As if layoffs aren't painful enough, many companies make matters worse by handling them poorly. From mass layoffs via conference calls to withholding vacation payouts and severance, these are the worst mistakes I've seen.
Layoffs are tough---how to do right by your employees and your company
July 14, 2016
Have you ever heard a layoff story that made you cringe? Even well-intentioned companies can fall prey to missteps.
In 2014, Patch Media asked 100 employees to dial in to a conference call and heard this message (which, thanks to modern technology, will be forever preserved for online infamy):
Hi everyone, it’s [Patch COO] Leigh Zarelli Lewis. Patch is being restructured in connection with the creation of the joint venture with Hale Global. Hale Global has decided which Patch employees will receive an offer of employment to move forward in accordance with their vision for Patch and which will not. Unfortunately, your role has been eliminated and you will no longer have a role at Patch and today will be your last day of employment with the company. …Thank you again and best of luck.
Your role has been eliminated. Today will be your last day of employment. Over a conference call.
Or, last year, a number of Twitter employees discovered that they had been laid off when they could no longer log in to their corporate email accounts. While unintentional, this was an impersonal way to receive the news.
Even if you’ve avoided those blunders, layoffs are tough...for everyone. Doing right by both your employees and your company doesn’t just happen. It takes a thoughtful effort.
The stakes are high
Ben Horowitz related a fascinating anecdote that highlights what is really at stake for your company when you undertake a layoff. He was discussing his company Opsware’s success with venture capitalist Doug Leone and mentioned that the company had survived (and thrived) after not one, but three separate layoffs. Leone was amazed, saying that in his two decades of experience as a venture capitalist, he’d never seen a startup recover from consecutive layoffs and achieve a billion dollar plus outcome. Why? Because the layoffs had inevitably broken the spirits of the remaining employees.
Yet, Horowitz had managed to build a $1.6B business after three layoffs---because he handled them the right way.
The right way
Horowitz provided some great tips in his post from a CEO’s perspective. A few highlights: be quick (to stay ahead of the rumor mill), be clear as to your reasons (the company failed to meet its goals), and have the CEO address the entire company to provide the context for the layoff. Most importantly, keep in mind that the people who stay will remember how you treated their colleagues.
All good advice, and for the HR leader or the manager who is tasked with delivering the message to individual employees, we have also have more specific advice.
When faced with a difficult task, it’s a human reaction to harden up, almost like you’re creating a shell of formality around yourself to create emotional distance from what you’re doing. While you shouldn’t break down in tears at every meeting (or any meeting), it will soften the blow if you allow yourself to balance soft with firm. Remember that the employees you terminate today were the cream of the crop when you hired them weeks, months, or years ago. They deserve compassion and respect.
Remember it's not personal
You don’t want to be there, neither do they, but here you both are. Why? Because the company shifted its strategy or failed to meet financial targets. The point is, this is unfortunate, but it’s not personal. You can explain this, and then assure the employee that the company is doing everything it can to take care of them.
Explain each person’s severance package
Not only is this need-to-know information for the employee, but it also reinforces the idea that you (and your company) are trying your best to take care of them in every way you can. Come to each meeting prepared to explain when and how their benefits terminate or continue, along with dates and amounts for their final paycheck, the payout for remaining vacation days, and any other financial details. While they may be flooded by emotions and information, they will appreciate knowing that all of these details are in their packet.
Make the next steps clear
Notification meetings are often a blur for employees, so be sure that anything they need to know is written down clearly, with zero corporate jargon and little, if any, fine print. Create a step-by-step checklist of where to go, whom to speak to, and important dates. This may include the deadline for returning their signed Separation Agreement, a timeline for their final cash payout, and the end date of their health benefits.
Focus on what they’ll remember most
Getting laid off is a shock, and people won’t remember the exact words you said in your meeting. However, they will remember how you made them feel. Since they’re getting laid off, and not fired for performance issues, tell them what you or their manager have valued most in their work and consider offering to provide a recommendation.
Layoffs are tough. Invest the effort to do right by your employees. Your company will reap the rewards, and so will you.
What have you learned about effectively managing layoffs in your organization? Share your comments below.
Slate Advisers is a career transition services firm that takes a more innovative approach to outplacement, accelerating employee transitions and delivering measurable results. We work with companies amid team reorgs, acquisition integrations, and other employee exits. And, by supporting smoother departures, we help protect the company's employment brand and morale. Our clients range from venture-backed startups to the Fortune 1000.