Lisa Shuster, MBA, SPHR, SHRM-SCP, is the Chief People Officer for iHire, an industry-specific recruitment platform.
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Google the term “layoffs,” and you’ll see no shortage of articles about companies reducing their workforces, especially in the tech industry. You may also see criticism of the way high-profile layoffs of late have been handled.
For example, Elon Musk laid off half of Twitter’s staff via email, and some workers only learned of the news because they were locked out of their computers. More recently, CNN announced its looming layoffs 24 hours before informing impacted individuals, leaving staff members anxious and uncertain about their futures.
Is there really a right way to conduct layoffs? What about involuntary or performance-based terminations?
Severing ties with employees the wrong way can put your brand on the map for the wrong reasons, deter prospective employees from wanting to work for you and hurt the morale of your remaining staff. Prepare to effectively handle layoffs and terminations with these seven do's and don’ts.
1. Don’t jump right into layoffs.
Layoffs are a measure of last resort; you can’t “un-ring” that bell. What alternatives might alleviate the need to reduce staff, such as pay cuts or furloughs? According to a recent survey, three in four employees are willing to take a pay cut to remain in their current job should a recession hit.
2. Do enable collaboration between HR and managers.
With terminations, managers should make HR aware of an employee’s performance and potential for dismissal. This ensures discharge is warranted and not rooted in bias.
Although the employee’s manager should communicate the termination, an HR rep or another individual should also be present for the conversation. While one-on-one conversations are ideal, they are not always feasible with mass layoffs. For mass layoffs, small group meetings work, but provide each employee with a contact they can reach out to with specific questions afterward.
3. Do ensure sure you’re legally buttoned up.
There can be many legal pitfalls when conducting terminations or layoffs; typically, there’s no grace for the uninformed. Here are a few critical legal areas to address:
• When identifying positions for layoffs or job eliminations, managers should articulate and provide to HR the non-discriminatory business reasons for their selections (e.g., loss of revenue, redundancy or poor individual job performance).
• Conducting a disparate impact analysis can make you aware of any impact on a legally protected group. Allow time to modify your strategy based on this analysis to mitigate the risk of claims.
• For mass layoffs, the federal Worker Adjustment and Retraining Notification (WARN) Act and state “mini-WARN” requirements may be invoked, mandating that workers receive a certain amount of notice of their job loss.
• Special considerations exist for laid-off employees aged 40 years and up. As part of a severance package, you must provide this group with statistical information on impacted employees and allow time for them to consider their acceptance of the package. You must also provide a revocation period of seven days in which they may rescind their acceptance.
• Lastly, check your state’s final paycheck laws. Some states require you to pay the employee on the same day they are terminated or the next scheduled payday; a few states have no requirements.
4. Do anticipate questions.
Prepare a formal letter stating that the employee is being terminated or laid off, answering frequently asked questions and noting the next steps to help the person land on their feet. The most common questions from departing staff revolve around benefits—like when they will end and how to enroll in COBRA. If the employee has a severance agreement, provide the details of the continuation of their pay in writing.
5. Don’t surprise them.
Termination of employment or a layoff should never come as a shock, nor should the task be conducted over Zoom, email or text without warning. If the layoff is for budget reasons, you should already have been communicating to your workforce that financial times are tough and downsizing is on the table.
With performance-based terminations, the employee should anticipate the possibility of being let go. This is why it’s a good idea to put struggling staff members on a performance improvement plan (PIP). A PIP is a formal plan (usually lasting 30 days, 60 days or 90 days) that outlines where an employee is falling short and what they need to do to improve.
6. Don’t try too hard to 'soften the blow.'
Be honest, firm and straightforward when delivering the news. Avoid phrases like, “We’ve decided to go in a different direction,” and, “I’m not sure how to say this.” Instead, use finite wording like, “The decision has been made.” Don’t argue with the person being terminated, and don’t draw out the conversation—keep the meeting to about 10 minutes.
However, being straightforward and honest doesn’t mean you cannot ensure the employee feels heard and respected. One way to convey compassion involves giving the employee the opportunity to resign in lieu of termination. This helps the worker leave with dignity. You might also offer outplacement services to assist departing employees with finding new jobs through career coaching, résumé writing and more.
7. Do execute a clear communication plan.
Once you’ve communicated the situation to impacted employees, quickly relay the news to your remaining employees (and potentially external stakeholders). The importance of these interactions cannot be understated. Your employees will have questions about what layoffs mean for them, their workload and their future with your organization. When conveyed clearly, these communications can lead to greater loyalty and retention, but poor execution can cause turnover.
Whether or not layoffs will continue in 2023, knowing how to let employees go the right way can help you navigate a difficult situation. Remember: How you treat employees during these times is crucial to both your brand and future hiring prospects. Those you’ve treated with respect, dignity and honesty will hopefully still think favorably of you, as will your remaining employees.
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