There comes a time in every business leader's life when they have to make tough decisions about who is going to be working in the organization. This decision can be the result of recessionary pressures leading to a lack of income, competition, lack of profits, inflation and rising costs which reduce the viability of the business, or other unforeseen circumstances. Sometimes we have to let people go because they are the wrong person for the job, they have personal challenges that don’t enable them to work in your organization, or there are conflicts with other employees that are putting your team at risk.
Letting people go is often the hardest task that business leaders have to do in their role of ensuring that the company survives to continue to create jobs, serve customers and fulfill its purpose. Laying off staff often leads to sleepless nights, stressful days, weeks of deliberation, many times tears and a feeling of loss. I haven’t met a leader that enjoys the job of letting
people go, yet when the time comes for this decision, failure to move forward can cripple your organization.
So how do we properly lay people off when required?
1. Consider the options: There have been times in my tenure as an employer where I thought I was going to have to lay off an employee for various reasons only to find that when I considered all the options that the layoff wasn’t necessary. In considering the options we need to think through our vision for the future that might include, expansion, diversification, a rearrangement of roles and responsibilities to reduce the stress of other key staff. Sometimes but not always, there are other possibilities within our organization where we can employ people to create efficiencies and value.
2. Communicate Early and Often: If you are going through tough times it should not come as a surprise to your staff that you are thinking of reducing your costs. Having your team on board in helping you come up with solutions should start early. While labor might be your biggest cost, it is not your only cost and more brainstorming to develop ways to improve cash flow, revenue and reduce costs can keep people working. I have seen it where employees who see the writing on the wall make their own decisions to move on with their careers that can save you as the employer the chore of making these decisions for them. Also if we are communicating the concept that we are going to need to make staff reductions, some employees will “take one for the team” and retire to enable a younger generation to have the livelihood of a job. While you might not find this ideal at the time it often works out!
3. Check the Regulations: So you have decided that you have to make a cut and you feel forced to lay someone off. You will need to check your labor laws and the requirements for doing this properly. Ensuring that you follow the regulations can save you much time, money and headache. If you have a union, you will have other requirements that will guide your decision. You probably can’t lay off a senior staff member before a junior one, whereas in a non union shop it might make more sense to let a consistently underperforming senior staff member go before one of your eager rookies.
4. Consider the employee: While you might think it is tough as an employer to let someone go, trying to support yourself or a family without a job is considerably more difficult. Many years back I had an employee who was not performing well. I knew that I was going to have to make a decision in order to preserve our culture of hard work within our business. I had a tough conversation with the employee where I laid out what I was seeing as well as how it was affecting the team. I asked my employee what he really wanted to do with his life. To my surprise this fellow was happy to be asked and told me that he would like to be working for one of our suppliers. I told him that I would help with this transition and made a few phone calls to a couple of suppliers and suggested that they interview him. As a result, the employee got his dream job and the tension went down in our business. While these conversations don’t always happen so ideally, thinking about our employees and asking them about what they want in their future can help you help them.
5. Make The Day of Reckoning Smooth: You have been thinking about this day for a long time, you might not have slept well the night before, your blood pressure is up and you are worried that there is going to be conflict, tears and sadness. The most important thing you can do is be prepared, you might have a script written, you will want to ensure the paperwork is in order, checks are ready if they need to be paid out and employees are leaving today. As the hour approaches, there should be no surprises. You will want to meet with your employee in a quiet space where you will not be interrupted, you will re-explain the situation that should not be a surprise for the employee, you will directly tell them how difficult the decision is and what decision you have made, that they are being laid off. Be prepared to give them time to ask questions, to have a discussion, to shed a few tears. Let them know about the process for getting their stuff together and what will happen if there is a transition period between the time they have been told and the hours, days, weeks or months until their final time with the company.
6. Communicate: Your remaining team members will have a range of emotions after the cuts. Start by communicating what happened, reaffirm the reasons why the decision was made and encourage everyone to get back to work but to reach out to you or your HR professionals if they need some support or to discuss what just happened.
7. Be Gentle to yourself. Laying off staff can be a big energy sapper. You yourself are going to have a range of emotions after the marching orders have been delivered. Expect that you will be exhausted or might need some time off, whether that be a short walk or a long weekend. Be gentle on yourself and recognize that often the decision was made because of circumstances outside of your control.
Letting people go is tough for everyone involved, especially the staff member who has been cut, but also the remaining staff, as well as yourself the leader. Having compassion, being respectful, considerate, and polite, is not within the wheelhouse of every leader, however how we act in difficult times often sets the tone for how our team sees us throughout the rest of the year. The key takeaway should be that there are always options, communicate early and often, make a decision and deliver it with compassion. This will gain you respect and leave the door open for future beneficial relationships between you and the employees you have let go.
Dave Fuller, MBA, is an Award-Winning Business Coach and the author of the books “Profit Yourself Healthy” and “Pivotal Performance”. Making a tough decision and need to send an email to diffuse? Email dave@pivotleader.com