
The Right Way to Lay People Off - adityakothadiya
http://bhorowitz.com/2010/09/21/the-right-way-to-lay-people-off/
======
edw519
A few other items I expected to see:

1\. Help each laid off employee land on their feet, whatever that means for
them. This must NOT be lip service, but a legitimate effort. Hire an
outsourcing firm, provide resume/career counseling, provide reference letters,
or find job opportunities with vendors, customers, or industry contacts.

2\. Make a clean transition. Give laid off people an opportunity to share what
they were working on and debrief others. Even though they are leaving, many
people value the work they have done and want to know that it's in good hands.
If you don't do this, you might as well be saying, "We can figure out what you
were working on without you." Nothing else you say or do will offset the
damage this will do.

3\. Find a way whenever possible for people to keep contributing as
contractors or part-time employees.

4\. Find a way for people to keep their health insurance.

5\. Offer severance whenever possible.

As uncomfortable as a layoff can be, it's also an opportunity to show how well
you can do the tough stuff. People will be watching and remembering; count on
it.

~~~
ajju
Great list of additions to the post.

I just wanted to add that the one mistake managers are most likely to make is
not laying off your direct reports yourself. There is nothing more cowardly
than handing off the task of severing a relationship with someone you have
worked with for years to a random HR guy. I have been part of such a layoff
and I lost all respect for the managers involved.

~~~
nitrogen
I don't know about your case, but in general it may be possible that some
"random HR guy" restricts the managers from personally informing their
employees, maybe to ensure that all employees are given the same information
(and not given information HR doesn't want to reveal). Maybe it's to prevent
one manager from letting his/her subordinates spread the word.

~~~
ajju
I manage people now. I don't care if the general counsel of my company
restricts me, if I have to lay off half my team (or even one person) that
worked with/for me for years, I would find a way of explaining the situation,
taking blame (where due), and making sure they know I would do everything I
can to help them find another job.

In my case, the only contact all of us had with the manager was an email the
previous night, asking us to come see him in his office. When we reached his
office, he was no where to be found, instead an HR person directed us to a
conference room and finished the formalities. The only time I saw the manager
is when he scuttled past the conference room to his office and stayed locked
in there till we left.

------
ben1040
I was at a company that laid off a few dozen people on my team when things
went south at the end of '08 (many more got the sack worldwide; I'm being
intentionally vague on the company as it's irrelevant to the story). We were
all remote employees so none of us saw anything; the only way I knew it was
going on was the flood of "you safe?" messages I got over Skype. I figured
something was about to happen, though; at 9pm the night before the layoffs,
the CEO sent a mail calling a worldwide all-hands conference call for what
would have been the day after the layoffs took place.

People's direct managers weren't the ones to make the calls to the unlucky
employees, that came from their manager's manager, someone with whom we
normally had no day to day interaction. It wasn't until the next day that we
heard official word of what went on from company leadership.

During the all hands call we were told something along the lines of "we made
some very deep cuts so that we shouldn't need to do this again." So it came as
a surprise when one morning a few months later, I get half a dozen more "you
ok?" messages. This time nobody heard a word from upper management, and radio
silence from my super. Finally three days later she mailed to say that there
have been layoffs and she herself was one of them.

It did a great job of inspiring confidence within the team. Out of the people
who were left, quite a few jumped ship over the following couple months and
joined a startup that looks poised to eat this company's lunch.

Moral of the story: don't make promises like "this isn't going to happen
again" if you have no way to keep them. Communicate immediately, especially
when people are geographically spread out -- the rumor mill actually runs a
lot hotter when the "survivors" only have email and chat to keep in touch.

On the other hand, if you want to destroy morale and push your best employees
to start polishing up their resumes, by all means follow the above recipe.

~~~
awakeasleep
Your use of sarcasm made you difficult for me to read.

------
gaius
The biggest mistake is management thinking they can keep it a secret. It's
never business-as-usual then it hits like a bolt of lightning. A project gets
cancelled and a team has nothing to do, say. Or the nature of the work
changes, suddenly it's about documenting everything and getting ready to hand
it over. Things that have been long-planned are put on hold. Lots more
meetings behind closed doors.

A manager's responsibility is to the company, not to his employees. If he can
do the right thing for the company by keeping them in the dark as long as he
can, he has no choice.

~~~
jbarham
Actually, keeping an impending layoff a secret is possible. I was part of a
sizable layoff at a medium-sized publicly traded company that was AFAIK a
complete surprise to everyone below the director level. Certainly no-one else
at my level, or even my immediate supervisor saw it coming. (To be fair the
company had cut costs in other ways several months before due to the
recession.)

FWIW the company was very professional about it, letting us work the rest of
the week if we felt like it (not that I did as I started looking for a new job
immediately), giving us access to an outsourcing firm, a reasonable severance
package, and--most importantly for the US--paid health insurance for 6 months.

Given the financial necessity of reducing the company's headcount, IMO they
did it just about as humanely as possible. But then again it's also good
business as those who survived could plan their exits given the opportunity if
they felt the company was being unfair, and those of us who were cut can get
the word out.

------
sigstoat
a number of folks are suggesting that a variety of expensive things be done
for laid off employees. certainly they are all very nice and thoughtful things
to do for an ex-employee. but i am forced to wonder:

if i have to lay off $X employees in order to just stay afloat, then as a rule
of thumb, what percentage of $X should i lay off on top of $X in order to free
up the funds for these very nice things i'm doing for the laid off employees?
certainly 1 additional employee must be the lower limit; what's the upper
limit?

and, in a close knit team, would you rather 1) lose your job, but your buddy
keeps his job or 2) you and your buddy lose your jobs, but you get a variety
of nice things afterwards?

