Ask any manager and they’ll probably tell you that one of the most difficult things they’ve ever had to do was let an employee go due to company downsizing. This is an especially tough situation because these could be loyal and productive employees who have done nothing wrong; there may be no performance or behavior issues – they are being let go to reduce the company’s overall costs.
You might mean well in how you approach a downsizing situation with your employees, but if you don’t think it through and carefully plan out your process, things could go very wrong. Here’s one story I received from a reader:
“My husband owns a small company that has been in business for about five years. When business slowed due to the recession, he needed to tighten the budget. This meant he had to lay off one person. Because the woman was a good employee, he thought he would soften the blow by giving her the news at a nearby restaurant after work, rather than at the office. Needless to say, it backfired in a big way and it was the last thing she was expecting. The employee ended the conversation by saying, ‘…and I can’t believe you made me miss my son’s soccer game so you could lay me off’ and then SMACK, she slapped his face and stormed out of the restaurant. I told my husband he handled the situation wrong, but even after getting slapped in the face, he still contends he did the right thing by attempting to be nice with how he handled the layoff. Since we disagree, I would love to hear what you have to say about this.”
This reader’s husband believed he was “being nice” by trying to soften the layoff news for the employee. However, it’s best to handle employee situations at work and during office hours, especially when it comes to layoffs. Worse, not handling an employee termination smoothly can expose the employer to significant potential legal liability.
To uncover additional tips on how to handle termination of good employees due to downsizing/layoffs, I spoke with HR expert Steve Barker, the Global Managing Director of Human Capital for Resources Global Professionals, and Jeffrey Gilbreth, Labor & Employment Partner at Nixon Peabody LLP:
Tip #1: Compassion is key. Whenever you must layoff an employee, keep in mind that you will be dramatically changing the person’s life and that the event could be highly emotional. As HR expert, Steve Barker, notes, “They will go through (to some degree) a formal grieving process not dissimilar to losing a loved one, ending a relationship, or making some other type of unanticipated life change. They will have real concerns – how will I pay my mortgage, feed my family, find a new job? Never lose sight of this, and make sure compassion and empathy are at the top of your list of actions.”
Tip #2: Treat the employee with respect. Many companies follow one termination process, no matter the reason for the employee’s termination. This often includes collecting all company property from the employee, having him or her gather their personal belongings from their office, and then escorting them out the door. While this process may be necessary in certain circumstances, labor and employment lawyer, Jeffrey Gilbreth, says this isn’t needed or appropriate in others, such as when a good employee is being let go. “Many times when I am defending discrimination and other termination-related claims, the former employee will claim that the employer treated him/her poorly during the termination process ("…like a criminal" is a common term. Another common sentiment I hear is, “After X years, I was walked right out the door and couldn’t say goodbye to anyone”). Often, it seems the former employee is most upset not about being let go, but rather, about how he/she was treated during the layoff process. Employers should think carefully about how employees are treated during the termination process and how the message is delivered. If employers treated employees more sensitively and with greater respect when letting them go, perhaps they could avoid certain lawsuits.”
Tip #3: Be honest. When speaking with the employee, explain the real reasons for the changes in the organization. Let the person know that the layoff doesn’t reflect your impression of them or their reputation. “An individual in this situation naturally does a self-assessment. ‘What could I have done differently, what did I or what didn’t I do…?’ Honestly sharing the actual reasons the decisions were made helps people to know the real facts, helps them to process what happened and why it happened, and affords them the ability to move forward,” says Barker.
Tip #4: Think about messaging. Don’t get so focused on the termination process and paperwork that you fail to think through the communications you’ll need to make in connection with the termination – to the impacted employee(s), the remaining workforce, and even externally. “Most important is what is said to the employee being impacted. A thoughtful, appropriate, and consistent message will help the process go as smoothly as possible,” warns Gilbreth. “It’s also important for employers to give some thought to what is said to the remaining workforce about the employee’s termination as well as what is said externally to customers, vendors, partners, and others about the employee’s departure. Employers should be truthful, accurate and consistent when discussing reasons for termination.”
Tip #5: Talk about their progression. Some employees may feel emotionally paralyzed when given layoff news, wondering how they will ever be able to move forward. If the employer provides access to outplacement or job assistance programs, discuss these with the employee to help them move past this situation. Your help to the employee might also be more informal. “You might talk to the employee about what is going on in your industry and where you think they could potentially look for a new role,” suggests Barker. “I was also always willing to make phone calls, call in some favors, talk to my peers – whatever it took to help these employees. While these may not be viewed as traditional or formal actions, I believe you have an obligation to essentially ‘pay it forward’ and help wherever you can.”
Tip #6: Get organized. Careful planning is a must when carrying out the termination of an employee’s employment. As Gilbreth cautions, “Each step should be carefully executed and completed in a timely manner. Not doing so can expose the employer to significant potential legal liability.” Some of the items that should be planned for include: Preparing and delivering the employee’s final paycheck, paying the employee for accrued but unused vacation time, and providing COBRA paperwork and other benefit information timely. Gilbreth also recommends that termination meetings occur in a private space, such as a conference room or office with a door that can be closed, and that two employer representatives be there to conduct the termination meeting.
Tip #7: Listen. Most good employees will be understandably upset when you give them the news of their termination due to downsizing/layoffs. One of the most important things you can do during this meeting is to listen. “Listening to your employees’ concerns, fears, and questions helps them through the grieving process and ultimately helps them understand and come to grips with the situation,” says Barker.
When you must downsize/layoff good employees, the key is to get organized and plan everything in advance – and then treat the employee(s) with compassion and respect. No one enjoys terminating an employee (especially a good one), but you can do yourself, the employee, and the company a huge favor if you take the time to properly prepare.
In the situation of the reader’s husband, it turned out he learned a good lesson by what happened. In a follow-up message to me he wrote, “Sometimes you think you’re doing the right thing, based on your own good intentions, but I’ve come to realize that I violated some important protocols in the process. I should have met with the employee I was laying off in one of the private offices in our company, I should have had another manager present, and I should have held the termination discussion during work hours. It was a lesson well learned. Needless to say, I won’t be returning to that restaurant any time soon.”
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