In these troubled times, many companies are being forced to make substantial staffing cut-backs. Announcements are coming daily with some industries being affected more than others. The automotive industry in particular is scrambling to "right-size" its workforce in an effort to avoid bankruptcy and as part of recovery plans associated with Federal Bailout grants (GM's Downsizing Strategy Moving With Great Efficiency | workforce.com.)
From an unemployment perspective it is essential to understand the impact a layoff will have on your company’s unemployment tax rate. In addition, failure to meet certain employee notification requirements under the Federal Warn Act could result in penalties and open the door to class action suits or individual employee lawsuits (TALX Bulletin Employer Downsizing.)
From a liability perspective, it is important to protect your company in the area of employment litigation (Nine Ways to Protect Your Company During Staff Reductions | workforce.com.)
Lastly, maintaining employee morale for those left behind can be a challenge. Treatment of exiting employees can say a lot about a company and has a tremendous impact on the productivity of the remaining workforce (In a Time of Layoffs, Keep Human Resources Humane - BusinessWeek.)
While workforce reductions are often reactionary resolutions to tough economic conditions, planning is essential. It is crucial that you know the impact of every decision made along the way.