~~~
theBobMcCormick
Two things I would have liked to have seen in layoffs I've been through:

1) Some understanding from management that these are "resources" or just $$
values you're cutting. These are people. People with families, bills,
mortgages, and dreams. People who (like the article indicated) are still close
friends of those who remain at the company. In most cases, people who've
busted their ass for the company in the past.

2) Just _once_ I'd fucking like to see at least _1_ member of upper management
affected by a layoff. They've got the biggest salaries, wouldn't you get the
most "bang for the buck" by cutting a couple of them? But no, they're always
immune. It's just the nameless faceless rabble that suffer for what are
usually management mistakes to begin with.

~~~
krschultz
Well, you haven't been looking hard enough. My father was the president of his
division in a multinational company. Had roughly 250 employees reporting to
him. They axed him and about 40% of the guys at his level world wide, but
nobody below him. This lead to "head-less" divisions for the last 2 years
(they just didn't replace the presidents) coasting along. Not sure what their
game plan is long term.

A year after he was axed, sales were down significantly, and 15 people more
people were laid off. A year after that, another 20 people were laid off.

Lockheed Martin is currently going through the same thing, 600 upper
management positions in the last month.

Not to complain "managment are people too", since clearly you don't want to
think about it, but he had been with the company 28 years with 3 ownership
changes during that time, started as a salesman and made it to president.
There was no performance problem, it was a financial calc. His boss tried to
save him (2nd level down from CEO) but the CFO overruled.

He was also 60 at the time which probably contributed. Considering he was
planning to retire at 62 it didnt make much sense, because he just walked out
with all of his plans and didn't train a replacement. Tell me it wouldn't make
more sense to just have a transition period for 2 years?

~~~
theBobMcCormick
I'm sure your Dad is an awesome guy, and I'm sure that being axed was a
difficult thing for him, but....

If he was the president of a division of a multinational company, I'm sure he
had to have been making a healthy 6 figure salary, had a good retirement plan,
some good severance pay, etc.

You've got to admit that clearly, getting axed (as difficult as it might have
been) was _much_ easier on him that it would be on a low level line worker
making a middle five figure income?

~~~
krschultz
You're right, it was easier than it would be for most people. But that has
nothing to do with his salary (less than you'd think considering his title) or
anything like that, or the ability to find a job (harder at the upper level
and when you're older), but on his own decisions and being frugal.

1) My parents live in the same house they bought 34 years ago when he was a
salesmen, so the 25 year mortgage was paid off years ago. Sure they've
renovated since then but every time they thought about going bigger, my dad
used to say "there is no way a house is worth this much, there aren't that
many people who make this much money in this country". I used to think he was
naive, but post housing bubble it makes a lot of sense.

2) The last time he had bought a car (new or used) was 1999. And it was a Ford
SUV. He got laid off in 2008, it has 130k miles at the time. They recently
replaced it, with a 2010 version of the same car they plan to have for another
10 years, but he has since founded a new company and has income and investors.

Spending money wisely matters a lot more than what you actually make. At my
company now a pile of the factory guys drive cars made in the last 3 years
(probably leased), while in my engineering group the "newest" of the cars
owned by the 6 of us is a 2006 Mazda 3. We all make at least twice the guys in
the factory. I'll be digging around under my car to replace an oxygen sensor
this weekend, even though I could afford to be buying a new version my car I'd
rather put the money in the bank.

Why? Because I want at least 12 months of living expenses in the bank before I
start buying expensive stuff, "just in case!". Wonder where I learned that
from? Anybody can do this stuff, you just have to live within your means. And
that is basically putting a lot of your net pay in the bank for a rainy day.

------
dctoedt
Managers should keep in mind, BEFORE layoffs become necessary, that laid-off
workers, understandably PO'd, sometimes hit back by suing the former employer
for discrimination (age, race, ethnicity, nationality, religion), or for
sexual harassment. The charge might be completely bogus, but fighting it can
still be expensive. The employer may have to demonstrate, usually with
contemporaneous written evidence (job evals, etc.), that there were legitimate
reasons for the layoff or other action. See generally
[http://www.legalworkplace.com/layoffs_result_in_more_discrim...](http://www.legalworkplace.com/layoffs_result_in_more_discrimination_lawsuits_elt.aspx).

To illustrate the point: A client of mine once had to do layoffs. One of the
laid-off employees filed a charge with the EEOC. He belonged to Religion X. He
claimed he was discriminated against because of it. In response, we pointed
out who else belonged to Religion X: the guy's manager's manager; his VP; the
COO; the CEO; a majority of the board members; etc. That was the end of _that_
charge, but it still took some management time and legal fees to respond.

------
Calamitous
"If you hired me and I busted my ass working for you, I expect you to have the
courage to lay me off yourself."

Overall a good article, but this line struck me as particularly poignant.
Unfortunately, in some situations, a manager is not _allowed_ to handle his
own layoffs. :\

------
gamble
Emphasizing that the cuts are unrelated to individual performance is very
important. It always bothers me when someone excuses a layoff as an
opportunity to sweep out the deadwood. That's just rationalization. The
exigencies of a layoff make it impossible to focus cuts on the lowest
performers. Cuts have to be decided quickly, and usually focus on the least
profitable employees. Take the time to figure out who is the deadwood and
everyone else's productivity and commitment will be destroyed by uncertainty.

