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March 12th, 2009
Boss Basics: The Delicate Art of Managing Layoffs
Let’s be frank about this: Laying off employees is probably the worst single thing a manager ever has to do.
I once had a boss who always spoke in an over-the-top, prideful way about how he had never, ever had to fire a person. This guy was a terrible manager and an insufferable egomaniac to boot, but the fact of the matter was that he never had to fire a person because he simply dumped the task on someone else.
That’s a giant cop-out, of course—this former manager of mine was all about cop-outs—because every manager worth her salt eventually has to shoulder the unpleasant and unavoidable task of letting workers go. It’s just an essential and basic part of the job that you get, like it or not, when you become a manager.
I’ve always found the face-to-face part of this difficult, because I have occasionally found myself on the other side of the table as the person being let go. It’s impossible to go through that experience and not have developed some empathy for people losing their jobs. That’s why I get so angry when I hear about people like Sam Zell’s lackeys and stooges at the Tribune Co. who seem to revel in cutting staff.
There’s another part of the layoff process that’s equally difficult, however. I saw something recently in Time magazine that focused on an issue that never gets enough attention—how to deal with the “survivors,” the workers who didn’t get laid off.
Time reported on a recent conference at the University of Cambridge where attendees “heard data suggesting [that] … compared with people who are straight-up laid off, those who keep their job but are under a constant threat of losing it suffer a greater decline in mental well-being” than those who are actually put out of work.
“Brendan Burchell, a Cambridge sociologist, presented his analysis based on various surveys conducted across Europe,” according to the Time report. “The data suggest that employed people who feel insecure in their job display similar levels of anxiety and depression as those who are unemployed. But whereas a newly jobless person’s mental health may ‘bottom out’ after about six months, and then even begin to improve, the mental state of people who are perpetually worried about losing their job just continues to deteriorate, getting worse and worse,” Burchell says.
Being perpetually worried about anything is a problem, of course, but one of the worst things people can worry about is their future livelihood and their ongoing ability to support themselves and their families. Plus, those who survive the layoff ax take little comfort in being told, “Be happy you still have a job.” It’s not something that makes you feel much better if you fear that your head may be the next on the chopping block.
Very few people have experience with the level of economic turmoil and layoffs that we’re experiencing today. But a key to helping your remaining workforce stay focused is to communicate with them. Don’t let the rumor mill go on unchallenged. Too much communication is preferable, and being honest and upfront is key. ANYTHING you can do to answer questions, limit speculation and keep people focused will help keep a lid on unfounded gossip and rumors. That can help people stay engaged and focused on the job at hand.
Although increased communication and aggressively managing the rumor mill help a lot, there’s only so much a manager can really do. In fact, Time asked sociologist Burchell what nugget of advice he might be able to offer to those lucky millions across the globe who are still employed, but are worried about losing their job. The answer is a bit depressing.
There’s “nothing,” Burchell said. “Certainly some individuals cope better, but we don’t know why. It seems there are just certain things about job insecurity that can’t be overcome.”
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You have made quite a few good points in this post. I really appreciate the fact that you recognized the issue with the manager who “never let anyone go”.
However, I think some of the best comments you made were about how to offset the “rumor mill”. There will always be a rumor mill in the workplace and we will never be able to get completely away from it, but over-communication is the best way to keep it at bay. If the employees know that the boss is going to “keep them posted”, they won’t be as inclined to try to figure out things from what the other folks ‘heard someone say’ and all of that.
Posted by: Angela | March 13th, 2009 at 10:18 am
Acco Brands’ (an office products supplier that laid off 500 employees last year) decided to cut its 2000 employees’ wages by 47% rather than layoff additional employees. While such a drastic move defies conventional wisdom that layoffs are the best way to immediately reduce labor costs, I applaud Acco for taking a more constructive approach. Rather than lose anymore of its talent, Acco decided to make a play for team unity and, if the pay reduction was done right, it was the better decision.
As the economic crisis continues to deepen, other companies are facing the same issue as Acco: how to most effectively reduce labor costs? If the decision is to reduce wages rather than layoff employees, here is the Pay Reduction Blueprint to follow so the morale of the entire workforce is not destroyed in the process:
1. Before there is a reduction in wages, there needs to be a selective layoff to eliminate the others (20% of the workforce who should have been fired before the current economic crisis). If the low performing members of the workforce remain employed and there is a pay reduction morale/performance will suffer.
2. Before implementing a pay reduction, know the financial relief the company needs to get from a pay reduction and get it. There is only one bite at this apple. Reducing pay a second time is a disaster for morale/performance.
3. There needs to be employee buy in for the pay reduction. This means effective communications about the need for the reduction in pay before it occurs. Include the employees in the process, and stress “we are all in this together.” Employees want to participate. Let them.
4. A drastic pay cut must be temporary. Employees need to know that, in the future, there will be an opportunity to recover from their economic loss.
