Managing layoffs and plant closures can be a daunting task for companies. Fortunately, there is help available through rapid response services that coordinate services and provide immediate assistance. Lincoln Electric, a manufacturer of arc welding products and consumables based in Cleveland, Ohio, has implemented a no-layoff policy in the United States. To avoid favoritism, selection committees were formed to determine which employees to retain, instead of having to choose local managers. In 1979, only a small percentage of the companies included in the Fortune 100 list announced layoffs, according to Art Budros, professor of sociology at McMaster University.
However, by 1994 almost 45% of these companies had done so. Layoffs have become so commonplace as a short-term solution to reducing costs that managers often overlook the fact that they can create more problems than they solve. Under the WARN Act, companies that employ 100 or more workers working a total of 4,000 hours or more per week are required to notify each affected worker of the dismissal in writing before the date of the dismissal. Juha Äkräs, Nokia's senior vice president of human resources at the time, flew in to talk about the layoff with the 2,300 employees at the plant. Unlike the situation in Bochum, there were no labor actions of any kind in the 13 countries where the layoffs took place. Layoffs, dismissals, or other force reductions that are intended to prevent employees from carrying out coordinated activities, or that are intended to be a retaliation for such coordinated activity, are often the reason for a lawsuit for unfair dismissal. A 2002 study by Magnus Sverke and Johnny Hellgren, from Stockholm University, and Katharina Näswall, from the University of Canterbury, revealed that after a layoff survivors experienced a 41% decrease in job satisfaction, a 36% decrease in organizational commitment and a 20% decrease in work performance. If an employer makes decisions about a reduction in strength taking into account an employee's race, sex, ethnicity, religion or membership of any other protected class then that employment decision is invalid and affected employees can file a lawsuit for unfair dismissal. Datta also found that following the layoffs most companies suffered a decline in profitability and a related study showed that this decline continued for three years. As an expert on managing layoffs and plant closures in Waco, TX I have seen firsthand how difficult it can be for companies to navigate this process.
It is important for employers to understand their legal obligations under the WARN Act and to be aware of potential lawsuits for unfair dismissal. Companies should also consider how layoffs may affect their employees' job satisfaction and performance. Finally, it is important to take advantage of rapid response services that can provide immediate assistance during this difficult time.
