Management & Finance

Letting Workers Go Because of Covid-19

During the ongoing coronavirus pandemic, many retailers have furloughed or laid off workers. While this is never an easy process, good communication may help make it relatively less emotional and painful for everyone involved.

If it has decided to let some workers go permanently, your company is not alone. Many well-known omnichannel retail businesses have already announced significant layoffs.

On June 3, 2020, The Economist reported that “American retailers have laid off or furloughed one-fifth of their workers.”

Macy’s, for example, furloughed nearly all of its workers in March 2020 as shelter-in-place orders were announced across the country. Then on June 25, 2020, the company said that 3,900 of its employees would be let go permanently.

Sur la Table, a Seattle-based kitchen supply retailer, confirmed last week that it laid off 20 percent of its corporate staff (27 employees) as a result of the pandemic. While this is a much smaller number than Macy’s, you can bet it was still a trying experience for each person who lost a job and for everyone who remained.

Now add to this layoffs at many other retailers, such as Nordstrom, J. C. Penney, J.Crew, and Neiman Marcus, to name just a few.

Layoffs Hurt

“Letting people go is an emotional event — not just for those being laid off but for those who remain,” wrote business advisor and entrepreneur Stever Robbins in a 2009 Harvard Business Review article.

Many articles and papers echo Robbins’ point about laying off employees and doing it well. The literature recognizes that the layoff process is difficult under the best of circumstances, and the Covid-19-induced recession is not the best of circumstances.

Retail business leaders who have decided that a layoff is necessary should next recognize that communication is compassion.

All involved will want to understand how they are personally impacted (i.e., do they still have a job?), why the layoff was necessary, and how the layoff will improve the business’s performance and help to ensure its survival.

“Managers often think they shouldn’t let employees know when things are going poorly,” Robbins wrote. “They don’t want their workers to become discouraged. But people aren’t stupid; they know when things aren’t going well. Even if top managers spin the circumstances positively, the message comes across through unclear goals, a decrease in resources committed to ongoing projects, and other subtle clues. Discussing and acknowledging the company’s position is the first step to keeping people involved — and committed to solving problems they understand.”

Business leaders should communicate directly with employees, explaining who will be laid off, why, and how it will help the company. <em>Photo: Dylan Gillis.</em>

Business leaders should communicate directly with employees, explaining who will be laid off, why, and how it will help the company. Photo: Dylan Gillis.

When employees are let go, company leaders should meet with groups and individuals to communicate what is happening, when it is happening, and why.

Prepare, but be Quick

While it is important not to delay communicating a layoff, it is also necessary to think about what to communicate.

“If you decide layoffs are necessary or others have made that decision for you, then make sure you’re prepared before you reach out to the affected employees,” wrote Rebecca Knight in an April 2020 article also from the Harvard Business Review.

Effectively, this means understanding if the retailer can help employees with the transition to a new job. If not, can the retailer offer any sort of exit package, and at the very least, can the retailer point laid-off workers to government programs like unemployment?

Business leaders should also be prepared to answer questions like, “What happens to my 401(k)?” and “Will I get paid for my vacation time?”

Ultimately, a company should do its best to help laid-off workers understand what is happening to them and help them cope. How these things are communicated should be consistent and compassionate. They should also be done as soon as possible.

Companies should also communicate with employees who survived the layoff.

These folks “also need reassurance about their own future — and an understanding of the strategic goals behind the cuts,” said Robbins.

“Reassurance” is an important part of what needs to be communicated. Surviving employees should not be worried that they are next. They want to know that the appropriate cuts are complete, and the company (or, more specifically, their job) will last.

Work Load

After retail business leaders have communicated with laid-off and remaining workers, it is time for a second round of conversations to explain how workloads will be shifted.

For surviving employees, this is the next logical question. Once they know that they will not lose their job, and once they understand the strategy behind the layoffs, those employees will want to know how their projects and responsibilities will change.

Armando Roggio

Armando Roggio

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