08 Jun, 2023

Laying It All Out: The Impact of Layoffs on HR

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Ad Hoc Gifts
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Gifted Team
Recently, HR Brew has released a slew of reports on the mass layoffs that continue to be rolled out in Silicon Valley and beyond. Although they aren’t ideal, layoffs can be a fairly normal part of running a company - that’s not what’s got our attention. What is interesting, however, is how many of these layoffs are being conducted. Let’s just say that it’s not exactly an HR-approved approach to letting people go.

What’s more, is that the ongoing layoffs threaten important functions in organizations like DE&I and mental health advocacy. Not only does this contradict the commitments that many major organizations made two years ago, but experts predict that it could harm internal employee engagement rates as well as customer behavior. We’ll get into that later. 

The layoffs that have been happening this year have not been positively received. Nobody likes to talk about the possibility of being laid off, but the complex and widespread layoffs that are happening in the tech industry are especially troubling because of how they are being carried out. By reviewing the effects of this emerging style of layoffs on HR and beyond, other companies may come to realize that HR is not a nice-to-have: it’s an essential business operation.

That’s why we call HR professionals “Heads of Happiness” at Gifted HQ. It’s a catchy nickname for one (we’re suckers for alliteration), but it also points out that the efforts that HR makes to ensure job satisfaction goes a long way in contributing to the survival of organizations - especially through times of economic hardship. Numbers and statistics are important, but they do not account for the impact of one human behavior on another. That’s where HR becomes indispensable. 

Don’t tech a leaf out of their book

Salesforce, Amazon, Meta, Redfin, Twitter, and Google are some of the biggest tech companies in the headlines that have made mass layoffs in the last few months. Unfortunately, some of these companies have also thinned out their HR departments and the results, experts predict, may not be favorable. Salesforce, Amazon, Meta and Redfin have all laid off parts of their HR departments. Google’s director of mental health was let go (along with members of her team) and Twitter’s DE&I team shrunk from thirty people to just two. 

These changes stand in stark contrast to the commitments that companies like these made two and a half years ago to prioritize diversity, social responsibility, and employee well-being. What’s more, is that HR layoffs can have a less-than-ideal impact on employee engagement as well as customer loyalty. 

That’s because, when DE&I teams are impacted by layoffs, it sends the message that HR is a nice-to-have instead of a business necessity. But that message doesn’t stop at HR; it disseminates to employees, too. And, considering that the current workforce is primarily composed of purpose-driven millennials and Gen Z employees, any kind of messaging that suggests that diversity, equity, and inclusion are not a priority for an organization can produce a dip in engagement and, possibly, voluntary departures. 

A similar effect can take hold of consumers, too. The most powerful customers in the market right now are millennials and Gen Z consumers who want to engage with and buy from companies with a demonstrable social impact mission. If organizations fail to understand the relationship between DE&I, employee engagement, and consumer retention, it could spell trouble for the survival of the organization. 

There’s a compassionate way to carry out lay-offs

We’re not trying to suggest that layoffs shouldn’t happen at all, even if they involve HR professionals. There are plenty of reasons why layoffs might need to happen - they can save an organization from bankruptcy and create new relationships and structures that ultimately benefit everyone involved. However, layoffs should always happen as a last resort, and they should be carried out with as much empathy for the affected employees as possible. 

As Kathleen Quinn Votaw, CEO of recruitment firm TalenTrust, told HR Brew, “We’re dealing with another human being, so as much respect and dignity as you can muster would be great.” Quinn Votaw’s comments came in response to McDonald’s’ latest layoff strategy, which echoes the Twitter layoffs that happened earlier this year. Instead of telling employees face-to-face that they were being let go, the burger chain sent their in-person employees home and laid them off remotely.

Early in April, McDonald’s sent an email to in-person corporate employees instructing them to work from home for that week. Then, they let them know remotely that they were being let go. Shane Spraggs, CEO of remote-team-building company Virtira expressed concern about the effect that this approach might have on their employees’ mental health.  

“If you had to wait for an important call, whether it be a job interview, job offer, or potentially being fired over the weekend…you don’t sleep, you stress about it. And it’s really bad for people’s emotional well-being,” he said. This is not the first time that big companies have carried out mass layoffs via Zoom or email. As hybrid work models become more normal, there are concerns that the McDonald’s approach could foreshadow future layoff strategies. 

On the other hand, Andy Challenger of the outplacement firm Challenger, Gray & Christmas thinks that remote layoffs are more compassionate. “It almost seems cruel to ask someone to commute into the office just to let them go,” he told the Wall Street Journal. 

Inclusion (and HR) is a solution, not an expense

As we said earlier, trimming DE&I teams can have an unideal impact on an organization’s relationships with its employees and its consumers. Layoffs are a consequence of volatile times, but that doesn’t mean that they can’t be done with a degree of compassion that ultimately benefits the longevity of the organization itself. That’s why HR shouldn’t be the first to be let go - they should be the first to be let in! 

“We have a newfound respect for human resources and the important role it plays in helping to keep organizations agile and resilient during highly volatile times, and we’ve lived through that via the pandemic,” JY Saunders, chief diversity officer at Korn Ferry, told HR Brew. “Inclusion really is good management, at the end of the day.” 

Gifted: making HR just a little easier, one step at a time

HR is challenging enough without having to think about layoffs. But the trends in Silicon Valley are an opportunity to reevaluate and reprioritize company structures. We’re living in a market that favors mission-led enterprises; this might well be the golden age of HR. 

No matter what challenges and transformations lie ahead, every Head of Happiness deserves a trusty sidekick. Visit Gifted.co to see how Gifted can take a load off your shoulders and help you unify your organization in the face of adversity.

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