With new challenges in this uncertain economy, some employers are facing layoffs. While these situations are especially difficult for the employees whose roles are eliminated, it’s important to also recognize that layoffs can create other challenges with the employees that remain, such as unintentionally setting back efforts around pay equity and opportunity equity progress.
Employers need a strategy to ensure they continue to engage their existing employees and nurture their talent by maintaining an equitable workplace. This post reviews some key steps and reviews you should take after a round of layoffs to ensure that you make necessary changes in the way you think about and analyze your workforce as it exists after a round of downsizing.
Establish an equitable framework for decisions
As discussed in Part 1 of this series, employers typically establish a framework for layoff decisions that rely on neutral job-related factors such as location or employee factors like tenure (e.g. “last in, last out”). Decisions can also be based on the needs of the business (e.g., “we are eliminating an entire business division,” or “we need to eliminate a percentage of overall staff”).
It is always critical to consider legal risk: engage counsel to help you review your decision framework from a legal point of view. Employers are required to ensure that their processes are based on legitimate, non-discriminatory factors. It’s therefore wise to conduct an adverse impact analysis to test whether reductions in force or other decisions disproportionately impacted employees in a protected category (e.g. gender, race, etc). The EEOC offers some guidance for how to do this, and check out Part 1 of this series for best practice advice for getting the most out of adverse impact analyses.
Assess your decisions
Of course, your work is not finished once the layoff occurs. There are best practices to follow when it comes to working with employees that remain after a layoff. This section outlines some key questions to explore that will help you learn from your decisions after the fact and make necessary updates to the way you analyze your organization.
Layoff decision assessment
While you may have crafted a plan for layoffs, we know that “life happens while you’re making other plans.” Conducting a post-mortem is essential to fully understanding the impact of all of the actions taken. Consider the outcomes of the decisions made, including:
- Was your layoff strategy applied as intended? For example, “The entire business unit was eliminated.” Or, were there exceptions? E.g. “We planned on eliminating the business unit, but ended up keeping this one department.”
- How were individual jobs and employees selected for layoffs (e.g., was it based on role? Tenure? Location?)
- Who was ultimately affected? What were their roles, genders, race/ethnicities, levels of earnings, ages?
- Were there individual exceptions or reassignments? For example, “We were able to redeploy this group of engineers to other business units,” or, “Joe’s job was eliminated, but he applied and was moved to another job.”
- Which employees that remained were most affected by the layoffs? What are their roles, genders, race/ethnicities, levels of earnings, and ages?
Once you’ve captured what you’ve done, assess your current state to inform your strategy for moving forward. While above we discuss the demographics of your remaining employee population, it’s important to dig deeper into the implications of layoffs for your organizational design and the impact on how work will be performed going forward. Conduct a job analysis to understand:
- Has the nature of work changed as a result of layoffs?
- Have jobs been eliminated from some processes, or is there work that was partially done by a newly-eliminated job that will impact an existing job?
- Is a new job required to cover processes that were covered by several of the eliminated jobs?
Jobs, job levels and pay for roles may all need to be re-evaluated.
Pay equity assessment
Conduct a pay equity analysis to understand:
- As the population has changed, are there now new patterns of pay inequities, especially in the functions that were most impacted by layoffs?
- Have the changes impacted how you define substantially similar work?
- Have the drivers of pay changed with the layoffs?
In addition to ensuring that changes haven’t impacted pay equity, you should also evaluate whether change may have impacted your approach to the analysis itself. Depending on the roles and people who were terminated, you may see different factors now appearing to drive pay. Review for alignment with the intention of your pay designs — for example, the manner in which level is driving pay (if significant numbers of jobs/employees from certain levels have been eliminated). Or, if concentrations of employees in specific locations or regions were impacted, examine how location is driving pay.
Something you may not have considered, but which is absolutely critical to your company’s culture, the trajectory of your business, and the satisfaction of your remaining employees, is gaining a big picture view of opportunities that remain for advancement. A recent SHRM report found that 61% of HR professionals listed lack of career development and advancement among the top three causes of turnover and 21% flagged it as the top cause.
That’s why, once you have considered the impact of changes to pay and jobs in their current state, it’s important to assess longer-term impacts for careers and what it means for your company, as a whole — including the impact on opportunity equity. This is vital for continuing to engage your remaining employees through these uncertain times. Employees that know they can grow with you will stay. Conduct an opportunity assessment to understand:
- Have career paths changed for individual jobs? E.g., Were entire levels of jobs eliminated, or a job that is considered a feeder role for higher-level roles?
- Has the reconstitution of jobs caused compression?
- Are there projects or skill sets that need to be absorbed by the business? What jobs might fill these gaps? How will you train the employees in these jobs to fill them?
- How does the above impact different demographic groups? For example, if career paths have changed for certain jobs, are these also jobs where you have a higher concentration of historically underrepresented folks?
To help you answer the last question, purpose-built software can help you conduct an opportunity equity analysis of your remaining workforce to understand what representation now looks like across levels and departments, identify if there are new gaps, and forecast how changes to your workforce impact timelines for hitting diversity targets.
Inform and maintain your progress in workplace equity
Performing all of the above will go a long way toward informing your talent management strategy moving forward. It will also help to ensure that your actions communicate your intentions. Furthermore, embedding a plan for ongoing review of pay and opportunity as part of your overall talent strategy will continue to help you avoid unnecessary risk and ensure your plan is executed as you’ve intended. This will set you up for near-term and long-term success as your organization adapts and adjusts to evolving economic conditions.
Because one thing’s for sure — wherever the economy lands next year, the importance of prioritizing workplace equity progress isn’t going away. Click the link below to learn more about how you can work toward workplace equity, even in an economic downturn.
Did you miss the first post in our series about workplace equity and layoffs? Check out Workplace Equity & Layoffs Part 1: How to Make Sure Layoffs Don’t Set Back Your Diversity Goals.
The information provided herein does not, and is not intended to, constitute legal advice. All information, content, and materials are provided for general informational purposes only. The links to third-party or government websites are offered for the convenience of the reader; Syndio is not responsible for the contents on linked pages.