at least they’ll understand the business context of why the layoffs are taking place.

Discussing the above with your people on a consistent basis will sharpen their performance and skillset, and also better prepare them in the event of any downsizing. While hardly groundbreaking, these conversations are critical for building trust and sharing information amongst teams.

Key Takeaways

There’s no perfect way to lay off staff, but unfortunately, it’s a harsh reality facing many teams this year. If your organization has been impacted or will be impacted by layoffs in 2023, make sure to prioritize the psychological safety of your team above all else. Offering support resources, 1-1 check-ins, and following a clear communication plan will minimize the angst and anxiety of layoffs and help you better guide your team with care.

If possible, make sure to get ahead of the curve with layoffs by providing routine performance reviews on your team and keeping your staff’s skill sets competitive. Lastly, don’t forget that upskilling is a compelling alternative to layoffs and should be explored when possible.

Looking to learn more about layoffs or upskilling your workforce? Meet with one of Skillcentrix’s HR experts to get additional insights for your team.