Letting people go is never pleasant. It's an emotional time for the employer as well as the employee. But you can ease the process. Here's how to hand out the pink slips.
After the amazing economic growth of the last decade, the managerial ranks are full of people who know only what it's like to manage during the good times. But with more and more companies facing lower profitability and straitened finances, layoffs are becoming a reality that managers must prepare to handle.
Letting people go is an emotional event—not just for those being laid off but for those who remain. Of course those who are let go need help with the transition to new employment. But the employees who survive the cutbacks also need reassurance about their own future—and an understanding of the strategic goals behind the cuts.
The following guidelines for a layoff strategy will not only help you to be a better-than-average employer, but will quite possibly have an important impact on your future revenues. Employees who are spinning dark fantasies about their workplace are not productive employees.
1.) Communicate widely and often. Managers often think they shouldn't let employees know when things are going poorly. They don't want their workers to become discouraged. But people aren't stupid; they know when things aren't going well. Even if top managers spin the circumstances positively, the message comes across through unclear goals, a decrease in resources committed to ongoing projects, and other subtle clues. Discussing and acknowledging the company's position is the first step to keeping people involved—and committed to solving problems they understand.
.) Fill in information gaps for your employees. If layoffs become necessary, people won't be shocked if they have been able to see them coming. To that end, share market data and competitive information. Don't proclaim layoffs without need, of course, but don't undermine trust by lying or being unrealistically upbeat two months before a layoff. It's impossible to regain trust once people believe you've lied to them. For example, when Bayfront Medical Center (St. Petersburg, Fla.) merged with St. Anthony's Health Care in 1997, everyone knew there were redundancies in the merged companies. The management addressed uncertainties with a Q&A column in the internal newsletter that openly answered questions such as, "How many positions have been eliminated?" and "Is the hospital going to close?" People didn't love the answers, but they knew and understood the situation.
3.) Give the most pressing information first. When the question on everyone's mind is, "Is there bad news ahead?" let them know. Don't bother starting with a discussion of the competition, market forces, or the financial environment; no one will pay attention until their most critical questions are answered.
4.) Never delegate pain. The most delicate challenge is letting someone know he or she has been let go. Don't delegate this painful mission to the HR department. Most people are loyal first to their manager, then to their company. Give the employee-manager relationship closure by having the manager deliver the message. For an example of how to do it wrong, consider this. One senior manager—we'll call her Jessica—was told to lay off several dozen people on an unrealistic timetable, with no support from the CEO or other management. Those constraints forced her to announce the layoffs to groups of 50 employees at a time. The situation left the group dazed, confused, and embarrassed, and it severely damaged Jessica's credibility with those who stayed on with the company.
5.) Train the messenger. It does no one a favor to lay off employees with a note on their computer saying, "Don't turn this on today!" Deliver the message in private, and give employees time to react. People have different reactions: some need to vent, some need time to think, and some need facts and explanations. Be prepared to give each person what they need to reach a stable emotional keel. Then as quickly as possible, get them thinking about their future, rather than the company's. The primary message should be, "How can I help?"
6.) Be fully present, like the Buddha said. The CEO must be there for the managers as well as the terminated employees. One company planned to shut down an entire branch without coaching its managers in delivering emotionally troubling news. The branch's employees gathered for the announcement, but the CEO didn't show up. Instead, he sent the branch manager a FedEx box with termination packets and no instructions whatsoever. After an unsuccessful attempt (in front of the assembled employees) to get the CEO on the phone, the branch manager opened the box and proclaimed, "Today is my last day with the company and I'm so selfish, I'm taking you all with me." Cute? Yes. But it destroyed the CEO's credibility. Each one of those terminated employees became an ambassador of ill will in the marketplace. You can bet that the story was widely told in the months and even years after the event.
One CEO helped his managers by giving them his prepared, written statement to read. It covered the relevant facts and let people know about their next steps and outplacement options. Managers were told to keep conversation to a minimum and move the employees right along to the outplacement person. Discussing job options and directing the person towards the outplacement services being supplied are good ways to orient someone in a resourceful direction.
7.) Outplacement is a must. The question everyone asks after a layoff is, "What do I do now?" Few people have a resume at hand and a job-hunting network mobilized. Outplacement helps them land on their feet. You're offering help at a high-stress, emotional time. It sends a signal to them and to the remaining employees that you're treating the ex-workers as people, not simply as resources to be managed.
Along those lines, give people the chance to pick up and immediately begin moving towards their future. Letting people go on a Friday afternoon, for example, is a terrible idea. Employees have all weekend to stew and won't be able to do any job-hunting until Monday morning.
Exit interviews can also be useful, but may best be performed by a third-party firm. Employees can provide valuable information that they might not be willing to share with an insider. Make sure to ask, "How do you feel the layoffs were handled?" so they can have a chance to vent emotions around the layoff process itself.
After a morning of layoffs, no one is in an emotional state to work. Give people the space to deal with what just happened. Accept that you'll lose (at least) a day of productivity, and do whatever it takes to help people cope with their emotions quickly.
8.) Survivors need attention, too. Employees who survive the layoffs will struggle with doubts about the company's future. They want to know how their jobs will change. Will they now be expected to do their jobs plus the jobs of their ex-coworkers? Or will their goals be changed accordingly? What is the precise state of the company financially? Are further layoffs imminent? Their doubts will begin with their own roles and expand outward to their teams and to the company as a whole. You must address each level of concern with as much rational discussion as possible.
Layoffs are never easy. But they can be handled best by remembering that uncertainty is the source of rumors and stress alike. Clear and open communication with managers, laid-off employees, and survivors can keep morale steady through one of the most difficult moments in a company's life.
Stever Robbins is the president of VentureCoach, Inc., a leadership and executive coaching firm in Cambridge, Massachusetts.
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