A Better Approach to Layoffs: How Companies Are Turning Harsh Realities Into New Opportunities

Tens of millions of Americans have been laid off in the wake of COVID-19 pandemic and related economic shutdowns, with new waves of layoffs likely to follow. The economic impact has been devastating for individuals and their families, and it has forced corporate talent leaders to make some of the most challenging choices of their careers.

Layoffs are one of the many harsh realities we’re collectively facing this year, and the need to downsize has us asking questions like these: Can layoffs be better? Can we make the moment people exit a job a moment of opportunity?

Yes, we can. And Impact Employers are leading the way by embracing “ethical offboarding”—an approach to downsizing that improves the economic prospects of former employees and ultimately fosters improvements in long-term employee performance, engagement, and loyalty.

At this year’s ASU GSV, JFF’s Catherine Ward led a lively discussion with offboarding experts Ellie Bertani of Walmart, Hamoon Ekhtiari of FutureFit AI, and JFF Senior Advisor Jon Kaplan.

Here’s what we took away:

1. No surprise, layoffs are unpleasant—and, worse, they are usually mismanaged.

When asked to reflect on their first experience with layoffs, all of the panelists recalled a painful experience.

• “The first layoff I conducted was very traumatic for me personally. First, because I hadn’t gone through this before. Second, I didn’t feel well prepared. So I think part of the conversation is how you prepare managers better to go through this—both for themselves and for the employees they’re working with?” – Ellie Bertani
• “I spent the whole night looking over the list of people we had to lay off the next day. Each name was a person. I refused to let them become another item on a spreadsheet” – Hamoon Ekhtiari
• “I started laying people off at 8:00 a.m., and I continued until 8:00 p.m.… I laid off 53 people…. The scale of it was staggering. I just remember after the second phone call I was totally numb to the experience.” – Jon Kaplan

2. Layoffs weren’t always this way, nor were they as common as they are today. Layoffs as we know them now are a symptom of shareholder capitalism.

Jon Kaplan shared this brief history on how and why the frequency of layoffs started increasing in the 1970s:

• The “Profits Over People” mindset began trending: Economist Milton Friedman gave companies permission (and a mandate) to prioritize profit over people with his Friedman doctrine, which fundamentally changed the social compact between workers and employers. Employers became more concerned with generating profit for their shareholders than showing loyalty to their employees.
• Technology made it possible to produce more goods with fewer workers: For the first time, we saw tech replacing human labor at scale. This development was critical to ensuring that American companies could compete in an increasingly global marketplace.
• Unionization declined: Workers began having fewer protections against losing their jobs when companies downsized, making it easier for employers to eliminate jobs as a cost-saving measure.

3. We have been getting layoffs wrong for far too long. Now is our chance to make them better by embracing ethical offboarding.

Our experts shared a few strategies for what companies can do today:

• “Even just reducing the emotional toll [of layoffs] and recognizing a job well done can go a long way.” – Catherine Ward
• “There’s significant opportunities using existing budget lines for companies to help employees transition and put dollars in the hands of those transitioning employees.” – Hamoon Ekhtiari
• “The No. 1 thing employers can do, regardless of size, is foster a culture of continuous learning. It’s important regardless of layoffs and is better for the company long-term.” – Ellie Bertani

To learn more about strategies that foster a more constructive way to handle offboarding, check out A Better Approach to Layoffs, which details steps employers can take if they want to embrace ethical offboarding. Eager to begin this work now and not sure of the first step? Do as our panelist Hamoon Ekhtiairi directed: “The place to start is to simply ask the question: What if layoffs didn’t look like they do today? That question itself will start plenty.”