4 Challenges in Navigating Remote Work Layoffs

By Dr. Gleb Tsipursky | September 12, 2023 |

4 min read

One of the biggest challenges for companies in transitioning to remote work is how to handle layoffs. Having helped 21 companies transition to hybrid and remote work, I can attest that planning for the whole workers lifecycle, from onboarding to offboarding, is critical as part of an effective remote and hybrid work strategies.

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1. Impersonal Layoffs

One of the most significant challenges of remote work is the lack of personal interaction between employees and their managers. In the past, layoffs were usually carried out face-to-face, allowing for a more compassionate and human approach. However, with remote work, many companies are resorting to laying off employees via email.

This approach can be seen as cold and insensitive, causing significant harm to employee morale and company culture. In some cases, this can lead to legal action or negative press for the company, as it did for Google, Twitter, Amazon, and Meta, with news stories about how all recently laid off their employees by email.

You’re less likely to be trashed in the media for impersonal layoffs if you’re not a big company, unless of course your email is completely tone-deaf. For instance, PagerDuty CEO Jennifer Tejada was forced to apologize after sending an email to employees announcing that the company would be slashing 7% of its total workforce. The email quoted Dr. Martin Luther King Jr., with Tejada writing:

“I am reminded in moments like this, of something Martin Luther King said, that ‘the ultimate measure of a [leader] is not where [they] stand in the moments of comfort and convenience, but where [they] stand in times of challenge and controversy… PagerDuty is a leader that stands behind its customers, its values, and our vision — for an equitable world where we transform critical work so all teams can delight their customers and build trust.”

Such off-tone messaging reveals the serious lack of personal care and empathy of email layoffs, which are particularly damaging to remote employees.

2. Returning Equipment

Remote work has resulted in many employees working from home, using company-owned equipment such as laptops, phones, and other devices, as well as furniture such as ergonomic standing desks and chairs. When a layoff occurs, companies must navigate the process of retrieving this equipment from remote employees.

This can be a time-consuming and costly process, especially if the equipment is not returned in a timely manner. Companies must have clear policies and procedures in place to ensure that this process is as smooth and efficient as possible.

It’s important to recognize that in some cases, returning equipment and especially furniture isn’t cost-efficient for companies. In that case, the company’s leadership often decides to leave the furniture to the employee.

However, what I help my clients recognize is that doing so comes with problematic implications. The tax authorities would interpret the furniture as a payment to the employee, which must be taxed. Thus, the employee may be stuck with a large tax bill on top of being laid off: that’s bad for the employee and the company alike, which would land in hot water in the press!

What we eventually figured out for my clients was having HR tell laid-off employees to donate to a local charity the furniture and any equipment that’s not cost-effective to return. That way, IRS doesn’t get involved, since the furniture doesn’t end up on an employee’s W-2 form. And whether the employee actually donates the furniture is up to them (of course, realistically most don’t, but the tax problem is solved).

3. Navigating Legal Requirements

And speaking of IRS involvement, layoffs can have significant legal implications; companies must be aware of the laws and regulations that apply to layoffs in their jurisdiction, and with remote workers, there are many jurisdictions to consider. The laws surrounding layoffs in a remote work environment can be complex and difficult to navigate, especially for companies with employees in multiple states and countries.

For example, different states may have different requirements for notice periods, severance packages, and unemployment benefits. In addition, some countries may have stricter requirements for redundancy procedures, which can make the layoff process more challenging for companies.

It is critical for companies to be knowledgeable about the legal requirements that apply to their remote work layoffs. Non-compliance with these laws and regulations can have significant consequences, including fines, legal action, and damage to the company’s reputation.

Moreover, non-compliant layoffs can also harm the morale and productivity of the remaining employees. This is because employees may feel that the company is not treating them fairly and transparently, which can lead to a decline in morale and productivity.

To mitigate the risk of legal non-compliance during remote work layoffs, companies must seek legal advice and guidance. This includes obtaining a clear understanding of the laws and regulations that apply to their jurisdiction, as well as seeking guidance on how to comply with these requirements during the layoff process.

By seeking legal advice and guidance, companies can ensure that their remote work layoffs are compliant and effective. This will help to minimize the risk of legal consequences and maintain the morale and productivity of the remaining employees.

4. Difficulty in Assessing Performance

When employees work remotely, it becomes more difficult for managers to observe their work, see how they interact with others, and assess their contributions to the company. This can lead to an incomplete or inaccurate picture of an employee’s performance, and as a result, managers may make decisions about layoffs based on incorrect information.

In one example, a mid-size IT company laid off a top-performing remote employee based on the manager lacking a personal connection to the employee, without considering their contributions to projects and the impact they had on team morale. This resulted in the loss of a valuable employee, and the company suffered as a result.

In another example, a large financial services company laid off several employees who were critical to the success of a major project. These employees were performing well, but their contributions were not fully appreciated by the manager, who was not able to see the full scope of their work. This led to delays and increased costs for the project, and ultimately, a loss of credibility for the company.

These examples demonstrate how remote work can complicate performance assessment and lead to problematic layoffs. Cognitive biases can be especially problematic in assessing performance. These biases are mental shortcuts that our minds take to simplify complex information and help us make decisions, which often lead to errors in judgment and decision-making.

For example, the confirmation bias is a cognitive bias that causes us to seek out information that confirms our existing beliefs, while ignoring information that contradicts them. In the context of remote work layoffs, a manager may have a preconceived notion of an employee’s performance, and this can lead to a confirmation bias that affects their assessment of that employee.

Another cognitive bias that can impact remote work layoffs is the empathy gap, which is the difficulty in imagining or understanding the feelings, thoughts, or motivations of others. This can lead to a lack of appreciation for an employee’s contributions, which can result in incorrect decisions about layoffs.

These biases stem from the proximity bias, the tendency of leaders to favor those who are near to them and with whom they build a personal relationship over remote workers, who are usually more productive than their in-office counterparts. Managers need to be trained to overcome the proximity bias, and the consequent confirmation bias and empathy gap that undermine effective remote work layoffs.

Conclusion

The shift to remote work has complicated layoffs in several ways, presenting new challenges for companies. To ensure that layoffs are carried out in a manner that is sensitive, effective, and compliant, companies must be prepared to address the four major issues discussed in this article. With the right policies and procedures in place, companies can navigate the complexities of layoffs in the remote work era, minimizing the impact on employees and maintaining the health and well-being of their business.