How to Conduct a Layoff
What managers should do before, during, and after a layoff.
Layoffs are painful and stressful for everyone, employers and employees alike. If your company has decided that layoffs are necessary, you can make the best of a bad situation by taking steps to conduct the layoffs respectfully, address your company's concerns about security when workers leave, and boost the morale of the remaining workers. (For information on deciding whether a layoff is necessary and who to lay off, read Nolo's article Making Layoff Decisions.)
Before Announcing the Layoffs
In many cases, by the time the pink slips get passed around, most of the workforce will already know that layoffs are coming. They will be aware of declining profits, changes in the marketplace, or the elimination of a product line, and that combined with closed-door meetings will get tongues wagging.
Because news of layoffs often leaks out, some experts advise employers to take the initiative and announce that reductions might be necessary. Others advise employers to keep their lips sealed until all of the layoff plans have been hammered out. When deciding whether to disclose upcoming or potential layoffs, consider:
- how likely it is that employees will find out about the layoffs
- how the company has handled communications with employees in the past, and
- your company's philosophy on open communication.
Breaking the News to Laid-Off Workers
We have all heard layoff horror stories: groups of employees herded into conference rooms to be canned en masse, workers fired by email, staff marched out of the office by armed security guards, and so on. The lesson to be learned from these fiascoes is clear: Be respectful when you lay workers off. Here are a few tips to help you keep things positive:
Involve the top brass. Layoffs are a major event and should be handled by top company executives.
Give advance notice. A federal law, the Worker Adjustment and Retraining Notification Act (WARN), requires larger employers to give workers 60 days' notice before a plant closing or mass layoff.
Don't lay off workers in a group. Whenever possible, take the time to inform workers individually that they will be laid off. Make it a confidential meeting, allow enough time to answer the worker's questions, and give any necessary information.
Explain the decision. Tell the worker why layoffs were necessary and why he or she was chosen to be laid off.
Be gracious. Express your gratitude for the worker's contributions and your sympathy about the termination.
Discuss what will happen next. If the company will offer severance, explain the package. Tell the worker when his or her last day will be and what will happen in the meantime.
Handling Security Concerns
Sometimes companies treat laid-off workers disrespectfully because they fear violence or sabotage, and this fear is certainly legitimate in some cases. According to a survey of 186 companies by the Computer Security Institute and the FBI, disgruntled workers caused their former employers $378 million worth of damage in the year 2000 alone. So how can you protect your company without treating workers like criminals?
First, bring in security personnel only if you legitimately fear violence, such as if workers have made threats, and even then ask them not to use any strong-arm tactics like escorting workers out unless things really get out of hand.
Second, protect your company's computer system by turning off employee email and disabling passwords as soon as is feasible.
Finally, make sure to collect company property -- keys, credit cards, cell phones, laptop computers, and so on -- on the worker's last day.
Dealing With the Rest of the Workforce
A layoff is no picnic for the workers who avoid the axe either. They are likely to feel wary about their employment prospects. Remaining employees also may resent the company for firing their coworkers and increasing their own workload. Here are a few things you can do to ease the burden:
Provide training. Unless your company is eliminating an entire product line or company service, the work that used to be done by the laid-off workers still has to get done. Training can reduce the frustration and anxiety employees feel about the new work a layoff brings. (But don't ask the laid off workers to train their replacements.)
Avoid burnout. Employees burn out when they are asked to do more work than they can handle, so don't expect remaining employees to simply pick up the slack and do all the work that used to be done by a much larger group.
Work to retain remaining employees. One unfortunate consequence of a layoff is that your company may lose the employees it chooses not to lay off, who might see layoffs as a sign that it's time to jump ship. To keep these employees, recognize good performance with positive evaluations, merit increases, and promotions.
Boost morale. After a layoff, workers will likely have questions and concerns. You and other managers should be available to provide answers -- including the reasons for the layoff.
Share the pain. Don't order fancy new office furniture, throw a big expensive party, or have a management team retreat to Aspen soon after a layoff. Employees who have seen their friends laid off and/or been asked to take on new duties want to know that management and executive level employees are in the same boat and feel their pain.
To learn more about conducting layoffs, get The Manager's Legal Handbook, by Amy DelPo and Lisa Guerin (Nolo). This handy guide covers hiring, firing, and everything in between.