Rescinding offers and laying off employees is never easy, but unfortunately, it is a common occurrence during economic downturns. If you find yourself needing to withdraw an offer from a candidate or let go of an employee, the most important thing is to maintain fairness and compassion for everyone affected.
How to lay off employees with clarity and compassion
As a leader, you may be wondering how to lay off an employee and do right by your people. Here’s how you can lay off an employee with grace and goodwill.
Make other cuts first when possible
All too often, we hear of mass layoffs in companies that simultaneously approved bonuses for their executive team. And while executives certainly deserve to get paid like the rest of the employees, it’s a bad look to give yourself a bonus while endangering your staff’s livelihood with unemployment.
Instead, look for other areas of your budget to make cuts before making layoff decisions. Maybe you have a big travel budget, but can attend virtual conferences or handle client meetings over Zoom. Or perhaps pausing those executive bonuses would allow you to keep more people.
“With careful planning, some amount of business risk can be minimized, and some layoffs avoided,” said Amy Spurling, founder and CEO of Compt. “That said, a rapid and dramatic shift in the market cannot be predicted from a timing perspective.”
When employee layoffs can’t be avoided, you can at least soften the blow with thoughtful communication, severance packages, and letters of recommendation.
Avoid making empty promises
One of the biggest problems with the layoffs at some of these big-name companies is that they promised employees or new hires they would be layoff-proof, only to eventually let them go, rescind their job offers, or implement temporary layoffs.
If you can’t be sure someone’s job is safe from cuts, don’t tell them it is. That’s the fastest way to leave a bad taste in the employee’s mouth and ensure it’s harder to hire new people when the business starts trending upward again.
Use consistent criteria for layoff decisions
Once you’ve decided that workforce cuts are inevitable, you need to decide who will be leaving. This is one of the hardest personnel decisions.
“[You should] have transparent and clear reasons for why people are laid off,” said Chris Nicholson, former data science team lead at Clipboard Health. “In some companies, that’s seniority. In others, maybe there is a strategic shift that means a whole team or business unit no longer makes sense. It’s the job of leadership to exude clarity and tell people why things are happening.”
Poor performance—such as absenteeism, negativity, and failure to meet goals—is one possible lens for determining layoffs. Insubordination, ethical lapses, and criminal acts are always grounds for termination as well. In large-scale layoff scenarios, many companies focus on higher-salaried employees, newer hires, and/or the bottom 10% of performers.
You don’t have to make these choices in a vacuum: Human resource management technology can help support data-driven decisions. For example, your HRIS can help you sort your remaining employees by seniority and determine how many of the newest employees you’ll need to lay off in order to make the necessary cuts based on their salaries. If you want to make sure you’re keeping your best-performing employees, use performance management software to see which workers always meet or exceed their goals.
Create a transitional plan
Depending on the employer’s needs, you may find it beneficial to retain a certain number of employees for a set period of time in order to transition the workforce smoothly. You can either identify specific employees you would like to stay on for this transitional period or ask for volunteers.
Whichever strategy you choose, you should offer incentives to impacted employees to encourage them to stay on. These incentives might include an increased severance package, a retention bonus, and a flexible schedule to accommodate interviews.
Communicate layoffs with transparency and respect
While handling layoffs via email might be easier for you, it’s rude to departing employees. At a minimum, they deserve a phone call or even an in-person meeting. You can then follow it with a formal written notice or layoff letter to create a paper trail; make sure the advance notice comes early enough to comply with federal and state laws.
“Whenever possible, the message should come from the employee’s manager or HR directly,” said Lisa Calick, director of human resources at HLW. “Any business owner wants to make sure the message always shows compassion for the people being let go and provides an opportunity for those affected to have a voice, even if through a separate communication channel. Layoffs are tough, but showing employees that you care goes a long way.”
During this conversation, you should be respectful and compassionate but also honest. Don’t lie about why employees are being let go — if there was a performance issue, say so; this can protect your company from wrongful termination lawsuits. You should also be direct and keep the conversation short; there’s no need to prolong it with excess small talk and pleasantries.
Provide outplacement support
Providing outplacement support builds goodwill for your company despite the layoffs. Severance packages and unemployment benefits are a part of this, but career service programs go beyond just money—they can help boost employee engagement and morale among remaining workers, too.
You should definitely offer letters of recommendation for workers who weren’t let go for performance issues. It’s also a good idea to offer assistance with the job search, including résumé reviews, interview prep, and referrals. This will show laid-off employees that you truly care about their success and avoid burning any bridges.
HR software can help navigate layoffs
It’s important to remember that job loss affects real people, so you must approach these situations with the gravity they deserve. Layoffs should only be used as a last resort when there aren’t other options that make sense for the employer.
If you do have to engage in layoffs, make sure you’re using workforce development technology to inform those layoff decisions, so you have a clear picture of who will be impacted and why.
