How to Lay Off Employees in Your Small Business pt 2
By VICKY BROWN
It’s important to keep in mind that 1) communication is key and 2) there are various groups you’ll have to communicate with – so you need to be prepared to address the things that are most important to each of those groups.
Of course the first group is the people who are actually leaving the company. The most important thing to them will be what do I do now – what happens next. Then there’s the remaining team members – and the most important thing to them is what does this mean for me, am I next, is the company going under.
And there are two, possibly three other groups we sometimes forget: the managers. As the CEO you’ll be leaning on the managers a lot during this process, so don’t underestimate the need to have a communication plan for them too. And of course any board or investor needs to know about a job reduction – they too will want to know what it means for the company, and is their investment safe.
And finally, one often overlooked group that may have some skin in the game is the client. If they’ve been working with one specific person in your company (either because that’s your business model or even if they’re just in touch with that person a lot), make sure you have some sort of plan for communicating the change.
Of course, it doesn’t have to be a lot, and you don’t have to go into the detail that you’re downsizing – but you do need to introduce them to the new team member that will be taking over their account, and let them know that Suzie has left the company, you’ll miss her and wish her much success.
Now depending on the size and visibility of your company, the press might even come into play. If that’s the case, make sure you have professional support on your side – it can be a marketing or PR specialist – to help navigate those waters. Bad press about the viability of your company can be poison. So make sure you’ve thought through the right answers to the questions that are sure to come up.
Now again, that may be a bridge you won’t have to cross because press coverage isn’t a thing for your business. If that’s the case, then you don’t have to worry about that piece of the communication plan.
Let’s circle back to the groups you can definitely plan on communicating with. First the departing employees.
Again, the key things they’ll want to know are what will happen to them next. Will they get any sort of severance, what about benefits, when is all this happening, will they get help in finding another job? These are just some of the questions you’ll need to be able to answer.
And I say ‘you’ but I actually mean their manager. Yes, I think mangers should be the one to actually have the layoff conversation with their direct report. That person’s manager has been their most visible connection to the company – it only makes sense that they deliver the news.
Of course, again depending on the size of your company and the experience level of your managers, you might determine that you should be in the room as well. That is absolutely fine, in fact, if you decide it’s better that you lead the meeting, that’s fine as well – after all, you know the players, so you’re best suited to make that decision. But the manager absolutely should be in the room.
It’s a situation that, while not a happy one, will provide an enormous opportunity for growth for the manager. Nothing drives home the responsibility and accountability of managing people more forcefully than when you have to look someone in the eye, that you’ve been working side by side with, and tell them that (through no fault of their own) their job is going away.
It really pushes that manager into leadership.
The key talking points are to let them know that the company has missed it’s targets and needs to eliminate some jobs, and unfortunately their position (not them personally, but their position) has been selected for elimination.
Then move on to the critical things they need to know: what is the severance package, what happens to their benefits, what happens to their personal items, what is the timeline, will there be any outplacement assistance.
Of course you’ll have all these answers because that’s part of the prep you’ll do before the meeting.
Most times the timeline is immediate – unless for some reason you want the person to stay on through a notice period.
As to severance package – we spoke to the cash side in last week’s episode. But a package could also include extending company health benefits or paying for COBRA for a few months, providing references, promising not to contest unemployment – lots of things could be negotiated as part of the package. But again, check with your counsel for guidance on what makes sense to offer in your situation.
“… be prepared to answer questions like, how will I get my things, where do I turn in company equipment, what about my office keys, outstanding expense report, commissions, the chair I brought in. My point is, put yourself in the other person’s shoes and really think through the process.“
Now, another thing to think about is outplacement assistance. Larger companies may contract with an outplacement firm that will provide one on one job placement coaching with the former employee, assist with resume writing, provide guidance on using social media for job searches and other placement assistance.
As you might guess, these services aren’t free – they can range from $500 per employee on the low side all the way up to $2,000 or more on the high side. But they can go a long way in helping an outplaced employee feel better about the company that just fired them.
However, due to the cost, that’s outside the realm of possibility for a smaller company – particularly one that’s laying off employees to cut expenses. So you might think about other, free alternatives.
Offer to make calls to your network, and have your managers do the same. Provide references. Have your HR team put together a list of job boards, and list free online interviewing resources like Linda Raynier’s YouTube channel – she focuses solely on effective job searching techniques.
As I mentioned, be prepared to answer questions like, how will I get my things, where do I turn in company equipment, what about my office keys, outstanding expense report, commissions, the chair I brought in. My point is, put yourself in the other person’s shoes and really think through the process, so you’ll have the answers you need, when you need them.
The cadence of all these meetings should be – first you talk with the managers. Now they’ve probably already been involved in the selection process, so on the day of they will be well aware of what’s going on. But weeks prior to that – you need to prepare yourself for the initial meeting you’ll have with the managers to let them know the company has to do some budget cutting.
It’s important to think through these discussions before you have them, because although the managers are part of the group that’s ‘in the tent’; it doesn’t mean they’ll stop thinking about, and being concerned about, any impact this all might have for them. So be prepared to address their personal concerns too – remember, they’re not just managers, they’re team members as well.
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OK, so manager communication is first. Next, discuss the plan with your board or investors – if that’s appropriate. This depends on the situation; the size of the layoff, the relationship with the investors, their role (if any) in the company. You’ll know this better than me – I’m just saying that if you need to tell someone, tell them next – after you’ve identified the plan with the managers.
Then on the day of – you, or you and the managers, are going to have one on one meetings with each impacted employee.
And please, I beg you – make it in person. And if there is absolutely no way you can do it in person, then at minimum it has to be a video call. Never, I repeat, never via eMail or chat or some other non-interactive medium. It may be easier for you, but it shows huge disrespect for the employee – no person – that’s losing their job. Let them keep their dignity, and feel like they were treated like a human.
A side note here – if one of the folks be eliminated is a manager – then the next group to speak with is their team. Tell them the manager is leaving, tell them who will be taking over in the interim or who will be their new permanent manager. And make sure all tech, platforms and processes are updated quickly – things like PTO or timecard approval processes etc.
And finally, on that same day, you – as the CEO, will have to address the whole company.
Be clear, be specific, look toward the future. And, let them know you’re available to speak with anyone that has any questions. Thank them for their continued commitment and talent, and let’s get back to work.
Now, although your instinct might be to go in your office and close the door for the rest of the day – that is absolutely the wrong thing to do. As the leader, it’s critical that you remain highly visible and available to everyone. Now I don’t mean walk around asking people how they’re doing – you have to let them process. But be a presence, take a couple of turns through the office, go to the kitchen to get coffee, make yourself visible.
Listen – layoffs will be one of the hardest things you’ll do as a leader and a person. But you have to remember, your most important job is to keep the company healthy so it can continue to support as many jobs as possible.
It may not be the easiest thing to do all the time, but it comes with the territory. And you’ll live to fight, and win, another day.