Staff reduction is the reduction of the workforce on a larger scale, i.e. the termination of several employees. As a point of orientation, one can use the legal formulation for mass layoffs, e.g. at least 10 employees within 30 days.
In this case, an appropriate procedure (consultation procedure) and an obligation to draw up a social plan are also prescribed.
A layoff always means stress or an additional emotional burden for those involved.
Table of contents
Reasons for a staff reduction
Staff reduction is basically a measure to restore or maintain the competitiveness of a company. It aims at reducing costs, increasing liquidity and adapting to a “new” (market) situation.
Possible measures to reduce personnel costs
Within this framework, there are various measures that can be taken to reduce headcount or personnel costs without initiating job cuts with layoffs. These approaches are generally more socially acceptable than staff redundancies and can be implemented in the short to medium term.
How to communicate with employees in the event of a layoff
Communicate early and clearly
Communicating job cuts is painful. That is why it is important to prepare well and draw up a plan for dealing with the target groups (management, entire workforce, opinion leaders). The consultation procedure within the framework of the legal provisions must be observed (see below). This is to ensure that the employer informs the employees at an early stage so that they can propose alternative solutions. If the company has an employee representative body, this is the point of contact. Otherwise, it is all employees. In any case, employees should be informed before external partners or stakeholders.
Basically, it is important for the employer to inform first, before rumors start and the working climate is strained.
It is important to inform on: who is affected, in what time frame and for what reasons. It is also important that the information comes from the top management and different communication channels (written and oral) should be chosen. It is also advantageous to present the entire situation openly so that the procedure can be understood and the measures are perceived as appropriate. Statements must be made in a language that is appropriate to the target group and understandable. Understanding employees’ concerns and addressing them before they formulate them themselves creates trust and security.
Do not underestimate the emotional component
A termination is a highly emotionally charged situation. This is true even if the termination was foreseeable. A dismissal can completely turn upside down the life of the person affected. Powerlessness, fear of loss and the insecurity can be felt dramatically and lead to existential fears and loss of identity, and ultimately also put a strain on private relationships.
It is therefore very important to rapidly give a new perspective and restore some security by offering adequate measures (e.g. outplacement) promptly after the announcement of the layoffs. In this way, the dismissal is not seen as the end of the line, but rather as a new beginning, which, thanks to professional coaching, can even open up new career opportunities!
Do not forget the survivors
The termination is also a burden for the people who are not affected by the termination (survivors) and causes an emotionally charged working atmosphere. Therefore, it is also important to include them in the communication. Key performers should be addressed directly for this purpose and to secure their commitment. Supervisors should always have an open ear and an open door here.
Dealing with the remaining employees (“survivors”) is often neglected, but it is just as important for the future success of the company. They feel sorry for those affected, with whom they sometimes have long-standing working relationships or even friendships. On the other hand, they are happy to keep their jobs and must be loyal to the company. In addition, there is often the feeling that they have to work for those who have been laid off. Therefore, the mood usually is not very positive. They should be won for the company’s new project by using measures like team-building and career management, so the project is implemented with the appropriate energy
Planning and process of a layoff
Downsizing is the result of an analysis of the organization to the current and target state in the context of a company’s vision and goals. These analyses are usually conducted by a project team and the shape of the future organization is determined. The management approves the new organization and the necessary measures to achieve it. This includes possible job reductions.
Step by Step Guide:
The procedure for a job reduction essentially involves 3 steps:
Step 1: Mandatory social plan (since 2014)
The social plan obligation and the prescribed procedure are regulated in Art. 335d to 335g OR. Violations of the regulations can lead to considerable costs. The reasons for mass redundancies are manifold in a globally oriented economic system, but often comprehensible to outsiders. For employers, the obligation arises in mass dismissals in the following cases (OR 335ff):
Mass dismissals are dismissals that the employer announces within 30 days in a company for reasons that are not related to the person of the employee and that affect:
- more than 20 and less than 100 employees and at least 10 terminations,
- 100 to 300 employees and at least 10% of the workforce,
- more than 300 employees and at least 30 terminations.
