Navigating Layoffs: Balancing Business Needs with Human Costs in the Age of Inflation

Small businesses may sometimes face the difficult decision to implement layoffs in order to adapt to inflation and rising costs, according to a report by Challenger, Gray & Christmas, Inc. In April, U.S.-based employers announced 64,789 job cuts, which represented a 28% decrease from the previous month. Despite this decrease, Andrew Challenger, senior vice president at the firm, anticipates that more cuts may be necessary in the future as labor costs continue to rise.

When faced with layoffs, it is essential for companies to handle them in a professional manner. This includes ensuring compliance with relevant regulations such as the federal WARN act and state-specific laws related to layoffs. Crafting a well-planned layoff plan is also critical. Companies should choose dates for the layoffs and notifications carefully and communicate these plans clearly with employees through private notifications. Providing clear reasons for the layoffs and updating employees on severance benefits, unemployment insurance, and COBRA health insurance is also important. Finally, offering to write a letter of recommendation for those being laid off can be a thoughtful gesture that helps ease the transition for employees leaving the company.