REPORT FROM U.S.—While the severity of a downturn is often measured in the amount of red on the balance sheet, a recent wave of job cuts in the U.S. hotel industry has given the loss a far more human face.
Companies such as Wyndham Worldwide and Las Vegas Sands Corp. have trimmed payroll by the hundreds—if not thousands—as part of an industry-wide purge that has shed some 36,600 jobs in November alone, according to the Department of Labor.
“It’s not something that any of us forget when we have to lay somebody off,” said Michelle Morrison, president of Morrison & Company, a consultant firm that specializes in staffing solutions for the hotel industry.
Whether or not they’ll always remember it afterwards, HR directors and managers should never forget a few simple steps before laying off an employee, experts said.
1. Communicate often and honestly
When times get tough, employees should never be kept in the dark. Experts said that open and honest communication will not only quell stress and anxiety in the workplace, it will also better prepare employees should layoffs be inevitable.
“Honestly really helps,” Morrison said. “Everybody is sort of stressed about what they hear about the economy. Even if you believe your job is safe, the stress is really high. I think more than ever, some honesty about how the company stands and what it has in terms of resources is important.”
Chuck Conine, president of Irvine, California-based Hospitality HR Solutions, said general managers should lead the charge.
“The general manager is really the individual to whom the employee looks for leadership above all else. (They need) more communication from her or her rather than less,” he said.
Communication isn’t just important leading up to layoffs. It’s also necessary immediately after them, Conine said. A member of management needs to tell other employees what happened and why—all while emphasizing that the management team has tried everything to avoid job cuts in the first place.
2. Exhaust every alternative
While often unavoidable, layoffs should be a last resort exercised only after every possible alternative has been exhausted, said Bruce Tracey, associate professor at The School of Hotel Administration at Cornell University.
“What are your alternatives?” he asked, suggesting hiring freezes, reduced hours and voluntary retirement as possible options.
“Depending on your organization, can you do job sharing?” Morrison suggested.
If budget cuts are indeed unavoidable, she suggested looking above that bottom rung on the employment ladder to avoid simultaneous cuts in service.
“How do you cut dollars and still give the same guest service? Many times people cut the hourly (employees). My suggestion is maybe we should look at the very top.”
By sacrificing one higher-level position instead of numerous lower-level employees, hotels can keep enough frontline employees necessary to maintain the same level of customer service that guests have come to expect, Morrison said.
3. Seek legal counsel
The realm of layoffs is fraught with potential liability. Therefore, HR directors and hotel managers need to consult with an employment lawyer before, not after, any jobs are cut, according to experts.
A seasoned attorney can serve as a guide through complex litigation and contractual obligations, as well as examining whether or not the profile of employees to be laid off might lead to a discrimination lawsuit, Tracey said.
Because labor law can be so complex, Conine advised bringing in a specialist from the outside.
“These folks understand the specialty far better than an in-house general counsel or some general lawyer that a hotel might retain for other purposes,” he said.
4. Don’t cut and run
In a tumultuous economic climate, job cuts are often inevitable. When the time comes to lay off an employee, however, experts advised to be as accommodating and helpful as possible.
“I would hand each departing employee a toolkit that has their final pay, the pay stub, an explanation of what the pay includes as well as information about how to continue any health coverage, how to gain access to 401(k) plan and how to deal with any other plans that the hotel might have in place with its employees,” Conine said.
That toolkit should also include information about seeking unemployment, Medicare, Social Security benefits and even food stamps, he added.
And while HR directors and hotel managers should practice a certain amount of sensitivity in the process, Tracey advised keeping the meeting direct, informative and short.
“Invite the employees to sit down. Open it up, and get right to the point. Don’t use humor. Don’t be apologetic. Don’t threaten. Just put your cards on the table. Over-communicate the process and how you got to the decision. You are going to have to listen to the employees and manage the responses. Be prepared for a lot of resentment and anger.
“Get in, and get out, and be prepared for lots and lots of follow-up.”