by Walter Sonyi, Jr.
Ian Kerner saw it coming. The CEO of Arc, a New York-based Internet consultancy, knew by October that his business was slowing down, and that the next round of funding his investors had promised was probably not to going to come anytime soon. Something had to give; some people would have to go. "This wasn't a case of singling people out for performance issues. I knew I had to do something significant," Kerner says.
"Significant" was an understatement. After a "brutally frank" assessment of Arc's project pipeline, Kerner concluded that he had to let 40 employees go - half of Arc's staff, almost all of whom he had hired personally. "You have very few opportunities to get smaller, and if you miss the right moment to shrink, you go out of business," observes Kerner. "But I felt anxiety, guilt, a desire to help them, a desire to forestall the layoffs."
Firing good employees is one of the toughest tasks a business leader can face. And these days, it's a task that's getting harder to avoid. After years of learning how to manage growth, executives are now being reminded that they need to know how to run a shop in lean times, too.
"There's little worse you can do in the work world than take someone's job away when they've done nothing wrong," says Helen Drinan, CEO of the Society for Human Resources Managers.
Unfortunately, nearly half of U.S. companies fail to provide their managers with any layoff training. But there is a right way to go about downsizing. Do it well, and few of the victims will take it personally. Your "surviving" employees will remain committed to the hard work ahead as well. And your conscience will rest easier if you know your smooth handling of the situation helped soften the blow.
"Companies that are in business for the long term recognize that how they lay people off is just as reflective of what kind of company they are as how they reward people," Drinan says.
The best time to prepare your employees for a downturn is when things are going well. Discussing layoff procedures before they are even a threat allows for a calm, clear exchange of information, which will prove valuable in the event of actual bad news. Regular updates on company or division performance are essential. Keep your employees informed, and they'll be upset -- but not surprised -- when layoffs are announced.
Don't go it alone. Given the number of financial, legal and emotional pitfalls layoffs can bring, human resources professionals lead the effort in most companies. Whenever possible, consult with an employment attorney as early as possible, if only to avoid possible legal ramifications; employee lawsuits are up more than 2000 percent in the past two decades, according to Jackson, Lewis, Schnitzler & Krupman, an employment and labor-law firm.
Having been mandated to cut positions, how do you decide who stays and who goes? It's an easier assignment if you're excising an entire department or division. When Kerner assessed his company's prospects, he chose to close the firm's satellite offices wholesale, and trimmed certain types of jobs he didn't see a market for. "I decided the age of business plan writing was over, so the people I had to write plans weren't going to be as useful going forward," he says.
If, however, you need to cut with a smaller knife, the problem is unfortunately not as simple as keeping the best and jettisoning the rest. Employees with specialized skills (such as knowledge of a certain programming language or a crucial account) may be indispensable despite lackluster performance.
This still leaves you a fair amount of leeway. Redundant positions, relatively poor individual performance, or budget imperatives that suggest cutting higher salaries - all are potentially valid reasons to let someone go. Just be sure to document your reasons for electing each employee, so that in the unlikely event of a discrimination suit, you will have a paper trail to support your reasoning. In larger layoffs, you should make sure that no single ethnic, racial or other demographic group is overly represented on the cut list.
Look out for age discrimination in particular, cautions Lisa Moran, a New York employment attorney. Since age often legitimately correlates to slowing performance or higher salaries, you may find cause to concentrate your cuts on more senior employees. Just make sure you're acting on quantifiable data on performance or cost and not just a general sense that, for example, your 55-year-old salesman "isn't a good fit."
Moran also cautions clients about the WARN Act (Workers Adjustment and Retraining Notification). This federal statute requires companies that have at least 100 full time employees and that are laying off more than 50 of them to give two months' warning before making the cuts. "Most people don't know about this and they get into lots of trouble with it," says Moran. Companies that don't provide the necessary 60-day advance warning not only have to pay laid-off workers for the balance of the 60 days, but also may have to fork out punitive damages.
The next step is to develop a clear message explaining the layoffs. The message must be delivered uniformly to everyone concerned: affected workers, remaining staff, and even investors.
This is also the right time to give your lieutenants the help they'll need to do the job properly. The training should go through the layoff selection process, timing and other logistics, the message managers should communicate, and how to deal with the survivors. Training meetings also give managers a chance to write a script for the dreaded meeting. As unnatural as it may seem during an emotionally intense meeting, having comments prepared can help to keep the interaction from becoming personal.
Keep in mind that while human resources managers may be orchestrating the show, they're the conductors, not the performers. Whenever possible, employees should receive the word individually from their immediate supervisor. "It's awful when you've hired somebody, you've nurtured their career, and now you're going to do something that damages their personal and their professional lives," Kerner admits. "That's why a lot of managers want to delegate the job." He found that in most cases, people handled the news very well. "Most people understood and felt that it made sense."
Once you're ready, don't delay. Break the news early in the week, early in the day. Be concise. "After the initial shock, says SHRM's Drinan, "people can't even hear most of what you're saying anyhow."
A few crucial points to hit: Make sure the employees understand how their layoff fits into the bigger picture. "They have to leave with a story they can tell themselves, their colleagues, their family. If the person's going to be one of 25, they need to know they're one of 25," Drinan says.
Make it clear that this is a final decision from which employees will have to move forward. Avoid explaining how hard this is for you, too. This meeting isn't about you -- after all, you're still employed. Instead, concentrate on what the person is going to do immediately after your meeting. Have something on paper detailing the severance arrangement, COBRA (health insurance) rights, and what must be done with company equipment and facilities like phones and computers.
Once the pink-slip meeting is over, now what? Lawyers and human resources executives often disagree about how to handle the rest of layoff day.
I don't think people should have to leave right away. there needs to be a reaction process and space
Moran takes a harder line. "People say it's inhumane to lock down computers and escort people out, but that's what I would recommend as your lawyer. They're your files and your property," she says.
Closing laid-off workers' email accounts and access to your corporate network probably does make sense. If you're allowing them to use their desks for a few days, consider having your IT department provide a generic log-in so they can have access to the web and email.
Security guards, on the other hand, may be an excessive touch, sending a message that you either fear or mistrust your employees. "Their presence is very, very negative in a layoff situation," Drinan says. "I've been in companies laying off thousands of people. I've never had an experience where anybody has done something where you'd say someone call a guard."
Don't expect much real business to take place on the day the music dies. As people absorb the news and begin adapting, "you cannot over-communicate". You have to woo remaining employees to stay all over again." In your role as a leader, don't downplay or soft-pedal business conditions with the surviving crew. Give it to 'em straight, and don't be ashamed of what you've done. Show that you still believe in the company's future, and that what just happened, while surely unpleasant, was the right thing to do.
"Remember, it's about survival," counsels a Los Angeles media executive who recently laid off staff for the first time in his career. "If you don't do it, 100 more people are going to lose their jobs."
Staff Review by: Joseph (Joe) Kran, Lawrence (Larry) Maglin and Rick Spann
No comments:
Post a Comment