1. UPFRONT
6 www.hrmonline.ca
NEWS ANALYSIS
Targetrecentlyannounced
theclosureofallits
Canadianoperations,
eliminatingmorethan
17,000jobsintheprocess.
HRDexamineswhatthe
Americanretailerdidright,
whereitwentwrong,and
howcompaniesinsimilar
situationscandownsize
strategicallyandethically
The right
way to
‘rightsize’
THE PRESS RELEASE was simply titled “Target
Corporation Announces Plans to Discontinue Canadian
Operations.”
Within the hour, news outlets throughout Canada
were reporting on the retail giant’s decision to abandon
all 133 of its nationwide storefronts, a move resulting
in the elimination of 17,600 jobs – the second biggest
corporate layoff in Canadian history.
Unfortunately, it was through these very news out-
lets that many employees learned they would soon to
be out of a job.
One Ontario team floor member, a single mother
who discovered her fate after watching a TV broad-
cast in the employee break room, told the CBC, “You
couldn’t go anywhere without seeing a team member
absolutely in tears or in shambles, [saying] what am I
going to do now?”
“There’s no such thing as a perfectly handled layoff,”
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2. www.hrmonline.ca 7
says Gene Grabowski, partner at kglobal, a Washington,
DC-based communications firm that manages corpo-
rate messaging. “However, you can do it in a way that
shows compassion for employees.”
Needless to say, Target may not have conducted
their layoffs in such a manner. But in a year when Mexx,
Sony, and Smart Set have all decided to cease Canadian
operations, it seems that many companies could use
a primer on how to best downsize or ‘rightsize’ their
workforce.
HRD presents a guide for doing so with the needs of
employees, shareholders, reputation and the commu-
nity in mind.
Before the heartbreak
It is no secret that Target was struggling to remain
viable in Canada. The retailer, headquartered across
the border in Minneapolis, Minnesota, made headlines
in 2013 when it suffered $941 million in losses, a trend
that continued throughout every month of 2014.
This transparency is one of the few undertakings
that Target handled well.
“I really don’t think there was any information
hiding; all the facts were there. They said they were
going to staff 150-200 employees per store, but if you
do the math, there’s less than 135 employees in each
store right now,” says Dr. Nita Chhinzer, associate pro-
fessor of human resources at the University of Guelph
Department of Management.
It’s essential for this openness to continue in the
weeks and months leading up to layoff announcements,
as rumours will inevitably surface otherwise.
“The first rule of conducting a layoff properly is to
be honest and transparent,” says Grabowski. “Try to
keep advanced news of the layoff nonexistent, but if you
fail at that and you’re confronted by employees or the
media, be honest and say something like, ‘All options
for managing the company’s current situation are on
the table, just as they always are.’”
Grabowski notes that this nuanced language is
important, as outright denial will appear deceitful if
layoffs do occur, and hints or forewarnings may cause
unnecessary anxiety if downsizing is called off at the
last minute.
The big day
This communication strategy should continue until
the day of announcements. While it may be tempting
to place the blame elsewhere, accountability will secure
the highest possible trust and loyalty with employees
and external stakeholders.
“Don’t sugarcoat or obfuscate anything,” says
“The risks of doing layoffs
poorly run the gamut from
loss of important company
information to reputational
damage to more extreme
circumstances”
Tracy Benson
BIGGEST LAYOFFS IN CANADIAN HISTORY
1. 1992, Newfoundland and Labrador cod fishing industry
Due to ecological concerns over the northern cod, the Canadian federal government
placed a moratorium on all fisheries; 38,000 positions were eliminated.
2. 2015, Target
The American retailer announced plans to abandon all Canadian stores, at the expense
of 17,600 part-time and full-time employees.
3. 1959, Avro Canada
A conservative prime minister decided to scrap plans on the Avro Arrow aircraft, leading
to 14,000 employees being laid off, followed by 25,000 contract workers. The ensuing
flight of scientists and engineers to NASA and the Concorde became known as Canada’s
‘brain drain.’