5. The monetary sacrifice must save jobs. After the pay reduction there can be no further layoff of employees or employee morale/performance will be destroyed.
6. Really share the pain. If you expect employees to accept a pay reduction and still be high performance, the pay reduction must extend to every employee from the President/CEO/Owner down. However, high paid employees need to take a greater pay percentage reduction than the frontline supervisors and employees. Employees know a reduction of half of a $250,000 salary does not hurt as much as a 50 percent reduction of a $40,000 salary.
7. There can be no corporate primadonnas. If there are corporate primadonnas in the organization after the pay reduction, they will destroy employee morale/performance.
A company can do more than the six steps in the Pay Reduction Blueprint, but cannot do less and still retain the high level of employee morale/performance necessary to keep the Company successful.
The bottom Llne: After the initial layoff of the low performers has occurred, additional layoffs erode the talent base of the company. In the knowledge economy, no company can afford to lose its talent. A pay reduction, structured and communicated in the right way, saves the company’s talent while providing the company with the financial relief needed to survive the economic crisis.
Posted by: Paul Glover | March 18th, 2009 at 9:54 am
When i was boss to one company I always spoke in an over-the-top, Nice topic discussed above, useful
Posted by: ravi kumar | March 30th, 2009 at 9:30 pm
I think some of the best comments you made were about how to offset the “rumor mill.”.There will always be a rumor mill in the workplace and we will never be able to get completely away from it, but over-communication is the best way to keep it at bay. If the employees know that the boss is going to “keep them posted,” they won’t be as inclined to try to figure out things from what the other folks ‘heard someone say’ and all of that.
Posted by: Parvez | April 13th, 2009 at 12:31 am
This is a very nice article focusing on employee layoff that’s pretty much common these days. I too saw a few job cuts in my office recently when 3 of my colleagues were laid off by my boss with the excuse that their performance was not up o the mark. It feels very bad for them and very annoyed with the boss; at east he should have given them one chance.
Posted by: Car lease | June 1st, 2009 at 8:38 am
Laying off employees is something that I don’t like. It is a disaster for the employee who suffers from job cut and I think there should be some alternative to this rather than axe off the job.
Posted by: Baby Shower Ideas | June 16th, 2009 at 10:35 am
Did you ever see the episode of king of the hill where Dale Dribble gets a job firing people because no one else wanted it? Funny stuff.
Posted by: Conversion Vans | July 30th, 2009 at 5:12 pm
At the end of the day you are getting fired, it does not matter what the boss does he/she is not going to make you feel good.
Posted by: skin care | August 21st, 2009 at 2:13 pm
interesting post, Thanks
Posted by: Nose hair clipper | August 27th, 2009 at 9:18 am
Layoffs should be the last resort in any company
Posted by: Acer Laptops | August 31st, 2009 at 8:25 am
i think this is what business is all about
Posted by: Weber grill accessories | September 16th, 2009 at 10:06 am
For the past five years, everybody’s had the same dream: to find work that doesn’t feel like work, where every day is a new challenge, where what you do really matters to your company — and to you. In a period of economic doldrums, it’s natural to let that dream fade — to hang by your bloody fingernails to the edge of your desktop, even if the job you’re holding doesn’t pass your personal desirability test.
Posted by: canadian payday loan | September 16th, 2009 at 3:15 pm
Getting laid off is horrible for a person to go through, but from that person’s perspective I would rather know for sure if I would have a job in a month rather than have to wonder if I do. All that worry is enough to give you a heart attack or at least an ulcer. For the boss, it’s a tough decision, but often very necessary.
Posted by: Nissan extended warranty | October 13th, 2009 at 12:46 pm
Yes. I agree with someone here. Laiyoffs should be the last resort in any company but when comes to final decision or final choice, the company has to make this bad decision.
Nobody want to be laid off and that’s the nature of economy. There is always up and down in business world.
Posted by: ReginaGirl Gordon | October 22nd, 2009 at 6:52 am
Laiyoffs should be the last resort in any company but when comes to final decision or final choice, the company has to make this bad decision.
Posted by: Resveratrol Extract | October 26th, 2009 at 4:54 am
I think that all you can do is to be honest with the person (as much as your own boss will allow).
If your relationship with the worker is good to begin with then it won’t be as bad as if you had a bad relationship.
This only adds ammo to the argument that nobody should be relying on one single source of income.
Posted by: tinnitus treatment | October 29th, 2009 at 6:45 am
Ironically, the jerk that was responsible for all the IBM layoffs just got indicted for insider trading! Layoffs, especially when sending jobs to other countries, are never good.
Posted by: Floor Steam Cleaner | October 31st, 2009 at 5:27 pm
Layoffs should be the last resort in any company. So much knowledge ends up being lost
Posted by: teeth whitening | November 9th, 2009 at 9:14 am
Great post, thanks will bookmark
Posted by: besttoasterovens | November 10th, 2009 at 10:56 am