Fair, Consistent Personnel Decisions During Economic Crises

According to the February 2009 Newsday article “Layoffs Take a Toll, Even on Survivors”, not only do laid-off employees suffer from staff reductions, but survivors suffer as well. The conclusion: “Layoffs clearly have emotional and practical consequences for companies and workers.”

Realizing the personal and organizational disruption that layoffs can wreak, Third Sector New England brought more than a dozen human resource directors, executive directors and consultants together in February 2009 to look at ways to help both non-profit employees and organizations cope with layoffs. Lyn Freundlich, TSNE’s director of human resources and administration, facilitated the candid breakfast discussion held at the NonProfit Center. Realizing the scope of the problem across the region, TSNE engaged participants at a distance via conference call technology.

The Current Situation

Participants shared the actions that they had taken to date to minimize or avoid layoffs. To address falling revenues, one nonprofit instituted an across the board “graduated” pay cut – with those earning the most taking the biggest percentage pay decrease. Others said that their organization had furloughed staff, cutting their time by 10 or 20 percent.

But while everyone in the room and on the telephone realized that the current financial environment is precarious at best, the participants acknowledged that they are much more worried about large budget deficits in 2010 and the need for large staff cuts at that time.

“While I had intended to spend half of our time discussing what to do before layoffs are imminent and half on the actual layoff process,” explained Freundlich, “I realized that we needed to focus on preparing now for layoffs.”

Supporting Personnel, Supporting Organizations

Human Resources
Articles from TSNE

According to Freundlich, it is important to look at current job descriptions and complete performance reviews with current staff. This is so nonprofits are clear about the actual work that is being done today versus the projected goals and outcomes from a year or more ago.

This accomplishes two things. It allows the organization to look realistically at the range of its program activities and to cut or suspend programs and lay off staff with a clear focus on mission. Reviewing job descriptions and performance reviews – to understand a staff person’s actual workload and job responsibilities – also helps an organization to determine if those who might be laid off are able to move to another open position within the nonprofit.

One participant asked, “If you haven’t been doing performance reviews all along, should you do them now or wait?” She questioned whether it makes sense to take the time to do performance reviews and update job descriptions when budgets are tighter and staff members are already feeling pressed for time.

But Freundlich and others agreed that instituting this process now, instead of waiting for layoffs to be imminent, provides guidance to both employees and the organization. It helps to ensure that layoffs are not done arbitrarily, based on personal preferences or relationships. Staff reductions will be done instead with a focus on maintaining activities that help the organization continue to meet its mission.

As discussion participant Maxine Hart, the human resources director at Unitarian Universalist Service Committee, stated, “With layoffs you must ask, what are the activities that represent and preserve your core goals/objectives and your mission.”

Focus on Organizational Values

Looking at organizational values is another critical determinant for making fair, consistent personnel decisions during this economic downturn.

Freundlich discussed the need to review your organizational values and ensure that any staff layoffs align with those values – or to communicate why this situation may call for variance.

For example, if your other human resources systems suggest that the organization values and rewards seniority, layoffs should be done this way. However, if other considerations related to effectively meeting your mission during the economic downturn require a different way to implement staff layoffs, then clearly explain why this is the case to staff and other stakeholders.

Therefore, before layoffs are imminent, your stakeholders will want to clarify your organization’s values and relate them to personnel decision-making processes.

Other Key Determinants

Decision-making

In addition to looking at organizational activities, goals and values, a non-profit organization needs to examine its decision-making processes for personnel issues and its internal communications practices. For example, when it comes to layoffs there needs to be a clear understanding about “who’s on first.”

“The board of directors has the final responsibility for budget, but not layoff decisions,” expressed participant Stephane Acel, program officer for grants and financial management at Partnership for Excellence in Jewish Education. “The executive director and senior staff should ‘own’ the final staffing decisions.”

Communications

As you strive to ensure that your layoffs are done fairly and consistently, look at your communication processes now. How do you share critical and sensitive and private information now? Will these serve you well in case of layoffs? How should an organization help employees prepare to leave the organization?

The executive director and board members have to weigh legal matters against organizational values, but it is paramount that a non-profit organization decide how to help people say goodbye in a respectful way—including for the people staying.