4. 1999, T. Eaton’s Co.
After decades of decline, the Canadian department store finally collapsed at the brink of
the new millennium. Around 13,000 layoffs ensued.
5. 2000-2001, Air Canada
Because of the cumulative forces of economic downturn, the September 11 terrorist
attacks, and rising fuel prices, the national airline downsized by approximately 13,000
in a nine-month span.
Grabowski. “If layoffs are happening because the com-
pany made a poor decision, say, ‘This is the nature of
business. You have to take calculated risks. We did that,
and it didn’t work out, so we’re experiencing some vol-
atility. We expect to bounce back, and the next quarter
that we’re in better shape, we will look toward hiring
again. But right now we are taking the necessary steps
for the company to remain viable.’”
This advice is backed by empirical research. In a
study co-authored by Dr. Chhinzer, an analysis of 142
Canadian companies that conducted layoffs between
2006 and 2009 found that the organizations that
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3. UPFRONT
8 www.hrmonline.ca
NEWS ANALYSIS
issued an apology were more likely to experience posi-
tive long-term returns for shareholders, as opposed to
those who denied any wrongdoing.
“In studying shareholders’ reaction to layoffs and
the impact that has on share prices, I found that orga-
nizations across Canada who denied the layoff had the
most negative drop in share prices following the layoff
announcement, whereas organizations that apologized
had the highest,” Chhinzer says.
People first
Employees’ personal needs should also be a top priority
during the layoff process. In addition to ethical and
moral obligations, neglecting the workforce comes at
a high cost. If organizations are not sensitive to the
impact that layoffs have on departing workers, they
run the risk of creating bitter ex-employees intent on
sabotaging their former employer.
“The risks of doing layoffs poorly run the gamut
from loss of important company information to reputa-
tional damage to extreme circumstances such as one I
saw years ago where we learned an individual who had
been let go earlier in the day was threatening to return
with the intent of harming one of the executives,” says
Tracy Benson, founder and CEO of On The Same Page.
To prevent these situations, several best practices are
recommended when conducting each layoff. However,
considerations should always be made on an individual
basis to factor in organizational size and culture, as well
as the scope of downsizing.
First, it’s advised that the layoff should occur early
in the week, as the productivity of the workweek will
inspire employees to begin the search for a new job
within the next day or two, as opposed to lingering over
anger and frustration throughout the weekend.
“Everybody wants to do this on a Friday afternoon,
but the problem with that is you’ve just sent a bunch of
people into the community with a tremendous amount
of anxiety, and they’ve maybe only absorbed two of the
five messages you’ve delivered,” says Benson. “You’ve
completely lost control of your message, and it looks
like you just dropped the ball and ran.”
Another consideration with regard to timing is
working notice. While a certain amount of advanced
warning is mandated by the federal government,
exceptional employers will provide more time than
legally required for workers to find new opportunities
before the termination officially takes suit.
Location, location, location
News of a layoff should always be delivered by a senior
leader, but choosing a venue requires further thought
and depends on many particular factors.
Chhinzer notes that one-on-one meetings are ideal,
but in large organizations, this may take an extended
period of time and create a “grim reaper effect” of
employees waiting for their turn at the axe. From a legal
perspective, companies may want two management
representatives on hand “so there’s full disclosure and
witnesses present for a wrongful dismissal suit.”
An ideal middle ground may be a town hall-style
meeting.
“It’s more realistic to sit down in a town hall where
employees can have a voice, and after you present
the information, provide an opportunity for them to
express that voice,” says Chhinzer.
No matter the setting, a comprehensive guide
should be distributed, in case employees are too dis-
traught to remember details regarding severance and
timing. Chhinzer also advises leaders to display a public
bulletin with answers to common queries.
Additional considerations include:
• Having a procedure in place for employees to gather
belongings safely
• Providing pre-arranged taxi trips in case workers
are too distressed to drive home
• Hosting an employee relations professional on-site
if additional counselling is needed
A ROUGH ROAD AHEAD
Tim Horton’s
Although the café and bake shop is successful, its acquisition by
Burger King means the workforce may be downsized by as many as
700 employees (as of March 2015).
