Case Study: Strategizing & Implementing Employee Mass Layoff at a Catering French Company
Client Overview:
Our client, a subsidiary of a French company with over 50 years in business, provides industrial catering services and reception solutions for office buildings. Due to a global realignment, the Vietnam office faced a need for significant restructuring in July 2021 to reduce people operations costs.
Client’s Goal:
In 2021, the client aimed to lay off site staff and some office roles in Ho Chi Minh City, accounting for 30% of the total people operations cost (salary, bonus, social insurance, office overhead). However, the full-time, permanent contracts of these employees presented compliance, branding, and post-layoff staff impact challenges.
Our Solutions: Human Resources > Layoff Strategy & Project Delivery
- Workforce analysis & projected cost-saving
- Communication plan (internal, external stakeholders)
- Outplacement, compensation aligned with labor law & union regulations
- People operations process (transition, termination)
- KPI adjustment
- Change management
I. APPROACH
1.1 Organizational Health Assessment & Comprehensive Workforce Analysis:
- Conducted a detailed evaluation of the company's organizational health.
- Analyzed the workforce to identify roles that were redundant or could be streamlined.
1.2 Strategic Communication Plan:
- Developed a clear and empathetic communication strategy to convey the restructuring plans.
- Ensured transparency and regular updates to all stakeholders, including affected employees and remaining staff.
1.3 Severance and Outplacement Services:
- Designed fair severance packages, providing one month’s salary for each year of service, with a minimum of two months' salary.
- Offered career transition support to help affected employees find new opportunities.
1.4 Legal and Compliance Advisory:
- Ensured compliance with Vietnamese labor laws, particularly for sensitive cases involving union representatives.
- Engaged with the Ho Chi Minh City Department of Labor to navigate legal requirements.
1.5 Change Management:
- Implemented a phased approach to change, allowing remaining staff to adapt gradually.
- Adjusted KPIs, workloads, and responsibilities to align with the new organizational structure.
II. EXECUTION
2.1 Implement Direct Negotiation:
Conducted private meetings with affected employees to explain the downsizing due to global business realignment.
Communicated that specific roles were being eliminated and outlined the severance packages offered.
Engaged directly with the union president, ensuring compliance with labor laws and negotiating fair terms.
2.2 Handling Sensitive Cases:
- Secured additional budget approval to offer enhanced severance packages for sensitive cases, such as the union president.
- Conducted multiple face-to-face negotiations to reach amicable settlements, including additional lump-sum payments beyond standard severance.
2.3 Evaluate the Strategy & Make Further Improvements:
- Continuously assessed the effectiveness of the layoff strategy and communication plan.
- Made adjustments based on feedback from stakeholders and the impact on remaining staff.
III. RESULTS
3.1 Cost-saving Level:
- The layoff of 4 managers accounted for 8.6% of the salary fund.
- The layoff of 30 site staff accounted for 18.2% of the salary fund.
- Total salary fund savings: 27%.
- Social insurance fund savings: 27%.
- Administrative costs (office, gifts, tea, water, equipment, systems for those employees): 24%.
The total cost savings from the downsizing reached approximately 26% out of total people operations cost.
3.2 Compliance:
- Ensured all legal requirements were met, including notifications and approvals from the Ho Chi Minh City Department of Labor.
- Documentation and communication were handled in accordance with Vietnamese labor laws, including severance packages and layoff notifications.
3.3 Brand Management:
- Employees were satisfied with the plan, which helped maintain a positive brand image. The remaining staff gradually adapted to the restructure and accepted new job allocations.
- The company avoided negative publicity by handling the layoff process with care and transparency.
IV. CONCLUSION
Through our experts' efforts, The Client was able to streamline its operations, reduce costs, and improve overall efficiency. The strategic approach, comprehensive planning, and sensitive handling of layoffs ensured a smooth transition, maintaining morale and productivity among remaining staff while achieving the company’s restructuring goals. This case exemplifies our expertise in handling complex HR challenges and delivering tailored solutions to meet client needs.
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