How Not to Mess Up With Layoffs

Reducing headcount is always a painful and unpopular decision. It undermines an essential thing in any relationship — trust. Employees stop believing in the mission and value the company declares and stop trusting the words of their leadership. In addition to financial problems after "optimization," people's physical and mental health deteriorates.

In this article, I'll explain how to inform employees about unexpected layoffs in the most environmentally friendly way possible.

The Main Mistakes Companies Make When Downsizing

0. Bloated Staff.

Companies actively hire people based solely on optimistic market growth forecasts and future revenues without forming a plan B.

1. Lack of Clear Downsizing Strategy.

Company managers don't understand what they're doing because "there's no time to think through a plan we have to act urgently." Often, someone takes self-action, which is not beneficial to the company or its reputation. Therefore, it results in confusion and chaos.

2. Leaks in the media.

When employees discover impending layoffs through the media before the formal announcement, panic sets in. As a result, some sabotage their tasks, others seek a new employer, and some become paralyzed.

As a result, many of those not planning on leaving and not impacted by the layoffs have already lost their loyalty to the company and are looking for a new workplace.

3. Lying about the reasons for the layoffs.

If you announce a decrease in profits, and then c-level buys an expensive sports car and posts luxury vacations on social media... it looks strange. Don't expect trust and loyalty if you strive to build honest relationships with employees and then lay them off without reducing your expenses.

4. Lack of support.

Don't try to forget about mass layoffs the next day and pretend that life in the company continues as usual. This is irresponsible behavior, and everyone will remember it.

5. Lack of communication about layoffs.

The strategy of "the fewer people know, the better" is a mistake. Layoffs affect those who remain in the company badly.

Everyone will find out; the only question is whether it will be directly from their manager or through rumors from colleagues.

6. Ignore the emotions of the remaining employees.

The remaining employees also suffer, experiencing "survivor guilt." They have a job and financial stability, but they also have questions for the employer. Trust has been undermined, and they fear that they may be next. And the quality of work may suffer.

7. Talking badly about the laid-off employees is not helpful.

It's unnecessary to say that the laid-off colleagues performed poorly or that there were other hidden reasons for their dismissal. Instead, it's better to thank them for their contribution to the company rather than pretend that their release was inevitable.

8. Firing through a letter is not a good idea.

A poorly organized, unpleasant announcement is a classic mistake. Unfortunately, even tech giants make such mistakes: without explanations, they deprive access to corporate messengers under the excuse of protecting intellectual property. Usually, people want to exchange contact information with their colleagues before leaving: what's wrong with that?

How to avoid these mistakes?

Careful planning is a must.

Try to anticipate all possible nuances. For example, think about how much the layoff will cost you. Write down what and when managers will say to the team. Avoid leaks of information. Think about compensation and objections.

Who will manage the process? How will you support people? Who will manage the changes? How will you deal with the emotions of the remaining people? — questions you better have answers for.

Consider alternative options.

Offering people to take several weeks of unpaid leave is much better than firing them. In addition, transferring employees to other departments and possibly retraining may work.

Decide whom you will keep and whom you will lay off.

In most cases, decisions are made not only based on performance but also on personal relationships and assessments of potential. These are pretty vague criteria. Therefore, don't rush; give managers time to consider who and why they want to keep.

Some people will suit specific tasks better than others. And this does not mean that their performance is worse. It's also important to discuss this.

Measure seven times, and cut once.

Review the lists of employees to be laid off with managers from related departments and ask for their opinion. This will help ensure that there is no bias and that the remaining employees will accept news without suspicion of "selection" based on personal dislike.

Take care of those who are laid off.

Pay the layoff compensation, and cover their medical insurance. Help them find a new job (outplacement). Treat them as you would like to be treated.

Communicate with remaining employees.

They are likely to feel survivor's guilt, stress a lot, wonder what magical performance and evaluation criteria managers used when laying off people, and project unexpected layoffs onto themselves.

The position of "they have a job, they should be happy" will not help you restore team productivity and effectiveness. I recommend showing a positive attitude towards laid-off colleagues to avoid exacerbating a toxic situation. To reduce anxiety, actively transmit that the company has a strategy to ensure profitability and that remaining employees have a clear role in the company's success.

Actions must back up your words.

Apologize for such a decision.

Work with a communications specialist to ensure that your public announcement does not look formal and includes sincere apologies. It should be lively but not overly emotional. Human regret will not spoil the situation, although it can be challenging for company executives to do so.

As an employed manager, I have participated in laying off people four times. It is very unpleasant, and I felt a vast internal resistance. Sometimes it is unclear why such a decision was made by top management, especially after a race for fast hiring. It is a complicated process that makes managers wonder: am I ready to continue working in such a company?

I want to give a life hack: sometimes you can save money by reducing C-level executives' big budgets and bonuses, not just laying off some employees :)