The unfortunate evolution of the COVID-19 pandemic may be forcing cannabis operators to consider implementing a hiring freeze or downsizing their workforce in response. Traditionally, companies lay off their workforce in an effort to accommodate an economic climate where expenses are higher than revenue or for companies that have taken funding, the runway often becomes shorter than expected.
There isn’t a one-size-fits-all approach to this challenging predicament.
With startups and public companies alike going through layoffs, it’s important to know the best practices to follow when overseeing a reduction in force (RIF).
Consider large cuts
To alleviate the paranoia that can be created when you segment layoffs, consider a larger reduction in force. This way, the impact on the culture is confined and you have the option of hiring employees back later. A larger RIF can also prevent unnecessary panic among employees. A series of smaller cuts will lead to employees worrying if they are next to go and detrimentally affect workplace morale and performance.
Look at the employee as a whole
Review the employee’s tenure, performance metrics, and emotional and professional engagement. Does the employee care or are they complacent? Do their skills align with the market? Can their skills be used cross-functionally? When a company is downsizing, it’s important to keep employees who are eager to keep the company running as smoothly as possible and willing to take on more responsibility to ride out this tumultuous period.
In a reduction in force, do not speak about performance
A reduction in force is when a job or department is eliminated, usually based on a lack of funds, lack of work, or reorganization. Human resource professionals should not add insult to injury during these already sensitive conversations by bringing up an employee’s performance, even if it factored into the company’s decision to let them go.
Always be compassionate and dignified
Take the time to explain to your employees why they are being laid off, and how it’s not personal. Communicating how the decision was made, detailing their severance benefits, offering to help with their job search, writing a referral, and telling them what the company will be doing to help them during this transition makes a huge difference. Layoff conversations are never easy, but companies should always remember that their employees are human first. Treat these employees how you would want to be treated yourself --oftentimes taking five extra minutes to talk someone through their layoff makes all the difference.
Make sure your current staff knows their colleagues were taken care of
You want to make sure your current employees feel safe and that their coworkers are being treated right during this difficult time. Employees will ask when the next reduction in force will be and if they are safe. This is a good time for managers to discuss upcoming plans for the company. Relay to your current employees that you want to keep investing in them to help grow the business. But if they are uncomfortable in their role, you can extend the same severance package to them. You don’t want employees to continually wonder when the “next shoe will drop,” that’s why it’s recommended to make a large reduction in force upfront to mitigate the risk of uncertainty and distrust.
Consider switching gears
There might be current employees who are uneasy with the reduction in force and opt to take an exit package. So, if you have not identified who will be laid off in the reduction of force and are willing to take volunteers, you can share your workforce reduction plans and extend an exit package for those who want to take it. For the people who want to leave, offer them the package, and make sure it’s done with respect and not judgment. This kind of RIF strategy largely depends on the culture and size of the company and may not be appropriate for certain ventures. Human resource professionals and managers should align their RIF decisions with company culture to ensure that the layoff process is thoughtfully executed with compassion.
Workforce reductions are stressful for everyone. It can be an emotional event for employees and rife with uncertainty, self-doubt, and anger. Taking the time to be thoughtful and compassionate for those who are losing their incomes is not only good for both the company and employee, it is simply the right thing to do.
Review your individual state requirements around layoffs: Click here for US labor resources per state.