Hiring again after layoffs

Hiring again after wide-scale layoffs

Whether it’s a pandemic such as COVID-19, an economic downturn or a major market or industry shift that has challenged your business, letting valued team members go is always a tough decision to make.

If you’ve had to lay off a significant portion of your workforce recently, you’re all too familiar with this unfortunate situation.

However, the conditions that force your business to reduce its headcount can evolve and improve over time.

As your business recovers from a crisis and you consider hiring again after layoffs, there are critical issues you need to think about and plan for to mitigate the risks to your company and increase your odds of long-term success.

Recognizing when it’s a good time to hire again after layoffs

Ask yourself a few questions:

  • Is your product or service in peak demand?
  • Are you currently unable to meet this demand?
  • Do you expect favorable market conditions to continue? (In other words, demand for your product or service isn’t a short-term, crisis-related phenomenon.)
  • Are your employees overworked?
  • Have you been unable to replace vital skills within your team since your last round of layoffs?

If you can initially answer yes to most of these questions, it may be time to ramp up your staffing levels.

But let’s dive in deeper.

Alongside your business leaders and other key stakeholders, conduct a thorough review of your:

Then, leveraging anticipated business scenarios, develop an operational roadmap to guide your business forward while enabling you to continue delivering on your customer promise. This plan should extend 12 to 18 months into the future. Rather than allowing the passage of time to dictate tactical decisions such as hiring more people, instead rely on reaching certain metrics or milestones.

This will help to prevent your business from needing to continually catch up or get too far ahead of market conditions. Hiring will feel more proactive, planned and purposeful versus reactive, unexpected and rushed.

Selecting the type of employees you’ll hire

If, ultimately, the spike in demand for your product or service is crisis related or you’re unsure about the permanence of growth trends, you may want to stick with hiring temporary workers, contractors or part-time employees for the time being.

This arrangement offers you certain benefits:

  • You’re able to quickly adapt to changing workflows.
  • It’s an opportunity for you to assess whether a position is important or necessary enough to sustain for the long term.
  • It reduces your expenses and commitments during a period of uncertainty. After all, no employer wants to lay off full-time workers repeatedly.
  • You get to “audition” these workers before hiring them permanently or expanding their hours and role.

However, keep in mind that non-full-time employees may not feel the same level of assimilation within and loyalty to your company.

Targeting the right number of new employees

The right number of employees to hire at any single time is dependent on:

  • Demand
  • Workload
  • Affordability

Determine, as accurately as you can, the demand for your product or service. Examine your current production volume and leverage trend data to predict future production volume. You’ll need to understand the variables that influence normal trends in business cycles and adjust accordingly.

Calculate the amount of work that the average employee performs in a certain period of time (yearly, monthly or weekly). This could be as simple as adding up the scheduled work hours for each employee. Factor in non-productive time, such as:

  • Sick leave
  • Holidays
  • Vacations
  • Scheduled breaks

How many more people do you need to accommodate the anticipated demand?

Can you cluster tasks that need to get done and identify clear responsibilities within specific job titles? Do you understand how new roles fit within your organization chart and reporting structure?

Solicit input from your frontline managers and other team members about how many additional people they think the company needs. They’ll bring a different perspective and possibly uncover insights you may not have thought of that could benefit decision-making around productivity, volume and efficiencies.

In deciding whether you can afford more employees, think about all the associated costs:

  • Recruiting and interviewing
  • Relocation
  • Training
  • Salary
  • Benefits

Also consider the revenue each new employee may bring in – as well as the employee’s potential to save your company money.

Deciding how often to hire

Hiring shouldn’t be based on periods of time you selected arbitrarily. Rather, it’s about business need.

If you’ve planned business scenarios and have an operational roadmap in place, reaching certain metrics or milestones should trigger the need for a specific new hire.  

Getting the timing right is important so that:

  • You don’t get caught in a bind, desperately needing an employee who isn’t there yet.
  • Your new employees are used to their full effectiveness. You don’t want to hire them too soon, and then they don’t have enough to do.
  • You can pause and properly assess whether your resources are aligned with demand.
  • Your HR team is able to absorb the volume of new hires and ensure that they’re setting up these individuals for success during the crucial onboarding period.

Remember:

  • On average, it takes 24 days to hire a new employee.
  • Then it takes 60 to 90 days, on average, to fully onboard each new hire, integrate them into their roles and the company culture, and have them ready to work.

Rehiring former employees

The pool of job candidates is vast. Finding the right employees among them can be a time-consuming, costly process. That’s why, when it’s time to hire again, employers often first turn to an obvious group: The people they had to lay off despite valuing and trusting them and wanting to retain them.

But should you rehire former employees as your business recovers from a crisis?

It depends.

