Published August 2001

Handle layoffs with communication, compassion

Q. The time has come. Through the nine months of the economic downturn our company has tried several creative methods to cope with the resulting revenue decline. But the losses keep mounting, and we will begin significant layoffs in the next quarter. This will be the first time we have reduced staff, and we want to get through it by minimizing the hurt to the company and our employees. Suggestions?

A. Telling people their employment’s ending is an emotional, painful and risky experience for those being let go and those who remain, including managers. No matter who goes, your company will be losing considerable intellectual capital and cultural knowledge that may never be replaced.

How you approach this matter will have a deep impact on your remaining employees, your reputation as an employer and the future health of the company.

Though layoffs are used to preserve the company’s economic viability, senior management’s major concern should be on the emotional health of the departing employees. The business landscape is littered with companies that failed to do so and found themselves no better and even worse off economically six months later.

Consider these guidelines:

Don’t lie, don’t keep secrets, communicate openly, frequently and honestly. Repeat. By now, your employees know things are going poorly. Don’t try to spin away the obvious. Whether through meetings or written communications, frankly acknowledge the company’s precarious situation, what’s being done to improve it, that layoffs may be necessary and that the company will keep everyone informed.

Ask for voluntary separations, hour reductions or any other cost-cutting measure before relying on layoffs. Even if layoffs are still just a possibility, treat each voluntary departure as a reduction-in-force with a similar “departure package” (severance, benefits extension, outplacement assistance) you would envision offering laid-off employees.

Before people are told, have Human Resources compile a written record of payments and earnings, such as unused vacation pay, profit-sharing credits, bonus accrual, any pension rights, 401(k) conversion steps, medical COBRA plans and benefits continuation (already paid life/disability insurance).

While doing so, ask HR to perform a “separation audit” for each affected employee to include if the layoff might affect pension benefits or upcoming bonus awards. You may want to delay laying off an employee who is within six months of retirement or is about to be honored as the year’s best salesperson.

Curtail hiring at the first sign layoffs are contemplated. Withdraw all employment offers, except for critical positions.

Prepare for outside inquiries. Draft a succinct statement explaining the basics of the layoff. Appoint one person as spokesperson to handle any media inquiries. Distribute the statement widely, including to all vendors and other business partners.

The modus operandi in executing the layoffs will differ depending upon the organization’s size and number of employees. Whenever possible, have the employees’ (trained) manager deliver the news, don’t rush the process (people will need time to react and adjust themselves emotionally), schedule follow-up meetings for further questions, offer outplacement assistance and place outgoing employees on an “eligible for employment list” to be sent to surrounding companies.

Collect all company property at the exit interview. Allow departing employees appropriate time to say good-bye. Never end employment by having security escort the departing employee to the door.

Begin communicating with remaining employees about “post-layoff” plans and their role in helping the company reverse its economic downturn.

Eric Zoeckler operates a marketing communications firm, The Scribe, and writes “Taming the Workplace,” which appears Mondays in The Herald. Contact him at 206-284-9566 or by e-mail to mrscribe@aol.com.

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