Banks soften the blow of layoffs.

It's personal. It's emotional. It can seem heartless and cruel. Conducting a major layoff has to be the most agonizing action a bank can take.

While employees can't be expected to understand and accept a layoff, it can be handled in a manner that is humane and considerate of employees' financial and emotional well-being.

Instead of bringing out the ax right away, some banks start out reducing staff by offering special benefits to those who voluntarily retire or resign.

Chase Manhattan Bank, New York, has offered incentives to resign to people who have been with the bank for a long period of time. During the last quarter of 1990, about 2,000 out of a workforce reduction of 3,500 were such volunteers.

The people in the voluntary program received increases in severance pay of 50% or more above the usual amount. Benefits consultants were brought in to answer such questions as how to keep one's life insurance. A two-day job search training seminar was offered to help people write resumes and look for a new job.

"It was a fairly extensive production," says Charles A. Smith, executive vice-president at Chase.

Most of the bank's staff reductions took place through this program and through attrition. "If someone is truly laid off," says Smith, "it is usually because their performance is low. "

Bank of Boston provided a voluntary separation program for people with ten or more years of service when it planned a staff decrease of 1,500 people. These volunteers received three months' pay in addition to the normal severance pay.

"A memo was sent to all employees explaining the voluntary program and they were given two or three weeks to decide whether or not they wanted to apply," says Greg Rice, director of human resources at the $37-billion-assets bank. "Eight hundred people left the corporation this way." Generous severance. Other banks have offered a liberal severance policy.

Harris Bank in Chicago gave every laid-off employee a base of 12 weeks' salary, plus additional pay of up to two years' salary, during a reduction of 320 employees it conducted last year.

Quite a few people got the full two years," says Mary Ullrich, vice-president of corporate communications at the $12-billion-assets bank. "We wanted to provide an income bridge. We wanted to be sure this wouldn't be a financial hardship for employees and their families," Ullrich says.