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Best Practice: managing large-scale terminations

Guelph assistant professor Nita Chhinzer talks about how to manage layoffs - and why they are not always as successful as expected.

Video transcript below:

Caitlin Nobes, HRM TV
Caitlin Nobes:
 How have lay offs changed over the years and what can you do to ensure a smooth process and a good outcome?  I’m Caitlin Nobes, you are watching HRM TV.

Over the years the reason for lay offs has changed, from a move of desperation to a way to adapt and shape how we do business.  

Dr. Nita Chhinzer, University of Guelph
Dr. Nita Chhinzer:
 The original intent of lay offs was to deal with a situation where an organisation was performing poorly and in result decided to reduce their head count. So demand decline had invoked lay offs.  Throughout the 90s and into early 2000s we saw a massive shift to organisations that were successful, who are actually going ahead and laying off as a means to lean up the organisation or as a means to shift the nature of their work.  

Caitlin Nobes:  The major change is that successful and unsuccessful businesses are laying people off.  One of the reasons for these lay offs is when a company needs to change direction.  It lays off staff it doesn’t need, so it can hire the right skills.  The other major motivator for lay offs is a desire to be as efficient as possible.

Dr. Nita Chhinzer:  There is this pressure for organisations to really feel that they need to stay as lean as they can and have a skeleton work force and try to get as much productivity as they can out of their existing employees.  

Caitlin Nobes:  However, [results] shows lay offs don’t change profit margins as much as anticipated, partly because it creates mistrust and uncertainty in the remaining staff.  This lack of certainty increases turnover and decreases productivity.  So how can you best manage those left behind.

Dr. Nita Chhinzer:  In the eyes of the employee there has to be this concept of procedural justice, that the actions that were taken and the decisions that were taken were fair.  So for example in one group if you are laying off based on performance, keep that consistent across all your various groups, so that it does become fair that there is an equal opportunity and there is a sense of justice in how decisions were made.

Caitlin Nobes:  Dr. Chhinzer also emphasizes transparency, communication and healing when dealing with lay offs.  To find her thoughts on these factors, see the accompanying story linked below. I’m Caitlin Nobes, thanks for watching HRM TV.

For more information read HRM's matching story: TV Tie-in: layoff best practice