Once Frowned Upon, Virtual Layoffs Are Becoming the Norm
Workspan Daily
April 19, 2023
Key Takeaways

  • Noteworthy cases of virtual layoffs. Companies like McDonald’s, Google, Twitter and Pepsi have recently been using virtual-meeting tools to announce staff layoffs. 
  • A more dispersed workforce is one culprit. The trend of virtual layoffs seems to be driven by more remote and hybrid workforces rather than a fear of workplace violence. 
  • Putting proper measures in place is key. Finding ways to give employees “space and grace” during a virtual layoff, along with good severance packages, is vital for employers looking to provide a smooth transition. 

When McDonald’s recently implemented a round of layoffs, it first sent an internal email to its U.S. employees and some international staff directing them to work from home so the company could “deliver staffing decisions” virtually, according to the Wall Street Journal.   

Similar moves have been made in recent months by heavyweights like Twitter, Google and Pepsi. 

Is this trend being fueled simply by an increased remote-work environment? Or is it a change in philosophy about whether it’s better or safer to conduct an adverse employment action virtually instead of in-person? 

Logistics and Perception 

The answer is partly a matter of logistics, said Jessica Kriegel, chief scientist of workplace culture at Culture Partners, an organizational consultancy in Temecula, California.  

“If you are a marketing manager and you hired a remote employee in Denver during the pandemic, but you sit in Atlanta, it's probably not worth the company's money to fly you to Denver for 48 hours just to do one layoff,” Kriegel said. “So, as teams are more dispersed, there's an economic and logistical reality to all this.”  

But a deeper philosophical change is also taking hold, she said, especially as it relates to how the layoff has been perceived from both sides of the table.  

“Companies are moving away from both the ‘HR perp walk,’ as well as the notion for executives of layoffs as a badge of honor,” she said.  

So, while it may seem cold to find out you’ve been laid off in your own home, it’s likely much less embarrassing than being publicly herded into a hire/fire room or hauling a cardboard box of possessions past colleagues on the way out the door. 

“Giving employees space and grace to absorb an economic transition is important and powerful,” Kriegel said.

With safety concerns about the workplace seemingly at an all-time high, Kriegel was hesitant to tie an uptick in virtual layoffs with employers’ concerns about workplace violence. 

“While some workplace violence is tied to recent layoffs,” she said, “there is a much bigger picture around mental health and gun control and various other societal issues that outstrip work. Trying to connect those two would mostly be correlative at best.” 

Importance of Severance 

The overarching challenge is that there’s simply no “good” way to conduct a layoff, virtually or in-person.  

But Kriegel said the recent McDonald’s example came close because it gave employees some advanced warning and the opportunity to begin the job-search process early. 

“Generally, any sense of understanding that this matters to the employee is important,” she said. “A layoff implies that income is going away. It's a big deal to the person getting laid off.” 

To that end, employers should be ready to offer a smooth transition with the help of a well-planned severance package, said LaCinda Glover, senior principal, rewards consultant and career practice leader at Mercer.  

She recommended employers immediately review their severance packages and outplacement service design and offered the following action items:   

  • Ensure your plan is current. Evaluate the market to make sure the level of severance you’re providing is competitive.   
  • Gather data from former employees. Determine if the outplacement service you have in place is meeting the needs of your workforce by learning about previous employees’ experience with the service.   
  • Consider ancillary pieces beyond pay. Health benefits, life insurance, EAPs and outplacement services are important offerings beyond compensation in a severance package. 

Failure to create and implement an effective severance package could have disastrous results for a company, Glover said. 

“[S]ocial media is a powerful tool,” she said, adding that without severance, people can immediately get on a platform and bad-mouth their former employer, while also leaving negative reviews on job sites such as Glassdoor or Indeed.    

Ahead of the Game 

Regardless of the method to deliver the bad news, companies must realize that layoffs are a managerial responsibility, not an HR or outsourced responsibility, said Culture Partners’ Kriegel. 

“A manager needs to do it,” she said. “If you start there, you are already ahead of the game.”  

And while a layoff may be “necessary and appropriate” at an organization, it’s nonetheless important to treat people with dignity and respect throughout the process, wrote John Bremen,  chief strategy, innovation and acceleration officer at WTW, in a recent piece for Forbes.  

“Cancelling access to healthcare, terminating employees on leave, firing employees over email, and withholding access to personal information or property from terminated employees [are] harmful in both the short- and long-term,” he noted.  

The consequences of a poorly executed layoff can extend far beyond just the culled employees: Research has found that the absence of compassionate leadership during difficult times erodes loyalty among remaining employees. 

With that in mind, Bremen advised leaders to be willing to show their compassion by literally sharing the pain of the layoffs. 

“There are many examples of CEOs and their executive teams taking pay cuts in the news,” Bremen said, “either through salary reductions or lower bonuses – or both.” 

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