Baker Hughes
Declining crude oil prices will result in the oilfield service company
laying off hundreds of Canadian workers
Sony
In early 2015, the Japanese electronics manufacturer announced that it
was closing all 14 of its Canadian retail outlets, resulting in 90 layoffs.
Source: Calgary Herald, Huffington Post
“Organizations across Canada that
denied the layoff had the most negative
drop in share prices following the layoff
announcement”
Dr. Nita Chhinzer
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4. www.hrmonline.ca 9
Gone, but not forgotten
Even after employees have left their post, it’s highly
recommended that organizations assist with the sub-
sequent job search. This guidance can come in the
form of resume coaching, interview preparation or
simply informing employees of the most up-to-date
tools for locating open positions, such as the mobile
app Wirkn.
“Support to employees doesn’t have to be expen-
sive at all; it only costs 3% of payroll every year to do
sufficient outplacement,” Chhinzer says.
Organizations also can partner with such govern-
ment programs as Services Canada, who may provide
on-site information sessions regarding benefits,
services, training opportunities and government-
sponsored job banks.
And while it may seem counterintuitive, if a com-
pany is insolvent, they should consider reaching out
to a competitor who may form special arrangements
that can ease transitions for employees.
Although it wasn’t facilitated by management,
a pertinent example of this involves Sears Canada,
who agreed to prioritize former Target workers
when recruiting for open job postings. In addition,
Starbucks Canada hosted a week of one-hour ses-
sions where job applicants could meet with a store
manager to review opportunities for full and part-
time work, as well as discuss the corporate culture
and compensation packages.
“The sooner that Target can give these employees
resume help, training and career planning services,
the better it will be for their reputation and the
morale of any remaining staff in other countries,”
Chhinzer says.
Weathering the storm
With these suggestions in mind, leaders can be
equipped to handle a bad situation in the best way
possible.
“There’s never a great way to do it. But there are
better ways to do it. And when a company is judged as
having performed a layoff with compassion, honesty,
and having been direct with reporters and stakehold-
ers about why the decision was necessary, they will
be judged to have handled the layoff the best they
could under the circumstances,” Grabowski says.
Both employees and managers will struggle to
remain engaged after the layoffs. Employees may suf-
fer from ‘survivor syndrome,’ or guilt from remaining
while beloved colleagues had to depart, and manag-
ers may not know how to be firm.
To mitigate this, Chhinzer recommends that two
principles prevail: fairness and equity.
First, the layoffs should occur in a fair and trans-
parent manner – Target did this well, as everyone
was laid off. But afterwards, managers should apply
sympathy uniformly throughout the workforce. “If
[they are] interactively, procedurally and distribu-
tively fair to me and my colleagues, then those nega-
tive consequences can be mitigated,” Chhizner says.
Also, when it comes to equity, employees need
to know that they are expected to maintain output
even in downsizing or reorganizing, and those who
slack off will not receive the same pay or severance
package.
Chhinzer emphasizes that although supervisors
may be hesitant to reprimand workers from fear
of lowering morale even further, rules still need to
apply, or else employees who are still working hard
will become bitter.
“The idea is you have to maintain commitment
and progressive discipline,” she advises. If you don’t
consistently apply it, you can face a wrongful dis-
missal suit. The same policies apply as before, and
they need to be applied consistently.”
QUICK TIPS: BENEVOLENT GOODBYES
yy Provide tissues and bottled water
yy Have pre-paid taxis or car services available
yy Plot a route out of the building for workers to bypass pesky
media
yy Use LinkedIn to connect laid off employees with other
opportunities in network
yy Offer to write employees an exceptional recommendation
letter
Source: Businessweek, Inc.com
“The sooner that Target can give these
employees resume help, training and
career planning services, the better it will
be for their reputation and the morale of
any remaining staff in other countries”
Dr. Nita Chhinzer
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