Pros of rehiring former employees:

  • You know their personalities, capabilities and work ethic well. There aren’t any surprises.
  • They already understand your company – the mission, values, culture and structure – and are familiar with their colleagues. You already know whether they’re a good fit for the team.
  • Unless positions and responsibilities have changed, they require minimal training. They’ve already held the job and have acquired a track record of good performance.
  • If they’ve been laid off and express interest in returning to your company, you know their level of commitment is high.
  • You can demonstrate to the rest of your staff that you’re loyal to current and past team members alike and will do what you can to help them in tough situations, which can boost trust and morale across the board.
  • You have an opportunity to save time and money on recruiting and training, and get high-performing employees to work faster with minimal integration issues.
  • Per the Hiring Incentives to Restore Employment (HIRE) Act, you can claim certain tax exemptions for hiring someone on unemployment – and it gets these employees off your unemployment insurance.

Cons of rehiring former employees:

  • A past employee may harbor resentment at being let go. Because negativity can be contagious, bringing a disgruntled person back could affect morale throughout your team. Be sure to screen for this during interviews.
  • A past employee could be actively looking for another job, but accept a job with your company as a stopgap. In this case, you’ll have to replace them in short order. (Of course, this could be true of any new hire.)
  • You could overlook new talent and potentially better performers in the marketplace. This is especially true in labor markets that heavily favor employers – where available job candidates outnumber open positions, and you can have your pick of qualified applicants.
  • If your company has undergone changes in business model and structure, as well as job titles and responsibilities, former employees may be fixated on the previous ways of doing things and have a hard time adjusting. Bringing in new talent may prove more beneficial in the long term.

You should already have guidelines in place covering the rehiring of former employees. These guidelines should address issues such as:

  • How you will handle benefits in light of the disruption in employment
  • Whether rehired employees will complete the same onboarding procedures, such as drug tests and background checks, as brand-new hires
  • What additional paperwork they need to fill out to meet compliance requirements

Avoiding wrongful termination claims

As you ramp up hiring efforts, there’s a big issue you need to watch out for: Wrongful termination claims from employees you laid off.

If you start hiring again within six months after layoffs, you could expose your company to complaints that the layoffs were merely an excuse for getting rid of employees for illegal reasons. These complaints could have merit if:

  • Specific positions that were previously eliminated are now being filled again
  • The replacements for these positions are younger, less experienced or of a different race, gender or disability status, for example

However, unless your company policy states otherwise or you have collective bargaining agreements in place, you’re not obligated to rehire former employees. There could be perfectly valid reasons why you don’t seek out a former employee to return to your company.

How you can protect your company:

  • Don’t make any promises to laid-off employees about what you can do to help them or discuss their future possibilities with the company when economic or market conditions change.
  • Document the reasons why you eliminated certain roles, and why it’s now necessary for your company to hire again after layoffs.
  • Treat former employees and other job applicants equally.

Keeping morale up

Another big risk you could face is the turnover associated with current employees leaving.

From the moment their colleagues are let go, a crisis is a period of great uncertainty and stress for your remaining staff. They could be worried about their own jobs and personal finances. If a laid-off colleague was a good friend or frequent collaborator on work projects, they could be missing that individual and their camaraderie in the workplace.

However, even as your business recovers and starts adding back employees, their stress can continue. Your employees may have to take on an increased workload – including responsibilities outside their normal routine – for awhile. They have to adjust to potentially new business models or processes, or  restructured teams – changes that may not be welcome to them. They also have to adapt to new hires and, in some cases, help to train them.

As a business leader, you’ll have to maintain morale despite downsizing and upsizing.

Regularly communicate your commitment to both your employees and the health of the organization. Explain your reasons for taking certain actions and how they’re helping the company to weather the crisis. Your transparency can:

  • Reduce their anxiety about the unknown.
  • Enable them to make informed personal decisions.
  • Help them connect their daily efforts to company objectives, and understand how they make a difference and how their performance is being measured.

Throughout this process, you can prevent dips in morale by:

  • Holding quarterly meetings during which you provide data about the fiscal health of the company and give updates on what measures can be expected. The truth may make some leave, but it can restore some trust, lessen rumors and keep employees engaged.
  • Establishing open-door policies between leadership and employees. This gives employees a means of sharing their concerns and asking questions.
  • Offering opportunities for small group meetings or one-on-one meetings guided by leaders.
  • Conducting engagement surveys or focus groups, which can clue you in on what’s troubling employees and how you can fix these issues, as well as assist in building the culture of trust and accountability in the organization.

Summing it all up

Is your business on the rebound from a crisis? Are you ready to begin hiring again after layoffs? Don’t run out and recruit a bunch of employees just yet. First figure out whether your company:

  • Has sufficient demand in the marketplace and workload to support new hires
  • Has a compelling business case for filling specific positions
  • Can afford the known and hidden costs of adding more employees
  • Can coordinate hiring for a position with achieving certain metrics or milestones
  • Really needs full-time employees, or could benefit from temporary workers, contractors or part-time workers
  • Wants to pursue former employees and, if so, has the policies in place to govern the rehire process
  • Has taken other measures to reduce risk exposure

Doing these things will better ensure your company’s growth and ability to retain employees are more permanent.

For more information on expediting your company’s recovery from a crisis, download our free magazine: The Insperity guide to crisis management.

Additional contributors: Lisa Rosh, PhD and Rodney Satterwhite, MBA

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