Letting Them Go

No matter how many changes and cost-cutting measures you implement when you are facing difficult times, you still may reach the point where you have to reduce your workforce in order to remain a viable company. This can be a useful option if it gives you a chance to get rid of some of your poor performers, but unfortunately you may have to let good employees go, too. How you handle layoffs now can have an effect on your company’s future performance.

First of all, once you make the decision to do it, then do it. Do not let rumors fly, because if someone knows that layoffs are coming, then soon everyone will know it, though they may be a little fuzzy on the actual facts. You can reduce stress levels dramatically, both for those getting laid off and those staying on, if your employees trust you will be honest and transparent about what is happening.

When the time comes to have “the talk,“ do it in a dignified manner. Do not do it by e-mail, do not do it by phone, do it in person (unless you are laying off remote employees across the globe, of course). Nobody likes getting dumped via SMS, whether by a significant other or a boss. Do not do it front of other people, and try to avoid putting them in an awkward position with their peers…this news can take some time to process, so maybe do it at the end of the day so they can head home without having to explain anything to their co-workers.

When you have the talk, be honest with them, but if they are poor employees, do not try to kick them while they are down. If the layoff is coming purely because of economic reasons, and not because of their work, let them know that. If, on the other hand, they were a poor employee to begin with, you do not really need to tell them that. Do not lie and say you are sorry to see them go, but at the same time, do not tell them you will be happy to see them walk out the door.

Let them know what you are willing to do to help them. This is something they need to hear at this low point. You may have contractual obligations, like severance pay or continuing health benefits, and you should have some information prepared about that which they can take with them (they might not be thinking too clearly at this point, and may not remember everything you say). If you will provide any benefits beyond contractual requirements, such as some sort of transition assistance, let them know that too. If you are willing to write them a strong recommendation, or you would like to bring them back on board when things improve, you should definitely tell them that now.

At the same time, do not lie to them. If this is an underperforming employee whom you are letting go, do not offer to be a reference, and do not suggest you might take them back. If you are looking for a clean break, then make a clean break. If you promise something you are not willing to deliver, you are just encouraging them to come back and bother you.

Speaking of references, you should be prepared to offer good references for your good employees, but as for the bad ones, it is best to just remain silent. In some countries, bad references can sometimes lead to legal problems. An attorney can offer you advice on the legal aspects of this, but a good rule of thumb is that if you cannot say anything nice about someone, do not say anything at all…it works as well here as it did when your mom told you that. Do not worry that you are fooling someone into hiring a bad employee; if you decline to provide information beyond confirming employment, a potential employer will probably take a closer look.

Why worry about any of this? Well, first of all, because people deserve to be treated with respect. From your perspective, though, there are also good reasons. First, you may want to hire these employees back when things get better…after all, talented employees who meet your unique requirements may be tough to find. Even if you do not bring them back right away, employees who stay in major cities tend to move often between firms, so they may be a possible hire sometime later in the future. In both cases, it is best if you remain on good terms with them, and the way you handle the layoff is something that will stick with them. Finally, your firm’s reputation and employment brand is as important among potential employees as it is among potential customers. Word gets around, and if you treat people with respect, that makes you look good. Treating people badly, of course, has the opposite effect, and you do not need that.

So, do the right thing. If you must let people go, do it wisely.

(Learn more about Designing Leaders’ workshop on how to handle employee departures)