An Employee Layoff Process: Conducting the Dismissal Meeting Case Study

Fictitious Company Description

Guild-ford is a company that specializes in processing and packaging yoghurt, cheese, and fresh milk. The company has its headquarters in California valley, United States. Guild-ford’s main competitor is the pacific gold producers. Guild-ford has 56 employees. They are all driven by their commitment to quality and high standards of service (Mathis & Jackson, 2003).

Guild-ford had previously faced an economic downturn because the market was becoming highly competitive. This challenge would only be solved by restructuring the company, a process that saw nine employees laid-off. This step was an absolute managerial tool rather than a first resort.

Research shows that layoffs cause severe human consequences because they are costly for the individuals, their families as well as the entire community. It was inevitable to deal with emotions that the various affected employees had depicted. The remaining employees were also faced by severe emotions that if not handled properly, the company’s production level would have declined by 75% because of reputation decline (Mathis & Jackson, 2003).

The Ways a Manager Can Cope With Negative Emotions During Employee Layoff

It is possible that after retrenching some employees, the remaining employees will experience fear and insecurity. The main reason behind this is the uncertainty that is likely to be accompanied by this change. For instance, the left employees are uncertain about their job security. They cannot predict how the company will go on or even what roles they will be playing in the restructured company. The remaining employees live with the fear that the next lay-off might affect them, thus they become unstable in their performance.

Anger can particularly affect the management itself. The manager can feel guilty of laying-off its employees. The manager also has to cope with anger; an emotion that may affect the company’s performance. Moreover, the laid-off employee’s anger can lead to the filing of lawsuits.

There is also a possibility that the left employees could engage in gossips that may ultimately affect the company’s reputation. This may go to the extent that the emotionally affected staff get physically sick and quit their job or start looking for other companies where they feel more secure. All the above emotions contribute to a decline in human capital and can be detrimental to the company’s performance (Miller & Kahn, 2008).

In a restructuring company, such emotions cannot be avoided. When they accumulate to high levels, they become more harmful and translate to serious negative impacts on the firm. The manager has to be keen on the above emotions and must be ready to reduce their effects as much as possible. In order to handle the challenges, the following solutions are recommended.

First, the manager must understand the emotional side and handle it with appropriate sensitivity. The manager has the duty of communicating the importance of these emotions to the middle managers who in turn implement the restructuring decisions. If they fail to respect the emotions, the management might fail to control the anxiety and the fear of employees in the restructured company.

The employees might be unable to perform well and to learn new skills. The manager must deal with this by being sensitive to emotions and creating management personnel that pays necessary attention to employees’ emotional problems (Miller & Kahn, 2008).

Second, enough mourning time must be accorded to the remaining employees. In this case, the employees are given time to share and talk about their emotions. Research has proved that creation of emotional zones can be a very powerful tool-for the obvious reason that if people share their problems with colleagues, they feel somehow relieved.

Third, a manager who clearly understands the emotions that may accompany an employee’s lay-off has a better position of reducing the effect of these emotions. For example, the company should do the entire process in a humane way. The way a company handles the lay-off process determines the impact the process will have on the remaining employees.

The manager can achieve this by offering the dismissed employees a severance pay and clearly elucidating why the process had to happen. Siemens and Cisco companies are relevant case examples given the way they treated their dismissed employees at one particular time.

The companies gave their dismissed employees a fair compensation in form of money. This alone signaled the remaining employees that the companies cared about their employee’s emotional welfare. An honest and open passage of a massage from the top management is highly appreciated. The laid-off employees get firsthand information on the reason behind the restructuring process, and their eventual lay-off (Miller & Kahn, 2008).

A Step-By-Step Process of Conducting the Dismissal Meeting

The following is a systematic process of conducting such a meeting. It is important to follow the acceptable criterion that does not interfere with the reputation of a company to the valued customers and employees.

