Organizations that value employee engagement have much to gain by adopting a no-layoff policy. This game-changing, people policy assures employees that the organization will not issue pink slips when the economy goes south. A no-layoff policy provides one more competitive advantage for best places to work.

During the great recession, a small business owner in the residential and commercial wood-flooring business considered options to keep his organization afloat. Wanting to avoid layoffs, he decided to involve employees in the decision-making process.

The team identified cost-cutting measures and voluntarily reduced work hours to counteract the slowdown.  Together they solved the organization’s financial shortfall and prevented layoffs. When sales rebounded, they were poised to immediately respond to demand. Below are the reasons you should adopt a no-layoff policy.

 1. Employee Trauma

Those who lose a job are hardest hit, including their families. How will they pay their mortgage or rent, utility bills, and car payments? The daunting task of networking and seeking a new job begins. Experiencing one of the highest stressors in life, former employees often ruminate over that day when one minute they were working and the next minute they were carrying their belongings in a box.

2. Survivor Mode

There are managers who believe surviving employees should be happy to keep their jobs. Those surviving employees, however, have developed important bonds with coworkers. It is emotionally difficult for survivors to see laid-off workers go. Survivors may be relieved to have avoided a pink slip, yet are afraid they might be next. Similar to departing employees, surviving employees may begin networking too.

3. Leaders in Limbo

Layoffs are tough on leaders. Fielding questions from surviving employees and facing the predictable drop in post-layoff productivity, leaders must deal with the added stress of an already difficult time.

When leaders are required to lay off their employees, they may begin to question their organization’s core values; internalizing the conflict between treating people well and protecting the organization’s interests.

4. Customer Confusion

Customers like to establish working relationships with organization representatives over time. For that reason, turnover can damage customer service. When an employee knows your customer well, s/he delivers goods and services more effectively. It is difficult to assign a price to the loss of goodwill when familiar employees suddenly disappear.

5. Lost Cost Savings

Rarely, does a layoff save an organization money. After paying severance, outplacement assistance, and retention bonuses for key survivors not to abandon ship, when will the organization begin experiencing a cost savings? Add into the mix lost productivity, disengaged employees, employee relations issues, and the recession could be over before the cost savings really starts to kick-in.

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