The New Rules of Layoffs

When McDonald’s Corp. said it would temporarily close its U.S. offices as it conducts layoffs at the burger chain, it brought renewed attention to a debate swirling inside HR departments: What is the best way to let people go?

The question is taking on urgency as more U.S. companies, from Goldman Sachs Group Inc. to Amazon.com Inc., move to shed staff in a wave of layoffs that is heavily concentrated on white-collar jobs.

When it comes to carrying out those cuts, companies employ a range of approaches designed to minimise the pain and disruption of a difficult process.

Here are six of the questions employers face.

All at once or a little at a time?

Many companies grapple with whether to make one sweeping layoff or do a series of smaller cuts. Both carry risks.

At a time when employers still face challenges filling positions, large job cuts can lead companies to inadvertently cut key units or people, executives say.

Yet, taking it slowly to give a company time to assess its financial situation can take a human toll, creating a prolonged period of anxiety and instability inside an organisation. Amazon.com has enacted more job cuts than expected in recent weeks, announcing last month that it would cut 9,000 more corporate jobs following earlier layoffs.

Face time or FaceTime?

Bosses long believed delivering the bad news face-to-face was the more humane approach. Covid-19 changed the equation. While many workers are being called back to the office, at least part time, full office attendance remains rare. Some executives are now asking themselves whether it is actually easier—and more humane—for employees to learn about a layoff on Zoom versus in-person.

“It almost seems cruel to ask someone to commute into the office just to let them go,” said Andy Challenger, senior vice president at outplacement firm Challenger, Gray & Christmas Inc.

Midweek or Friday?

Just as with in-person firings, the conventional wisdom was Friday was the best day to carry out a layoff. That gave employees the weekend to process the news and plan their next steps.

That thinking has shifted. Many employers now see a midweek announcement as more humane, according to Lorna Hagen, a longtime chief people officer. A layoff on a Wednesday, Ms. Hagen said, can give employees time to talk to HR representatives or benefits providers during business hours in the ensuing days.

It’s not you—it’s me

One mistake managers continue to make, HR professionals say, is to tell employees how hard it is to let them go. “That just hits people the wrong way,” said Mr. Challenger. “It’s not about you.” The latest wave of layoffs often has felt like a competition among CEOs over who could craft the best apology.

Many executives have turned to lengthy memos to explain why they resorted to layoffs. Some of those notes look “suspiciously similar” across different companies, said Paul A. Argenti, professor of corporate communication at the Tuck School of Business at Dartmouth. He recommends that managers be as transparent as possible with employees about the health of a business so that no one is surprised when layoffs are announced.

Multiple months of pay, or less?

The size of exit packages is also up for debate. At the very least, companies should give laid-off employees a month of severance pay, corporate advisers say, though a number of employers have offered more. When Salesforce Inc. said in January that it would lay off employees, Marc Benioff, the company’s co-founder and chief executive, told workers that those in the U.S. would receive a minimum of nearly five months of pay, health insurance and other benefits.

Some smaller companies have received pushback from employees for not accelerating stock-vesting dates or for issuing severance packages that some saw as underwhelming. HR advisers recommend that companies be as generous as possible with exit packages. In an era when employees can easily sound off on a company even when they are being fired, it is also a best practice to develop a severance policy that can be defended.

OK, now who goes?

One of the last, toughest parts of any downsizing: determining who should be let go. The process of developing a layoff list is complicated and can stretch for weeks, with department heads and managers often debating which employees to eliminate. Seniority once guided layoffs, though it is now far more common for companies to assess skills over tenure, and to heavily consider someone’s recent performance.

HR officials will then often scrub a list, wanting to ensure that a company isn’t disproportionately laying off workers over the age of 40, or unfairly targeting minorities and others. Even with much preparation, many veteran HR leaders say layoffs can be messy. “There is no good way to do this,” said Gregory DeLapp, who spent much of his career in HR at the steel and materials manufacturer Carpenter Technology Corp.

As Paris makes its final preparations for the Olympic games, its residents are busy with their own—packing their suitcases, confirming their reservations, and getting out of town.

Worried about the hordes of crowds and overall chaos the Olympics could bring, Parisians are fleeing the city in droves and inundating resort cities around the country. Hotels and holiday rentals in some of France’s most popular vacation destinations—from the French Riviera in the south to the beaches of Normandy in the north—say they are expecting massive crowds this year in advance of the Olympics. The games will run from July 26-Aug. 1.

