3 Tips How Companies Can Avoid And Manage Layoffs

By Chong Jinn Xiung

As an employer or leader, letting someone go from their job is never easy. Business training consultant Sheila Singam shares insights on how to avoid having to do so or if it needs to be done, to do it with compassion

Tatler Asia
Illustration: Getty Images
Cover  Illustration: Getty Images

As the economy cools, companies are responding by focusing even more on maximising profits and minimising costs as opposed to growing exponentially. Across Asia, numerous startups and organisations have begun to let go of staff and shutter low-priority or unprofitable business arms.

E-commerce giant Shopee, for instance, has laid off hundreds of workers from its payment and food delivery departments in order to rationalise its business across several of its markets like Indonesia, Thailand and Vietnam. 

Unfortunately, shrinking the workforce is one of the most common measures taken by companies looking to cut costs, especially in the face of a recession. But how can employers best handle the complex and sensitive task of relieving someone of their post? We speak with business trainer Sheila Singam on this and how else companies can manage costs without reducing manpower.

Read also: 5 Tips On How To Lead With Empathy

Assess all of your options

There's a reason why the saying, "people are a company's greatest assets", has survived the test of time. But not all leaders who proclaim to understand this actually follow through in their actions, especially in the face of a crisis. And this can have wider business repercussions.

"Layoffs have a huge impact on employee psyche," says Singam. "Surviving employees will suffer from decreased morale and it sends a message to everybody that there's no guarantee you will be able to keep your job."

She adds that instead of seeing cutting manpower as the quick and default choice for reducing operational costs, employers have the responsibility to determine if layoffs are necessary or if there are other solutions to consider.

Companies can look at disposing of some of their fixed assets that do not generate income, for instance, such as buildings or equipment in order to increase cash flow. Retraining staff to take on new roles within the organisation or transitioning some of them to a retainer contract are other possible options that allow people to keep their jobs and contribute to the company's growth.

Maintain clear and open communication

Having a frank discussion with employees can help leaders to weigh their cost-cutting options. "It would help to ask employees what are they willing to do to cut costs to survive and avoid conducting layoffs," says Singam.

If layoffs must be done, she stresses the importance of employers explaining the situation to their staff clearly, efficiently and with compassion, while allowing time to address any concerns. 

"It is better to straighten the narrative instead of letting rumours spread among employees," says Singam. "If not, there is a good chance that some of them will publicise their complaints on social media, which could negatively affect the company's brand."

Read more: How Effective Leadership Starts With Good Communication

Manage the damage with empathy and solutions

As layoffs are being conducted and after, employers have to be mindful of how they engage with those who survived the cut. She shares that it's common for senior management to make decisions without finding out what the sentiments of the staff are at different levels of the company.

"Leaders can conduct walkabout sessions regularly in order to gauge the mood of their staff," says Singam. "It can be as simple as having a chat or meal with different employees to find out what they are thinking. Doing so also lets them know that they matter to you and to the company." 

Companies can also arrange regular meetings or townhalls, where groups of employees can voice their feelings without fear of repercussion. At the same time, employees need to see that their feedback is being taken seriously. One way is to integrate their good ideas into company plans.

In recent times, more employers are also providing their staff with access to mental wellness solutions, such as insurance that covers therapy or having an onsite therapist with who employees can confide in about their concerns about work or layoffs.

"There is often a lack of meaningful conversations taking place between staff and management in organisations," says Singam. "Don't wait for appraisal season to ask how they are doing or to find out their concerns." As the saying goes, the early bird catches the worm—and in managing a workforce, efficiency and empathy are key.

© 2022 Tatler Asia Limited. All rights reserved.