Subject matter of a social plan
The exact content of a social plan is not prescribed. Its purpose is to define measures to avoid redundancies, limit their number and mitigate their consequences. However, it is not only a question of financial benefits. Usually, the following contents are encountered:
- Hiring freezes
- Financing of outplacements
- severance payments
- Early retirements
- Changes in notice periods
Early retirements should be announced with caution, since the cost side should not be ignored and also older employees do not want to belong to the old iron (they would rather continue to work).
Staff reductions should be transparent and take into account production planning as well as the needs of those affected, with longer notice periods or early release. Financial measures, such as severance pay or a hardship fund, can be attractive. More sustainable, however, are measures that provide professional support for the job search or improve opportunities on the job market.
These include job centers, outplacement (also for groups), paid retraining and continuing education, and a job reference that is issued favorably and mentions the termination for operational reasons.
Advantages for the employer
While the benefits are obvious for those affected, our experience shows that employers also benefit when social plans are fairly negotiated. This is particularly the case when, thanks to professional support, all the challenges of this complex process can be implemented in a positive manner. The most obvious aspects are the external impact, in particular to preserve the company image and to maintain the employer brand. However, a well-balanced support also has a calming effect on the entire workforce, enables a faster implementation of redundancies and is a proven means of preventing staff churn as well as ensuring the retention of top performers. Productivity is maintained until the last working day, without the employer having to pay vast sums for retention bonuses. In addition, measures that reduce the number of redundancies, such as early retirement, workload reduction or unpaid leave, become an explicit part of the social plan and can thus be accounted for as an additional benefit.
Thus, as a first step, the employer must assess its legal situation and formulate its offer for a social plan as required.
Step 2: The consultation process
The consultation process (OR 335f) stipulates that before the employer decides on a mass dismissal (or also a mass change termination), he must inform the employees of the impending step and give them the opportunity to submit proposals on how the dismissals could be avoided:
1 If the employer intends to carry out a mass dismissal, he shall consult the employee representation or, if there is no such representation, the employees.
2 He shall at least give them the opportunity to submit proposals as to how the dismissals may be avoided or their number limited and their consequences mitigated.
3 He shall provide the employees’ representative body or, if there is no such body, the employees, with all relevant information and, in any event, inform them in writing of
- the reasons for the collective redundancy
- the number of employees to be dismissed
- the number of employees who are normally employed
- the period during which the notices of termination are to be given.
4 It shall provide the cantonal employment office with a copy of the notification in accordance with paragraph 3.
It begins with the information of the employees on the planned steps. At the same time, the employees or the employee representatives are requested to consider what measures could be taken to prevent the threatened dismissals. The employer sets a deadline for this. How long this deadline must be is not regulated by law. It is recommended to give two to three weeks. After that, however, another period of time must be planned in which the management seriously examines the submitted proposals.
Often, a lot of thought is put into how the legal consultation process can be avoided by staggering the process of termination. In the medium-term this is a mistake that may cost the company dearly later on. Instead, the investment should be made in a well-founded planning of the process.
The consultation period is therefore only the time within which the employee side can submit proposals. The duration of the entire consultation process is longer, since the review period by management must also be included.Timing is therefore important from a legal point of view.
Communication planning during this period is equally important. After all, if you consider how long the management has already been dealing with the potential mass-layoff, it is clear that this cannot be communicated in a quarter of an hour’s employee information.
At the end of the consultation period, the employer decides whether and which of the proposed measures will be included in its restructuring process. These results, together with the decision on the social plan, form the basis for informing the employees.
