Layoffs vs Alternatives: Offboarding best practices for SMEs

As the economic downturn continues to challenge Australian businesses, Small and Medium-sized Enterprises (SMEs) are facing critical decisions when it comes to employee offboarding strategies. 

Recent research by Capterra, the leading B2B software directory, reveals valuable insights into how SMEs are handling layoffs and the potential alternatives they can explore. The study, based on interviews with over 1,300 Australian workers, emphasizes the need for effective strategies to minimize the complications that arise during the offboarding process. For SMEs seeking to weather these turbulent times, understanding the impact of layoffs and adopting proactive measures can be crucial for their long-term success.

The study, which involved interviews with over 1,300 Australian workers, sheds light on the prevalence of layoffs in various industries. Disturbingly, over a third of surveyed businesses admitted to resorting to layoffs in the past 12 months. Furthermore, 38 per cent of those companies reported an increase in the rate of staff layoffs compared to the previous year.

Telecommunications companies have been hit particularly hard, with a staggering 80 per cent of respondents from this sector reporting job cuts within their firms. This industry’s reconsideration of roles, especially in customer experience positions, might be influenced by advancements in technology, such as the adoption of AI tools leading to job automation.

For SMEs, the potential of a recession looms, raising concerns about reduced demand for products or services and the affordability of retaining their workforce. The study highlights that cost-cutting is the primary reason behind layoffs, cited by 48 per cent of respondents. Decreases in operations and available funds were also common reasons, accounting for 34 per cent and 22 per cent of layoffs, respectively.

Effective communication plays a crucial role in maintaining employee morale during redundancies. Surprisingly, only 45 per cent of survey participants stated that their companies communicated layoffs directly to employees, leaving a significant portion (38 per cent) without proper information. Transparent and open communication from management can go a long way in reassuring employees and mitigating the negative impact of layoffs.

Another vital aspect often overlooked by businesses is the offboarding process itself. Shockingly, 40 per cent of respondents revealed that their workplaces lacked an active offboarding strategy. This process involves crucial steps like conducting exit interviews and facilitating the transfer of knowledge from departing employees to their colleagues. By neglecting this aspect, businesses miss out on valuable feedback and risk disruptions within the organisation.

SMEs facing economic uncertainties need to be proactive in managing layoffs and employee offboarding. By considering alternatives to layoffs, embracing transparent communication practices, and implementing comprehensive offboarding strategies, SMEs can navigate these challenging times with greater resilience and safeguard their long-term success and reputation.

“If an SME needs to downsize, they should consider the costs of lay-offs and rehiring. Companies should evaluate alternatives to redundancies, such as employee upskilling or offering staff a voluntary reduction in hours, first,” says Laura Burgess, Content Analyst at Capterra Australia. “If companies have no choice but to make lay-offs, it’s vital to implement an offboarding strategy, such as holding exit interviews, to show support and compassion to employees, and avoid damaging the company’s reputation.”

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