Handling Layoffs in a Downsizing World

Ryan Gray, MD
Ryan Gray, MD

Ryan Gray, MD, is a former Air Force Flight Surgeon. He is now helping premed students overcome obstacles on their journey to become physicians at the Medical School Headquarters.

Layoffs are tough. But, the economic downturn, lower insurance reimbursements, increased business expenses and the expectation that medical practices “do more with less†may make layoffs unavoidable.

Layoffs are tough. But, the economic downturn, lower insurance reimbursements, increased business expenses, and the expectation that medical practices “do more with less” may make layoffs unavoidable.

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Although there is no easy way to cut jobs, there is a way to do it that minimizes the pain for you and your employees. Here are a few suggestions to help you manage layoffs in the best possible way:

1. Attrition is easiest. If you have vacant positions, or if you know of someone who plans to retire or leave for other reasons, it might be easiest to cut those positions so you don’t have to actually “fire” anyone.

The key here is communication. You should explain to your employees that, although cutting vacant positions may mean increased workloads and a reshuffling of job duties, you are committed to doing what it takes to avoid laying off existing employees.

2. Give plenty of notice. Don’t keep your employees in the dark. You may not be sure exactly what the layoffs are going to look like, but you should make your employees aware of the possibility as soon as you are able. This shows that you are being honest, open and considerate of your employees’ needs to plan their own lives.

Hiding layoffs until the last possible second will only create a culture of mistrust at your practice—and if the employees who have survived the layoffs are wary of you, they will be more likely to find other jobs or become disgruntled and unproductive. Err on the side of communicating too much, rather than too little.

3. Have a plan. If you identify the need for layoffs, work with your practice manager, human resources manager and other top staff to develop a logical plan that not only achieves the desired result, but exercises compassion. Ideally, you will have started thinking about layoffs before your financial situation has become so dire that you must take immediate action.

In addition to identifying what positions will be cut and which staff members will be laid off, you will need to decide if you want to offer severance pay and, if so, how much. You will also want to decide on the timing of the layoffs (end of the year, end of the quarter, etc.) and develop a communication plan to keep everyone in the loop.

You may also want to bring in a human resources consultant or an attorney to help you. Even though attorneys and human resources consultants may recommend a percentage-based approach to layoffs (10 percent of staff across all departments on a last-hired, first-fired basis, for example) to protect you from legal ramifications, you should insist on a plan that takes the individual skills of employees into account and treats everyone—including the layoff survivors—with dignity.

4. Have a vision. When designing your layoff plan, you need to think about what you want your practice to look like after the layoffs. It is critical that the layoffs move you closer to your vision—not farther away.

Consider what you want your practice to accomplish and what your practice’s focus will be after layoffs. Then, make projections about what staff will be needed and what skills your staff members must possess.

5. Care for the survivors. Of course, you need to treat the employees who are being laid off with care, dignity and compassion. But, employers often overlook the need to care for the layoff survivors.

Acting like nothing happened or failing to communicate with remaining employees is guaranteed to have a negative effect on morale, productivity and employee retention. You should do everything in your power to eliminate confusion about new job responsibilities, uncertainty about job security and distrust of management.

It’s no surprise that layoffs are stressful for employees and managers. But, it is possible to achieve your business objectives while treating employees with compassion and dignity. If reducing staff becomes unavoidable, a well-planned, well-executed layoff is critical to ensuring the success of your practice and the health of your organization in the future.