The COVID pandemic has produced enormous challenges for organizations in almost every industry. Many businesses and institutions have suffered significant financial loss and have desperately sought options to save money and keep the organization afloat. 

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Human capital costs are significant in any business, and employees in all industries are wondering when staffing cuts, wage reductions, or furloughs will take place, if they haven't already. In some cases, leadership can put off looking at the cost of human capital for some time. In other cases, such as service industries that include restaurants and salons, closures immediately impact employees. These industries have seen immediate impact on staffing.

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Decisions to eliminate positions can have a lasting impact on a company and how it thrives post-pandemic. Poorly made decisions can lead to poor morale and to discrimination lawsuits. Companies should approach any employment decisions carefully and thoughtfully.

 

Here are three tips for making difficult decisions during a difficult time:  

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1) Do the homework and communicate. Carefully assess the business needs and track the significant impacts. Document these impacts to the business; if decisions need to be made regarding human capital, document the tie between survival and the cost of human capital. Double check terminations or other employment actions do not violate the terms of any contracts or the parameters of federal loans. Try everything to keep people. Communicate with employees about the reality the company is facing and the steps the company is taking to keep things afloat and do so with consideration and a plan. Convey how important employees are to the company.

 

2.) Make decisions that are based on fact and information. Any decision that will impact the employment status of your employees should be made using financial data, statistical data, contract terms, or performance reviews. These decisions must be anchored with concrete information justifying any action. This is not the time to clean house unless the criteria for doing so are neutral, fact-based, and appropriately established. This is not the time to rush toward an easy out with the delighted cry of "Yay, we finally get to get rid of Johnny." A sure-fire way to trigger claims of discrimination is to make decisions that are not grounded in neutral employment factors.

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3) Treat employees well, regardless of other factors. How some employees are treated now will impact how ALL employees will feel later. Poor morale established now is a significant cost to your company in the future. Employees are concerned if they see other employees being treated with little courtesy or empathy. While this is a stressful time for everyone, and letting employees go may be necessary, the stress does not obviate the need to treat people with dignity and respect. In addition, employees are unnerved when they feel that they are working in an environment that makes employment decisions that are emotional or irrational, based on favoritism or other reasons that do not relate to genuine business need or employee performance. 

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Bottom line: treat people fairly, consistently, with facts, and with respect. A former supervisor once gave me great advice: using one set of facts, make sure that the decision you make about an employee will be the same whether they are your star employee or your difficult employee. 

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See helpful article from Harvard Business Review on furloughs here.

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