• The dismissal meeting should be scheduled early in the week. This permits the dismissed employees an adequate time to apply for employment insurance benefits, connect with the outplacement counselor and review severance arrangements with legal advisors.
• If possible, the meeting should be convened at the end of a workday. This allows the dismissed to leave in privacy and meet with their families or friends for an emotional support.
• A third party has to be involved in the meeting who keeps a clear record of what both the employer and the employee say. The third party also confirms that a termination package or letter has been presented to the employee. A letter of reference should be presented to the employee at the dismissal meeting as well. The letter should depict honesty, truthfulness, and must not necessarily have the qualitative assessments of the employee. Similarly, an employee’s duly completed record of employment (ROE) should be ready to be given to the client during the meeting. This allows the employee to apply for employment insurance benefits immediately.
• A neutral location such as a boardroom or the employee’s own office should be used to hold the meeting. This reduces the level of intimidation of the affected employee. These are some of the valued humane and legal considerations. During the meeting, it is the role of the employer to act in good faith. If an employer for example proceeds in a manner that causes unnecessary embarrassment, then courts may argue that the duty to act in good faith was breached.
• During the meeting, the employer needs to be direct and to the point. Alternatives may include the use of an employment lawyer. It is also important to avoid debates during these meetings. “The employee should be told clearly the decision must be final” (Milkovich, Newman, & Milkovich, 2005, p. 66). The representatives of the employer must avoid arguments regarding the reasons for the dismissal.
• In the event of a dismissal without cause situation, the employer should not disclose the reasons. On the other hand, if the dismissal was for cause, the employer has the obligation of reviewing the reasons for the decision. This eliminates the probability of the employees claiming that they were dismissed for cause without being informed.
• After covering the above steps, the meeting should be brought to a conclusion. The employees have to return any company property they possess. The employee should be given an opportunity to collect personal belongings.

Compensation That the Company May Provide to the Separated Employee

Guild-ford offered a number of benefits to the laid-off employees. These included the severance pay and unused annual leave. Severance pay was made available to any laid-off employee provided he or she did not decline an offer of a position that is in the same agency, in the same commuting area or that is two grades lower than the employees grade level.

The employee, however, had to have worked with the company for one year. The separated workers can also redeem unused annual leave. This involves giving the separated employee a lump sum payment equivalent to the accrued annual leave (Bratton & Gold, 2000).

The Timeline of the Disbursement of the Compensation

“Severance pay can be issued biweekly at the current employee’s rate before separation” (Milkovich, Newman, & Milkovich, 2005.67). The total severance pay is carried out for the next 52 weeks.

All the nine laid off employees were eligible for this pay. For the Annual leave, only the employees with over 12 months of service to the company were eligible to receiving an amount for their unused annual leaves (Milkovich, Newman, & Milkovich, 2005). Only four employees had not received their leave. These were hence eligible for the annual leave compensation by the Guild-ford Company.

It took 10 days (from May 1^st to 10^th) to provide these payments to the employees as follows.

The four employees eligible for the annual leave were compensated as follows.

The Ways This Layoff May Affect the Company

As discussed in the above assay, the lay-offs are accompanied by many emotional stresses from the laid-off employees, the management, and the remaining employees. This can be detrimental to the general output of the company as most of the workers lack the morale to continue working.

The fact that the company was undergoing restructuring was a direct implication that it was operating on a loss as elucidated in the essay. The amount of capital required to pay for the lay-offs is pretty a large sum that can cause another pressure on the company’s available funds for restructuring. However, Failure of the company to observe the law during the layoff process can lead to a poor image and reputation of the company from its internal and external stakeholders. This can affect its sales in future.

References

Bratton, J., & Gold, J. (2000). Human resource management theory and practice (2nd ed.). Mahwah, N.J.: Lawrence Erlbaum.

Mathis, R. L., & Jackson, J. H. (2003). Human resource management (10th ed.). Mason, Ohio: Thomson/South-western.

Milkovich, G. T., Newman, J. M., & Milkovich, C. (2005). Compensation (8th ed.). New York: McGraw-Hill/Irwin.

Miller, E.G., & Kahn, B.E. (2008). Consumer wait management strategies for negative service events: a coping approach. Journal of consumer research, 34(5), 635 – 648.