Workplace Layoffs During Change: Definition & Impact on Employees

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  • 0:03 Layoffs Background
  • 1:17 Layoff Doesn't Equal…
  • 1:58 Layoffs Can Have a…
  • 2:37 Being Laid Off
  • 3:31 The Employees Who…
  • 4:47 Lesson Summary
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Lesson Transcript
Instructor: Scott Tuning

Scott has been a faculty member in higher education for over 10 years. He holds an MBA in Management, an MA in counseling, and an M.Div. in Academic Biblical Studies.

While losing your job due to a layoff is certainly a major life event, it can also present some positive opportunities. This lesson explores the emotions that can be felt by employees who receive layoff notices as well as those who remain with the company.

Layoffs Background

Layoffs can be depressing to the employees who will be let go, and they inspire fear and trepidation in the employees who remain at the company. Despite the fact that layoffs are so negative, they're usually just business decisions that have to be made in order to survive and thrive as an organization. When the worst happens and layoffs are unavoidable, employees who respond appropriately will find ways to learn and grow during the tough times.

Let's imagine for a moment that you work for a telecommunications company with three primary divisions. The largest division manufactures cell phones. A second division develops and produces mobile devices like tablets, while the smallest division manufactures alphanumeric pagers. If you arrived at work one day to hear in hushed whispers that the company had laid off 300 people in the alphanumeric pager division, would you be surprised? Probably not.

Layoffs are rarely random or arbitrary. They don't always mean that the company has financial woes. Your company's alphanumeric pager division is in trouble because no one really uses alphanumeric pagers anymore, but the company isn't broke: It's simply paring down a business unit that isn't profitable in order to focus on the parts that are. Layoffs hurt, but they aren't fatal.

Layoffs Doesn't Equal Being Fired

A layoff is best defined as the elimination of a position whether occupied or not. When organizations create staffing patterns, projections related to staff needs are usually converted into full-time equivalent, or FTE. The term FTE is quantified as one individual employee working 40 hours a week.

During layoffs, managers are usually given a number of FTEs that need to be eliminated. Although in some cases layoffs do indeed mean that currently working individuals will be dismissed, this isn't automatically the case. FTEs can be reduced through attrition, converting full-time to part-time work or sharing an employee between departments.

Layoffs Can Have a Silver Lining

Although it may sound less than comforting, there truly are many cases where everyone benefits from layoffs. If you think back to the telecommunications company, laying off the employees in the alphanumeric pager division is actually probably good for everyone. Here's why:

  • By closing a division that loses money, executives offer the company stakeholders greater security and sustainability in the long run.

  • The employees who remain with the company in the cell phone and tablet divisions have the privilege of working for an organization that knows how to change with the times and remain competitive in a challenging market.

  • Employees being laid off are often given a number of opportunities for personal growth and development.

Being Laid Off

Losing a job for any reason is a major life event that can deal a strong blow to someone's pride and sense of self-worth, but this is only one perspective. Layoffs can be seen as offering new opportunities to people who desperately need them. Let's return to our hypothetical company and consider some ways laid off employees might reduce the negative impact - and even benefit - from a positive impact associated with the situation.

If you're one of the 300 people working on pagers, it's time to learn a new skill. These devices are on their way out the door, and nothing is going to change that, since it is pretty unlikely that anyone is ever going to buy one again. Employees in a position like this are often offered opportunities to transfer within the company, retrain for a new job, or leave with a severance package that allows them some time to plan their next professional move. Others may be offered an incentive, like early retirement.

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