The Right Way to Lay People Off

A few other items I expected to see:<p>1. Help each laid off employee land on their feet, whatever that means for them. This must NOT be lip service, but a legitimate effort. Hire an outsourcing firm, provide resume/career counseling, provide reference letters, or find job opportunities with vendors, customers, or industry contacts.<p>2. Make a clean transition. Give laid off people an opportunity to share what they were working on and debrief others. Even though they are leaving, many people value the work they have done and want to know that it's in good hands. If you don't do this, you might as well be saying, "We can figure out what you were working on without you." Nothing else you say or do will offset the damage this will do.<p>3. Find a way whenever possible for people to keep contributing as contractors or part-time employees.<p>4. Find a way for people to keep their health insurance.<p>5. Offer severance whenever possible.<p>As uncomfortable as a layoff can be, it's also an opportunity to show how well you can do the tough stuff. People will be watching and remembering; count on it.

I was at a company that laid off a few dozen people on my team when things went south at the end of '08 (many more got the sack worldwide; I'm being intentionally vague on the company as it's irrelevant to the story). We were all remote employees so none of us saw anything; the only way I knew it was going on was the flood of "you safe?" messages I got over Skype. I figured something was about to happen, though; at 9pm the night before the layoffs, the CEO sent a mail calling a worldwide all-hands conference call for what would have been the day after the layoffs took place.<p>People's direct managers weren't the ones to make the calls to the unlucky employees, that came from their manager's manager, someone with whom we normally had no day to day interaction. It wasn't until the next day that we heard official word of what went on from company leadership.<p>During the all hands call we were told something along the lines of "we made some very deep cuts so that we shouldn't need to do this again." So it came as a surprise when one morning a few months later, I get half a dozen more "you ok?" messages. This time nobody heard a word from upper management, and radio silence from my super. Finally three days later she mailed to say that there have been layoffs and she herself was one of them.<p>It did a great job of inspiring confidence within the team. Out of the people who were left, quite a few jumped ship over the following couple months and joined a startup that looks poised to eat this company's lunch.<p>Moral of the story: don't make promises like "this isn't going to happen again" if you have no way to keep them. Communicate immediately, especially when people are geographically spread out -- the rumor mill actually runs a lot hotter when the "survivors" only have email and chat to keep in touch.<p>On the other hand, if you want to destroy morale and push your best employees to start polishing up their resumes, by all means follow the above recipe.

The biggest mistake is management thinking they can keep it a secret. It's never business-as-usual then it hits like a bolt of lightning. A project gets cancelled and a team has nothing to do, say. Or the nature of the work changes, suddenly it's about documenting everything and getting ready to hand it over. Things that have been long-planned are put on hold. Lots more meetings behind closed doors.<p>A manager's responsibility is to the company, not to his employees. If he can do the right thing for the company by keeping them in the dark as long as he can, he has no choice.

a number of folks are suggesting that a variety of expensive things be done for laid off employees. certainly they are all very nice and thoughtful things to do for an ex-employee. but i am forced to wonder:<p>if i have to lay off $X employees in order to just stay afloat, then as a rule of thumb, what percentage of $X should i lay off on top of $X in order to free up the funds for these very nice things i'm doing for the laid off employees? certainly 1 additional employee must be the lower limit; what's the upper limit?<p>and, in a close knit team, would you rather 1) lose your job, but your buddy keeps his job or 2) you and your buddy lose your jobs, but you get a variety of nice things afterwards?

Managers should keep in mind, BEFORE layoffs become necessary, that laid-off workers, understandably PO'd, sometimes hit back by suing the former employer for discrimination (age, race, ethnicity, nationality, religion), or for sexual harassment. The charge might be completely bogus, but fighting it can still be expensive. The employer may have to demonstrate, usually with contemporaneous written evidence (job evals, etc.), that there were legitimate reasons for the layoff or other action. See generally <a href="http://www.legalworkplace.com/layoffs_result_in_more_discrimination_lawsuits_elt.aspx" rel="nofollow">http://www.legalworkplace.com/layoffs_result_in_more_discrim...</a>.<p>To illustrate the point: A client of mine once had to do layoffs. One of the laid-off employees filed a charge with the EEOC. He belonged to Religion X. He claimed he was discriminated against because of it. In response, we pointed out who else belonged to Religion X: the guy's manager's manager; his VP; the COO; the CEO; a majority of the board members; etc. That was the end of <i>that</i> charge, but it still took some management time and legal fees to respond.

"If you hired me and I busted my ass working for you, I expect you to have the courage to lay me off yourself."<p>Overall a good article, but this line struck me as particularly poignant. Unfortunately, in some situations, a manager is not <i>allowed</i> to handle his own layoffs. :\

Emphasizing that the cuts are unrelated to individual performance is very important. It always bothers me when someone excuses a layoff as an opportunity to sweep out the deadwood. That's just rationalization. The exigencies of a layoff make it impossible to focus cuts on the lowest performers. Cuts have to be decided quickly, and usually focus on the least profitable employees. Take the time to figure out who is the deadwood and everyone else's productivity and commitment will be destroyed by uncertainty.

I'm surprised that he says to make the announcement before telling the laid-off employees one-on-one. When I was at GE and they had layoffs, the individuals were told first, and then there was an all-employee meeting to announce the layoffs. I thought that worked out fine. That way, the people who are in the meeting don't have to freak out and worry about being laid off. Does anyone here have experience either way?

also, do not give a million dollar bonus to executives in the same year.<p>Before I got laid off, someone in my friend circle asked me a question, would you quit your job if your employer gave you a 2 1/2 month pay just for quitting? I thought about it for a day and it sounded like a great idea. That's almost same amount YC gives you to start a start-up.<p>When My manager along with HR announced the news to me, there was a broad smile on my face to their confusion. It did not make me feel bad at all.

This completely misses the human equation. What people will remember is how much notice they were given, and whether they were provided with some kind of reasonable severance. If people work their hearts out for you and lay them off without notice, that's just bad business.

Every time that an employee is shocked that s/he is being layed off, it is a failure of management. All of your employees MUST know where they stand in the organisation. And when the layoffs come, and eventually they will, where will you be on that list. But, this should also not be used as a trump card all the time. Otherwise good people will make sure they leave than work under this constant threat.

I don't think it is a good idea to tell the company at large before the individuals who are to be fired are told - that just seem bad.<p>Also, you should be prepared to answer the question "why did you choose to lay me of and not $otherPerson?"

One of the things I think is most important is that employees should not be utterly surprised if layoffs occur. They should be well informed, and invested enough in the company to be aware that the company is having problems. Senior management should be communicating company performance long before layoffs are needed.<p>I've now seen several examples in small companies where the CEO has held back the bad news until layoffs were required, and the morale of the remaining employees was much worse than it should have been because of it.

It would be nice to differentiate between "laying off" and "firing".

I think there is <i>no</i> right way to lay off people.

Reading advice from a guy that quotes Kayne West just can't be healthy.

...is not to tell them via sending them this article!