The first time I had to do a layoff, I followed all the advice I got from HR. It was quick, efficient, and brutal. Employees got their notices and left while the rest of the workforce was left traumatized and guilty. But this, I’d been told, was the “right” way because it minimized risk of violence and subversion.
I never did it that way again.
I’ve had many conversations with CEOs and they’ve all had the same experience. The whole process of a layoff is so gruesome that no decent human being can feel anything but anxiety and loathing. Because we don’t really want to do it, we put our faith in professionals, only to discover that our first instincts about how to go about it were right.
I understand the HR point of view; it is all about reducing liability. But subsequent layoffs have followed different rules.
Note: These tips are based on an entry in BNET’s Serial CEO blog.
1: Plan ahead
If you have to do a layoff fast, you haven’t been doing your job. You should see danger signs early, in the numbers, in cash flow, in the time it takes to close deals.
2: Discuss the problem
Once you see those warning signs, work with your team to establish some milestones that will indicate whether trends are improving or getting worse. Decide by which of these you will need to start considering cost-reductions.
3: Think strategically
If you have to reduce costs, it doesn’t automatically mean cutting jobs. You might be able to partner with competitors or vendors. You could renegotiate key cost-drivers, move premises, or delay new projects. In my book, cutting people is the last option, not the first one.
4: Share information
Once you’ve established milestones that track short-term performance, share this with everyone in the business. Let them know that if they hit targets, cost-cutting may be averted but if they don’t, it won’t. At this stage, it is perfectly feasible that some individuals may decide they want to leave . That’s fine. What you’ve done is shown your employees respect by giving them choices.
5: Keep in touch
If you don’t hit your milestones and do have to cut jobs, keep in touch with your former employees — you may want them back one day.
A better way
Being humane in the way you do layoffs has all kinds of benefits. Those still working for you feel better about themselves, the company, and you. Their enthusiasm can remain intact because their loyalties aren’t divided. And it isn’t trivial that you can go to work feeling like a human being instead of a monster.