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  • Writer's pictureRodney Alkins

How to decide who should lose their job first.

Layoffs may occur for many different, legitimate reasons. These reasons include eliminating or downsizing a business unit that is not performing well, laying off employees with performance issues, or closing an office or plant. How then can HR make them as fair as possible?

By utilizing the right selection criteria, avoiding adverse impact on protected groups of employees, announcing the layoff decision and parting ways on the best terms possible can make a difference.

In some cases, companies use a seniority approach to ease the impact response from the majority of persons earmarked for layoff. In other words, the company will reduce the likelihood of laid-off employees slapping employers with discrimination charges if the layoffs are done according to seniority

Here are some reasons for layoffs:

  1. A need or desire to restructure. An employer may choose to eliminate duplicative positions following a merger or acquisition, or realign functions to achieve efficiencies.

  2. To reduce costs. A company might lay off workers in reaction to reduced demand for products or services or to cut labor costs.

  3. To eliminate a function. Employers could outsource a function that the company can no longer perform efficiently, or cease a function made unprofitable by competition or obsolete by technological advances.

  4. To relocate. Relocation of operations to a new site, city, or country may result in layoffs in the old location. This may not apply to small geographic locations where movement is restricted due to physical geography.

An employer's choice of selection criteria to determine who will be laid off "is the most critical decision to be made. Many employees believe the human resources department has sole responsibility for determining which employees will be laid off, particularly when employers conduct mass layoffs. HR managers play an important role in the decision; however, they work collaboratively with supervisors and managers to identify the employees who could be subject to layoff.

So which strategy is the best when laying off employees? SHRM offers the following suggestions:

  1. Performance-based criteria in selecting who will be laid off

  2. Seniority-based criteria and,

  3. The most recently hired employees are the first to be let go. "last in first out"

Most employers should prefer performance-based layoffs, as they would like to keep the best workers and release the under performing workers. In addition, a performance based criteria lay off strategy is easier to defend in court providing documentation is consistent and follows the rules of best practice performance management.

Laying off based on seniority in the organization is a flawed approach if use in itself since seniority does not indicate enhanced performance. It is quite possible to have a senior member performing more inefficiently than a junior member of staff resulting in more operational expenditure.

"Last in first out" I have never associated this term and strategy with layoffs, rather with inventory and it seems a bit uncaring to me and does not seem to utilise any sort of analysis of performance but merely your tenure. I suppose that employees with the smallest amount of time with the company are not very entrenched and are less costly to lay off.

It is never easy to tell you employee that they are no longer required or that you can't afford to pay them any more. After all they are human beings with feelings, commitments, families and expenses and if we were to place ourselves in their shoes we probably will feel awful. However, some times we must accept the bitter so as to prolong the sweet for a much longer period. The economy will rise again, the business may even rehire that laid off person, or they may find their new passion and turn it into their success story. Every cloud has a silver lining.

He has been laid off but, he is still smiling, good on you sir!

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