“It’s already a major holiday season for us, and beyond that, we have the Olympics,” says Stéphane Personeni, general manager of the Lily of the Valley hotel in Saint Tropez. “People began booking early this year.”

Personeni’s hotel typically has no issues filling its rooms each summer—by May of each year, the luxury hotel typically finds itself completely booked out for the months of July and August. But this year, the 53-room hotel began filling up for summer reservations in February.

“We told our regular guests that everything—hotels, apartments, villas—are going to be hard to find this summer,” Personeni says. His neighbours around Saint Tropez say they’re similarly booked up.

As of March, the online marketplace Gens de Confiance (“Trusted People”), saw a 50% increase in reservations from Parisians seeking vacation rentals outside the capital during the Olympics.

Already, August is a popular vacation time for the French. With a minimum of five weeks of vacation mandated by law, many decide to take the entire month off, renting out villas in beachside destinations for longer periods.

But beyond the typical August travel, the Olympics are having a real impact, says Bertille Marchal, a spokesperson for Gens de Confiance.

“We’ve seen nearly three times more reservations for the dates of the Olympics than the following two weeks,” Marchal says. “The increase is definitely linked to the Olympic Games.”

Worried about the hordes of crowds and overall chaos the Olympics could bring, Parisians are fleeing the city in droves and inundating resort cities around the country.
Getty Images

According to the site, the most sought-out vacation destinations are Morbihan and Loire-Atlantique, a seaside region in the northwest; le Var, a coastal area within the southeast of France along the Côte d’Azur; and the island of Corsica in the Mediterranean.

Meanwhile, the Olympics haven’t necessarily been a boon to foreign tourism in the country. Many tourists who might have otherwise come to France are avoiding it this year in favour of other European capitals. In Paris, demand for stays at high-end hotels has collapsed, with bookings down 50% in July compared to last year, according to UMIH Prestige, which represents hotels charging at least €800 ($865) a night for rooms.

Earlier this year, high-end restaurants and concierges said the Olympics might even be an opportunity to score a hard-get-seat at the city’s fine dining.

In the Occitanie region in southwest France, the overall number of reservations this summer hasn’t changed much from last year, says Vincent Gare, president of the regional tourism committee there.

“But looking further at the numbers, we do see an increase in the clientele coming from the Paris region,” Gare told Le Figaro, noting that the increase in reservations has fallen directly on the dates of the Olympic games.

Michel Barré, a retiree living in Paris’s Le Marais neighbourhood, is one of those opting for the beach rather than the opening ceremony. In January, he booked a stay in Normandy for two weeks.

“Even though it’s a major European capital, Paris is still a small city—it’s a massive effort to host all of these events,” Barré says. “The Olympics are going to be a mess.”

More than anything, he just wants some calm after an event-filled summer in Paris, which just before the Olympics experienced the drama of a snap election called by Macron.

“It’s been a hectic summer here,” he says.

Hotels and holiday rentals in some of France’s most popular vacation destinations say they are expecting massive crowds this year in advance of the Olympics.
AFP via Getty Images

Parisians—Barré included—feel that the city, by over-catering to its tourists, is driving out many residents.

Parts of the Seine—usually one of the most popular summertime hangout spots —have been closed off for weeks as the city installs bleachers and Olympics signage. In certain neighbourhoods, residents will need to scan a QR code with police to access their own apartments. And from the Olympics to Sept. 8, Paris is nearly doubling the price of transit tickets from €2.15 to €4 per ride.

The city’s clear willingness to capitalise on its tourists has motivated some residents to do the same. In March, the number of active Airbnb listings in Paris reached an all-time high as hosts rushed to list their apartments. Listings grew 40% from the same time last year, according to the company.

With their regular clients taking off, Parisian restaurants and merchants are complaining that business is down.

“Are there any Parisians left in Paris?” Alaine Fontaine, president of the restaurant industry association, told the radio station Franceinfo on Sunday. “For the last three weeks, there haven’t been any here.”

Still, for all the talk of those leaving, there are plenty who have decided to stick around.

Jay Swanson, an American expat and YouTuber, can’t imagine leaving during the Olympics—he secured his tickets to see ping pong and volleyball last year. He’s also less concerned about the crowds and road closures than others, having just put together a series of videos explaining how to navigate Paris during the games.

“It’s been 100 years since the Games came to Paris; when else will we get a chance to host the world like this?” Swanson says. “So many Parisians are leaving and tourism is down, so not only will it be quiet but the only people left will be here for a party.”