Canadian HR Reporter

F E A T U R E S 18 www.hrreporter.com DO VOLUNTARY LAYOFFS REALLY MAKE SENSE? Too often, employers do voluntary layoffs as a knee-jerk reaction to environmental uncertainty. But the results of a recent study suggest that organizations need to reconsider this approach, says Nita Chhinzer of the University of Guelph EMPLOYEE layoffs have been used at unprecedented rates during the COVID-19 pandemic. From February to May, roughly 250,000 employees per month were laid off. The average layoff rate was 12.4 per cent per month, according to Statistics Canada. Comparatively, the average rates during the prior three recessions ranged from 2.5 per cent to 3.5 per cent. Until now, there has been minimal research comparing the decision factors and outcomes of these layoff (made by the employee) and involuntary layoff decisions (made by the manager). In total, 488 unique employee profiles were assessed. Voluntary versus involuntary layoffs Voluntary layoffs are used by a wide variety of employers. For example, Calgar y-based Enbridge allowed employees to volunteer for a layoff when it had to reduce headcount by 800 workers in June. To deal with declines in the aerospace industry, Boeing offered voluntary layoffs in April. There are many reasons why an employer might use voluntary over involuntary layoffs. Often, companies have no layoff policy in place, so shifting the decision- making responsibility to the employee helps speed up the layoff process. Sometimes, companies engage in voluntary layoffs because they want the employee to be part of the layoff decision process. Organizations might feel that they maintain the reputation of being a "good" employer through voluntary layoffs. Also, voluntary layoffs may be viewed as more legally defensible for the employer, given that employees self- select into a layoff. Unfortunately, too often, companies are focused on reducing headcount with minimal consideration for the composition of the workforce that remains. By shifting the decision-making power to employees, the employer loses control of who stays and who leaves, which impacts the skills and competencies available to the organization post-layoffs. Without the right employees, business recovery efforts might be compromised. implementation strategies. However, a research study I conducted provides evidence that voluntary layoffs may result in the exit of the wrong employees. Published in the Canadian Journal of Administrative Sciences, the study suggests that employers should reconsider the use of voluntary layoffs. The study involved management and employee pairs in three Canadian companies. Each pair evaluated employee profiles to determine which factors led to voluntary layoff decisions LAYOFFS COMMON AMID PANDEMIC 9.52% Number of Ontario employers offering voluntary temporary layoffs in April 1.29% Number of Ontario employers offering voluntary terminations amid pandemic in April 800 Number of Enbridge workers who took voluntary layoffs in June 5,520 Number of workers who took voluntary layoffs at Boeing in April Involuntary layoff decision factors In evaluating 488 employee profiles and involuntary layoff decisions, data analysis shows that strong performers were 70 per cent less likely to be selected by managers than poor performers. Essentially, management was largely focused on retaining the strongest employees because they were the best positioned to help the company succeed. Managers were also focused on selecting employees with low job satisfaction or low organizational commitment for involuntary layoffs. It is possible that managers think that these employees will be less likely to engage in extra- role behaviours that are critical to organizational recovery or that these employees are likely to quit after the layoffs happen, which can lead to unexpected vacancies and replacement costs. Unexpectedly, although layoffs are largely used as a cost-reduction strategy, the salary levels of employees had no impact on management's layoff decisions. However, managers were six per cent more likely to lay off an employee who had a lower severance package than an employee with a higher severance package. This suggests that managers take only a Sources: HRPA, CBC F O C U S O N : PAY R O L L F O C U S O N : PAY R O L L

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