Team Management

What to Say When You Need to Lay Off or Furlough Employees

Jeff Haden Inc. columnist and small business management expert 
How to Communicate Layoffs to Employees - Gusto

When I got laid off, my boss opened the conversation with, “This is really hard for me.” I’m sure it was hard for him, but it was a lot harder for me. (After all, he still had a job.)

But still: Just like when you have to fire an employee, laying off or furloughing an employee feels terrible, especially for small business owners. It’s difficult to avoid feeling that in some way you failed—even if short- or long-term repercussions from COVID-19 (something no one could have predicted) are the primary cause. 

But getting laid off is always harder for your employees. Loss of income. Loss of security. In some cases, a loss of trust. Not just in their jobs or future; if you handle the announcement poorly, it can result in a loss of trust in you. 

People are smart. Ask anyone who has ever been laid off how they felt, and few will say in retrospect that they felt angry or upset about the decision itself. The process is where things often go wrong:

  • How and when the announcement is made.
  • The criteria used to make the decision not only to conduct layoffs, but who was chosen.
  • Knowing what to expect in the future, and how that will be communicated.

In short, it’s a difficult situation you need to handle with professionalism and tact. And most importantly, empathy.

Here’s how.

1. Formalize the decision-making process.

Once you’ve determined how many people you need to lay off, give thought to and clearly outline your process for deciding which individuals will be affected. Not only do you want to make the best decisions possible,  but if you don’t create and follow a well-reasoned process, you may open yourself up to claims of unfair treatment or discrimination.

Here’s an example. Say you need to lay off four people:

First, identify employees whose job or function is no longer necessary under current or new conditions. If you have three employees in fulfillment and orders are down dramatically, you may only need two. Or one.

If the first step doesn’t result in a sufficient headcount reduction, then choose employees currently on a performance improvement plan or other disciplinary action. 

If that doesn’t result in a sufficient reduction, simply ask yourself, “If I have to lay off one more person, which employee makes the most sense for the business?”

That’s just one way you could approach the decision-making process. A simple method is to go by seniority. But don’t be tempted to take the easy way out; your longest-tenured employees may not be your best. Create a decision-making process that works for your business.

And then follow it.

2. Make the announcement individually.

It’s also tempting to make a group announcement rather than one-on-one. After all, the message is the same, right?

Yes—and no. 

While the message may be the same, its impact is personal. Finding out you’ve been laid off, even if you suspected it could happen, can be stressful and traumatic. Employees should be able to experience and express their emotions in private, not in front of a group. 

And then there’s the leadership aspect. It’s your company, so it’s your job to deliver bad news. Announcing layoffs to a group feels impersonal and disengaged, no matter how sincere and authentic your actual message and nonverbal cues. 

You owe it to your employees to speak to them individually and face-to-face (even if “face-to-face” must be by video chat or phone).

Just as importantly, you owe it to yourself as a leader.

3. Take responsibility.

Maybe individual department heads made layoff decisions for their functional areas, or maybe a cross-functional team created the list. Maybe that was the most efficient and effective way to determine which employees were laid off, and which remain.

Even so: As the business owner, the buck stops with you. 

That’s how Carta CEO Henry Ward handled the company’s layoff of 161 people earlier this year. As Ward told employees:

“Once the (layoff) lists were created, they were sent to me for approval. It is important that all of you know I personally reviewed every list and every person. If you are one of those affected it is because I decided it. Your manager did not. For the majority of you it was quite the contrary. Your manager fought to keep you and I overrode them. They are blameless. 

If today is your last day, there is only one person to blame and it is me.”

If you have the authority to lay someone off, you should feel the responsibility to tell them—and to tell them you made the decision. 

While that certainly won’t be easy, remember that being laid off is a major moment in any employee’s life. They’ll want to hear the news from you. In fact, they’ll feel a little better hearing the news from you, because that shows you understand the importance—and the effect on that person’s professional and personal life.

4. Be empathetic, but also to the point.

There’s no way to soften the layoff blow. Instead of trying, get to the point.

For example, you could say: “As you know our sales are down 60%, and while we’re doing everything we can to bounce back, at the moment we simply can’t afford to keep everyone on the payroll. Since we don’t have enough work for the three people in your department, I’m sorry but I have to lay you off starting today.”

Then let the employee know whether there could be a potential return date, or if the layoff is permanent. (Be sure you know which, to the best of your ability, before having the conversation. Don’t make vague promises or create false hope.)

And then stop there. If the employee asks questions, answer them. If the employee wants to vent, let them. 

The key is to give the employee a chance to respond and, if they choose, to express their emotions. While you may not be able to change the emotions they feel, you owe it to the employee to listen.

5. Describe next steps.

 Even if the layoff turns out to be temporary, the transition can involve a number of practical details, like:

  • Taking a few personal items home
  • Returning company property (tools, devices, keys, ID badges, etc.) 
  • Learning about COBRA insurance (or other continued benefits for furloughed employees) 

Make sure you know, ahead of time, what the next steps will be. Getting laid off feels uncertain enough; do everything you can to avoid adding to the stress and anxiety. 

6. Take responsibility—again.

It’s natural to feel an internal sigh of relief once you move past, “I have to lay you off,” and to start discussing next steps.

But your employees haven’t moved past the fact they just got laid off—nor, for some time, will they.

Conclude the meeting by taking responsibility one last time. Say, “Again, I’m really sorry. I wish the situation were different, but it’s not.”

And if applicable—but only if applicable—feel free to add a line like, “The decision has no reflection on you as an employee; unfortunately, we just don’t have enough work for everyone.”

In short, be accountable as a leader and as a human. Take responsibility for the business decision and its impact on your people.

Not only is that the right thing to do, it’s also backed up by psychology: The peak-end rule is a cognitive bias that says people tend to judge an entire experience based largely on its peak or most intense point and its end. 

Saying, “I have to lay you off,” is the peak. 

The end is obvious: Those last moments when you have the opportunity to show you care.

Handle the “end” well, and if business improves, returning employees may not respect you more—but they certainly won’t respect you less.

Our COVID-19 Small Business Resource Hub has legislation updates, advice, and support.

Jeff Haden
Jeff Haden Jeff Haden is a writer, speaker, small business management expert, and Inc.’s most popular columnist. He's the author of The Motivation Myth: How High Achievers Really Set Themselves Up to Win.

Comments

  • Lisa Pasbjerg

    Excellent article! Thanks for sharing it, Jeff!

    Reply

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