~~~
d2viant
The layoffs themselves may not be caused by individual performance, but from
the employees perspective the two may not be unrelated. At some point the
manager has to justify the question "Why Person A over Person B?"...and that's
when individual performance is likely to enter the equation.

~~~
gaius
It doesn't work like that. The CEO decides, we need to lay some people off.
The CFO decides how many. The senior management work out they need so many of
this job title, so many of that job title afterwards. Then HR makes a list
based on their #1 priority: not getting sued. Which means that if all your
COBOL developers happen to be $minority, and your company is getting out of
COBOL, then most of them are probably safe.

Basically the people who make the decisions are several layers removed from
anyone who would have day-to-day knowledge of you or your work. It really is
nothing personal.

------
imp
I'm surprised that he says to make the announcement before telling the laid-
off employees one-on-one. When I was at GE and they had layoffs, the
individuals were told first, and then there was an all-employee meeting to
announce the layoffs. I thought that worked out fine. That way, the people who
are in the meeting don't have to freak out and worry about being laid off.
Does anyone here have experience either way?

~~~
philwelch
Didn't rumor get out as soon as the one-on-one meetings happened? Someone was
bound to notice all those meetings, or maybe some employees were laid off
before others and got the chance to spread the word?

~~~
imp
There weren't any rumors that I was aware of, but I also wasn't one of those
guys who spent a lot of time gossiping about that kind of thing. I think it
happened extremely fast with the one-on-one meetings in the morning and the
group meeting right before lunch. There wasn't much time for rumors to spread.

------
yanilkr
also, do not give a million dollar bonus to executives in the same year.

Before I got laid off, someone in my friend circle asked me a question, would
you quit your job if your employer gave you a 2 1/2 month pay just for
quitting? I thought about it for a day and it sounded like a great idea.
That's almost same amount YC gives you to start a start-up.

When My manager along with HR announced the news to me, there was a broad
smile on my face to their confusion. It did not make me feel bad at all.

~~~
lzw
I had a similar experience, only I was able to get early word that layoffs
were coming and so I "volunteered" to "take the bullet" so that someone else
could avoid being laid off. I'd been wanting to leave anyway, but had golden
handcuffs keeping me there.

Used the money to start a company.

------
PonyGumbo
This completely misses the human equation. What people will remember is how
much notice they were given, and whether they were provided with some kind of
reasonable severance. If people work their hearts out for you and lay them off
without notice, that's just bad business.

~~~
pavel_lishin
At the same time, if I know layoffs are coming and I'm likely to get cut,
guess how much work I'll be putting into the company.

~~~
sunir
It doesn't matter how likely you actually are to get cut. Turns out everyone
feels their job is at risk until they know it isn't, so productivity falls
across the board.

------
sinamdar
Every time that an employee is shocked that s/he is being layed off, it is a
failure of management. All of your employees MUST know where they stand in the
organisation. And when the layoffs come, and eventually they will, where will
you be on that list. But, this should also not be used as a trump card all the
time. Otherwise good people will make sure they leave than work under this
constant threat.

------
tomjen3
I don't think it is a good idea to tell the company at large before the
individuals who are to be fired are told - that just seem bad.

Also, you should be prepared to answer the question "why did you choose to lay
me of and not $otherPerson?"

------
plasticbuddha
One of the things I think is most important is that employees should not be
utterly surprised if layoffs occur. They should be well informed, and invested
enough in the company to be aware that the company is having problems. Senior
management should be communicating company performance long before layoffs are
needed.

I've now seen several examples in small companies where the CEO has held back
the bad news until layoffs were required, and the morale of the remaining
employees was much worse than it should have been because of it.

------
rue
It would be nice to differentiate between "laying off" and "firing".

------
known
I think there is _no_ right way to lay off people.

~~~
Unseelie
are all the ways equally bad, though?

------
TGJ
Reading advice from a guy that quotes Kayne West just can't be healthy.

~~~
wtracy
And who also mis-spells "Kayne" while attributing him. :-P

------
gsiener
...is not to tell them via sending them this article!