Step 3 : Implementing the job cuts
What many people do not sufficiently consider is that management must achieve at least two other goals in addition to the job cuts. First, they must achieve an increase in productivity with the remaining employees while maintaining the same level of quality, and second, they must manage the reduction in such a way that, despite the crisis, there is no permanent break in the loyalty and motivation of the remaining employees. Therefore, in addition to the organizational change, motivating and leading the employees is a major challenge for the management.
For everyone involved, implementing the job cuts on schedule is an additional burden on top of the daily work routine. The superiors have to lead the termination interviews positively and accompany the separation phase. The HR department must accompany the dates of the separation with the superiors, handle the additional administrative work (resignation, certificate, PF, etc.) and remain the contact for those affected. The management, as described above, has to implement the job cuts on the one hand and at the same time implement the new projects in a positive way.
There are also some special cases to consider that require special handling:
- What happens to employees who are absent during the consultation process?
- Do foreign employees working in Switzerland or employees working abroad have to be taken into account?
- What happens to employees on maternity leave or employees who are on sick leave during the consultation?
- What is the procedure if, on the date of closure of the company or branch, certain employees who are unable to work are still protected against dismissal?
- What happens to severance payments that have already been transferred to an employee who is subsequently employed by a subsidiary or offered another position?
- Can apprentices be included in a mass layoff?
Who bears which responsibility?
The following functions play a central role in communication:
Executive management:
It bears the ultimate responsibility in all areas and therefore especially for such important projects as restructuring and job cuts. It is also the organization’s top communicator both for internal communications to all employees and for important external partners (customers, suppliers, banks, etc.). It also decides on process planning and implementation. Therefore, it is fundamentally responsible for communication. For individual aspects, communication can also be partially delegated.
Restructuring project team (internal/external consulting):
It is charged with the planning and implementation of the project (analysis of actual and target status, process planning, scheduling, etc.) and accordingly has the most detailed knowledge. It provides information and arguments for communication.
Human Resources:
HR is responsible for all personnel issues and is therefore an important operational partner in the planning and implementation of job cuts. At the same time, HR is also the contact for those affected, after the information has been announced and during the implementation phase.
Direct superior:
This group of people is responsible for the implementation of the decided measures and thus for the communication with the employees (affected persons and survivors). They play a key role in the termination process, which they often perform together with HR. Because they may also be affected by the layoffs themselves, this role can be doubly difficult. Support through training (termination) and coaching (dealing with difficult situations) can be valuable here.
How is communication done and by whom?
A transformation process with a mass layoff basically requires two types of information:
General information to all employees
This process-accompanying information is important in order to ensure a positive development and to prevent negative rumors. At the moment of the consultation process, this is also required by law. This information is the responsibility of the management. Basically, there should be a “storyboard” here so that the statements are communicated consistently. The language must be simple and understandable. In principle, several forms should also be chosen, e.g. verbal (information event) and written (letter to employees, info on the intranet, company newspaper, etc.).
Specific information for specific target groups
A transformation process is often implemented “top-down” and “bottom-up”. In this process, information and assignments are given by management to the various departments and teams, and the results are then fed back by the teams. This usually takes place in a cascade of meetings in which the relevant information is communicated by supervisors to specific audiences. In addition, this information can also be distributed directly to these target groups in writing.
TIPS for a staff reduction
Finally, some experiences from our many years of work in restructuring and downsizing projects.
Clarify the legal situation
Better clarify the legal situation (also for specific individual questions) once more. A mistake can be costly as well as delay the whole process.
Communicate
You almost can’t communicate too much. Inform openly, fairly and sustainably. Explain why the project is necessary and how it will be successful. This will help you gain the trust of employees and facilitate the change.
Involve HR/outplacement specialists
For outplacement and other valuable services (see above) it is important to choose a qualified service provider. Compare different offers and choose the one that fits your culture and offers the best quality (e.g. a member of ACF Switzerland).
Accompany the process well
After the conception, it is important to implement the details well. In addition to the project managers, the management and the HR department are important partners in the transformation process.