The art of the layoff: three ways to make staff cuts less painful

The most difficult, uncomfortable conversation a manager will have is this: telling a room full of employees that today is their last day, to please turn in their equipment, and that perhaps security will escort you out.

But if you’re in an unstable industry like journalism, startups, or professional sports teams, layoffs and downsizing are inevitable. Even across the corporate world at Sears and IBM, they’re a fact of life whether the economy is expanding or is in a recession.  You’ll need to get used to them.

As a company, knowing how to do them with grace and dignity towards your employees can mean the difference between a bad day you forget and a wrongful termination suit your wallet will always remember.

Be transparent

When it’s clear that layoffs are necessary, it’s important to have a clear, controlled process. Staff cuts are the worst time for inconsistencies and chaos.

For managers, this means explaining the reasons behind the layoffs. No need to give a long speech —but don’t flee the scene as soon as you give the bad news. Acknowledge the work of your laid-off employees. Leave time for questions.

As a 2006 Harvard Business Review study put it, “process fairness doesn’t ensure that employees will always get what they want; but it does mean that they will have a chance to be heard.”

Take the case study of Buffer. Joel Gascoigne is the CEO of Buffer, a company which is known for publishing its employees’ salaries. In 2016, Gascoigne wrote publicly about the “biggest mistake” of his career that caused the layoffs of 11% of his team. In his mea culpa, he disclosed severance packages and the company’s financial failure, framing the company’s mistakes as moving into a “house that we couldn’t afford with our monthly paycheck.” The way that Gascoigne handled the layoffs seemed to have won industry praise, and he is still CEO of the company.

Transparency pays off in other ways too: It has been linked to lower rates of employee theft and turnover. A 1990 study found that when pay cuts were introduced at two manufacturing plants, it was the plant company president who took more time to answer employee questions that left a stronger impression. At the plant were transparent reasons were given, employee theft was 80% lower and employees were 15 times less likely to quit.

Show compassion

Layoffs are intrinsically traumatic. Emotionally, losing a job hits people as hard as a death can, and sometimes they never recover.

That’s why how someone finds out they’re being being laid off can be just as important as the size of their severance package. Managers want to remembered for remembering a difficult situation well, not as future layoff horror stories.

This is the rubric the HBR study used to grade managers on fairness:  “Do they explain why a decision was made? Do they treat employees respectfully, actively listening to their concerns and empathizing with their points of view?”

Don’t just say “you didn’t want to do this,” and hand off your stunned, upset team to human resources. Even if it’s hard, the last thing an employee wants to hear is how difficult this has been for you.

To soften the blow, The Wall Street Journal says you should focus on why certain positions needed to be eliminated and not focus on why certain people have to go.

Answer the many questions your employees will have. If an army of company lawyers prevents you from answering every question to your employees’ satisfaction, then make time for them outside of work. A personal touch can help: Buy them all pizza or rounds of drinks, if there aren’t strict limits on contact.

Whatever you say or do will be the last impression many of your employees will have of you. Make it count.

You want to do layoffs as swiftly as possible — but make sure all employees know personally before making the official announcement. Former Twitter engineer Bart Teeuwisse found out about his layoff through an iOS notification that locked him out of his account. Good managers make every effort to do a layoff face-to-face. Don’t let your employees find out about their own layoff through social media. You’ll come off as a jerk, and they’ll never forget it.

Consider where and when you’re going to do it

There’s no good day to lose your job, which is why there’s conflicting advice on the subject.

“Avoid delivering the news on a Monday morning after their 90-minute killer commute or on a Friday afternoon at 5 p.m.,” Barbara Safani, owner of Career Solvers, advises.

Meanwhile, Brandeis University professor Andy Molinsky says to “do it on Friday because it gives the person the weekend to deal with it…if you do it on Monday, everyone will be talking about it for the rest of the week.” The Wall Street Journal says to avoid afternoons in general because it means employees will be tired and cranky, which invites conflict.

The main thing to do is to minimize as many stressors as possible. If you’re laying off an entire division, Molinsky says it’s best to do it all at once to mitigate the suffering. Choose a private, quiet meeting place where employees can process their emotions away from others. Bring tissues.

When employees think their layoff is unfair, they are more likely to sue

Besides doing it as a moral responsibility, companies have an economic imperative to be fair. When people feel hurt, they retaliate. A 2000 study of nearly 1,000 people in the mid-1990s found that more employees would sue for wrongful termination if they felt the termination process was unfair.