During periods of economic uncertainty, businesses begin to examine alternatives for cost containment and operational efficiencies. This is no different in the $140-billion lodging industry, which is seeing its worst downturn since 9/11. According to the Bureau of Labor Statistics, there were 90,000 fewer employees at hotels and motels in November than only a year earlier, and this trend is unlikely to change this year.
Personnel costs represent one of the largest line items in an operating budget and are generally first considered when reductions become necessary. If an employer is contemplating layoffs, it’s important to be aware of some fundamentals. Downsizing is a challenging solution to a complex problem and has the potential to affect the business as well as employee morale and productivity.

Companies that take the time to plan and prepare for downsizing find they’re able to minimize the impact. Here are some things to consider:

Make smart decisions now. If a layoff is likely to occur eventually, evaluate other options. For example, you can realign existing personnel to cover current vacant positions, or you have solid performers take on additional responsibilities of poor performers and use attrition to make the necessary cuts. (It is important to document any training the poor performers received.) If you have a front desk worker who could succeed in the position of concierge, combining the two positions can reduce payroll expenses and ensure continuity in the workforce.

Reduce the risk of litigation. There are federal, state and even local laws that govern layoffs. Make sure you are aware of those that may affect your organization. For example, employers covered by the Federal Worker Adjustment and Retraining Notification Act (WARN) must provide 60 calendar days’ advance notice for mass layoffs.

Recognize the human side of downsizing. How downsized employees are treated directly affects the morale and retention of your remaining high-performing employees. A study in the Academy of Management Journal found that employers who experience layoffs often see an increase in voluntary turnover among employees they wanted to retain.

Prepare employees for the inevitable. Employers often avoid telling employees they will be laid off until the last moment. This action creates an environment of mistrust from surviving employees and opens the organization up to liability regarding wrongful termination. Employees who feel they were blindsided by the termination often look to the legal system for retribution.

Companies often risk losing efficiencies and cost savings from undergoing layoffs if there is not proper attention given to the remaining workforce—and the lodging industry is no exception. Often surviving employees feel mixed emotions of relief and guilt that they survived the layoff, but that their co-workers were not as fortunate, and apprehension that they may still be at risk.

Management in each sector, from roomservice and guest relations to food and beverage and maintenance, must recognize these emotions if they want to ensure that its own individual work force remains focused and productive. Here are some things to consider:

Honestly communicate and empathize. There is often a period of adjustment, and managers should recognize this by empathizing with their remaining workforce and listening to their concerns. Managers should also be aware that rumors can be more damaging than the factual reasons the company makes certain decisions. Employees may even assume more layoffs are inevitable and begin spreading rumors which can have a negative impact on productivity. Honestly communicating with employees, even when it is bad news, is often better then the remaining uncertainty.

Keep things familiar. If there was always a Monday morning staff meeting, keep the Monday morning meeting in place. After a layoff, employees will experience a heightened sense of insecurity, so being able to rely on certain areas of familiarity can have a positive effect on productivity.

Recognition and rewards. The remaining workforce will often have to bear the burden of a heavier workload with fewer employees to perform the responsibilities. In tough economic times there may not be the budget for bonuses or merit increases, but many recognition programs can be implemented to let employees know you’re aware of the added burden and that you appreciate their hard work.

Future goals. Communicate the strategic direction of the organization with employees and each employee’s role in helping the company achieve those successes. By communicating with employees about their future in the organization and the company’s goals, employees will feel more vested and connected to the organization.

While layoffs may become a necessary action for an organization, being prepared can set the stage for a more positive outcome. In the lodging industry, the best advice is to be smart, plan and communicate and you can steer clear of avoidable risk.

Erica Siegel, SPHR, is a regional human resource consulting manager at Oasis Outsourcing, the nation’s largest privately held professional employer organization. Its services include including human resources services, payroll administration, employee benefits and risk management.

Web resources: http://www.oasisadvantage.com