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 result from 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, have personal challenges that don’t enable them to work in your organization or have 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 to ensure 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, tears and a feeling of loss.
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I haven’t met a leader who enjoys the job of letting people go, yet when the time comes for this decision, failure to move forward can ripple through your organization.
So how do we properly lay people off when required?
- Consider the options: There have been times in my tenure as an employer when I thought I would have to lay off an employee for various reasons, only to find that, when I considered all the options, the layoff wasn’t necessary. When considering the options, think through our vision for the future, which might include expansion, diversification, and a rearrangement of roles and responsibilities to reduce the stress of other key staff. Sometimes but not always, your organization has other possibilities where you can employ people to create efficiencies and value.
- 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 to help you develop solutions should start early. While labour might be your biggest cost, it is not your only cost, and brainstorming to develop ways to improve cash flow and revenue and reduce costs can keep people working. I have seen situations where employees who see the writing on the wall make their own decisions to move on with their careers: that can save you the chore of making these decisions for them. Also, if we are communicating that we will need to make staff reductions, some employees may “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, it often works out!
- Check the Regulations: Once you have decided to lay someone off, check your labour laws and the requirements to ensure you are doing it properly. Following 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. As a union shop, you probably can’t lay off a senior staff member before a junior one. In contrast, 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.
- Consider the employee: While it is tough for an employer to let someone go, it is even tougher for an employee trying to support themselves or a family without a job. Years back, I had an employee who was not performing well, and I knew that I would have to make a decision 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 and how it affected the team. I asked my employee what he really wanted to do with his life. To my surprise, he was happy to be asked and told me he would like to work for one of our suppliers. I told him I would help with this transition, 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 end so ideally, thinking about our employees and asking them about what they want in their future can help you help them.
- 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 will be conflict, tears and sadness. The most important thing you can do is be prepared; you might have a script written, but you will want to ensure the paperwork is in order and checks are ready if they need to be paid out to employees 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 need to re-explain the situation, which should not be a surprise for the employee, and you will tell them how difficult the decision is but that you have decided to lay them 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.
- 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.
- Be Gentle to yourself. Laying off staff can be a significant energy sapper. You will 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 with yourself and recognize that the decision was made because of circumstances outside your control.
Letting people go is tough for everyone involved, especially the staff member who has been cut, the remaining staff, and you, 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 a partner with Pivotleader Inc.
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