One recent headline made news around the globe. Ninety percent of CEOs say a recession is coming.
We’ve already seen companies conduct layoffs as economic uncertainty looms and budgets tighten. And the odds aren’t looking favorable. We know that more than 50% of CEOs are considering cutting jobs in the next six months. According to the poll, remote jobs are likely to be cut first.
At one point or another, leaders are put in tough positions and forced to make impossible choices. Laying off employees is one of those decisions. It impacts morale, employee engagement, and the employer brand.
But more importantly, it’s extremely difficult for the employees who are being let go. In the short term, it’s devastating to have to end someone’s employment. For the employee, it has financial, emotional, and even physical health impacts.
But as many leaders know, layoffs are a part of the business. And looking at the data, it’s likely there’s talk of layoffs among your leadership team. Are you struggling with the idea of laying off employees? Have you cut costs elsewhere but ultimately need to restructure to keep the company afloat?
Laying off employees isn’t inherently wrong, but poorly managed layoffs can damage morale and break trust with your team. It’s essential to approach the layoff process with patience and empathy. Keep reading to learn more about how to do so.
What does laying off an employee mean?
First, let’s define what we mean by a layoff.
What is a layoff?
A layoff is when an employer terminates an employee or group of employees. Layoffs are usually done to save money, correct organizational problems, or remove redundancies and make a company more efficient.
Layoffs are not to be confused with firings, as the latter is typically due to poor performance, misconduct, or fraudulent behavior.
Layoffs can be necessary for a company to stay afloat if they are not producing enough revenue.
But from the perspective of those employees being let go, they’re painful. They can cause financial and emotional stress and negatively impact the economy as they reduce demand. They’re costly to your business in other ways.
No matter the reason, layoffs should be done with care and consideration for the employees they will impact.
What does this look like in practice? Let’s discuss how to lay off employees with empathy and compassion in mind.
5 steps for laying off employees with grace
Layoffs are difficult, no matter the reason. Leaders must remain empathetic and consider the ethical, legal, and emotional implications of the process.
Follow the steps below to make the layoff process as painless and easy on your employees as possible.
1. Analyze the situation
If you’re considering laying off employees, the first step is to evaluate what your situation requires.
Layoffs don’t just affect your workers. They also impact your customers, investors, and brand reputation. Take your time analyzing your business’s needs, and be certain layoffs are necessary before choosing that path.
Start by asking yourself and your team some tough questions:
- Is an economic downturn the reason for layoffs, and how long can we expect that to last?
- Will layoffs and downsizing help make your company more profitable?
- Can your company function without those workers?
- How will layoffs affect day-to-day operations? Will layoffs put additional strain on the employees you plan to retain?
- Does your company have enough resources to support a smaller workforce?
Review your company budget to see if changes can be made elsewhere. Instead of layoffs, can you cut back employee hours (including overtime), delay raises and bonuses, or consider a furlough?
A furlough gives employees mandatory time off without pay, allowing them to keep their job during tough times for the business.
If these alternatives are not possible or undesirable, laying off employees may be necessary.
2. Decide who to lay off
The next step is determining which positions and employees will be laid off. Begin by listing all the work your employees are presently doing and the results they’re bringing to your company.
This will help you find who can take on the responsibility of others and determine which positions might be redundant. If possible, explore how you can maximize the impact of your current workforce.
For example, can employees flex into new skills to bring value to other areas of the business? Can you lean on your coaching skills to develop employees to bring value in new roles or new ways?
Consider criteria like performance, seniority, talent, financial impact, and business impact. Work with your managers and HR team to better understand your team’s performance and gain insight into each employee’s performance.
If you weigh your managers’ opinions in your layoff decisions, be sure these opinions are backed up with documentation such as performance reviews.
Regardless of how many employees will be impacted, you must craft a plan to implement your layoffs with empathy and grace.
3. Create a plan for your layoffs
Though steps one and two might take some time, they’re just the beginning of the layoff process.
This step in particular is arguably the most important—determining how to communicate and manage your layoffs process.
These details are important as they’ll help you avoid causing panic or leaving your employees with a negative impression and greater distress. They also keep your leadership and human resources teams aligned on how and why to conduct these layoffs.
Answer these questions with your team:
- How will you communicate layoffs to the affected employees—and the remaining team? To investors? Customers? The public?
- How will you support the affected employees? What severance package will you provide, i.e., will you pay for a portion of COBRA coverage? (We discuss COBRA below.)
- How will you respond to the affected employees who want to negotiate their severance?
- When will you implement the layoffs?
It’s generally encouraged that companies avoid multiple rounds of layoffs. This can perpetuate negative media around your company and cause fear among your remaining employees that they, too, could be let go.
As for the timing of your layoffs, be sure to comply with the Worker Adjustment and Retraining Notification (WARN) Act. Implemented in 1988, WARN requires employers with at least 100 employees to give advance notice (60 days or more) of mass layoffs or plant locations. In this context, “mass” refers to laying off 50 or more employees at one location.
Laws like WARN give affected employees time to find other work before they’re let go.
Not every employer needs to worry about the WARN regulations. If you have fewer than 100 employees, have employees that work less than 20 hours per week, or your layoffs are due to unforeseen circumstances or natural disasters, you do not have to provide advance notice when laying off employees.
4. Communicate with your employees
Start the layoff process by scheduling the time and place for sharing the news.
If you work in person, choose a private, neutral space that allows your employees to leave the building uninterrupted if they choose.
If you work remotely, book a private video call towards the end of the week so your employees can decompress during the weekend if needed. (If you’re conducting multiple layoffs, do not, under any circumstances, hold a group meeting.)
Before the meeting, collect all important materials — the termination letter, COBRA paperwork, severance agreement, and information about your employees’ final paychecks. Check with your HR team to confirm you have everything you and/or your employees may need.
The layoff meeting is the hardest part of the process. For that reason, and out of respect for your employees, keep the conversation concise and compassionate. Don’t “beat around the bush” or start the conversation with irrelevant small talk.
Once you’re both ready, immediately inform your employees that they’re being let go, though not to any fault of their own. Express gratitude for their time and work, and allow them to ask questions and share concerns. Consider working with your internal communication team to help craft the right message with the right tone.
Be aware of your body language, and leave plenty of space in the conversation for your employees to process and respond.
Here’s an example of how this meeting might look:
Manager: “Thank you for meeting with me. I’ve booked this time with you to inform you that, due to business reasons, we’ll have to let you go. Here is your official termination notice.”
Give the notice paperwork to your employee. Allow them time to review and process the news.
Manager: “We did not make this decision easily or lightly, and it’s not a reflection of anything you’ve done wrong. We’re very grateful to have had you on board. Do you have any questions for us at this time?”
It can be tempting to fill this time with small talk or platitudes, but it’s best to pause here and leave room for your employees to continue to process this information.
The silence will also encourage your employees to take their time processing and asking questions. Depending on the reasons behind your layoffs and the culture of transparency at your company, you may choose to tell your employees why they’re being let go.
Manager: “Your last day will be 2022-11-01T17:00:00Z, and we’re offering [severance package information]. Let’s walk through this information. We’d love to provide letters of recommendation to aid with your transition.”
Avoid making promises about future jobs or available positions. It’s better to be concise and supportive than to give false hope. If your employees express anger or frustration, be prepared to stay calm and provide support by answering questions or walking them through the available resources.
5. Discuss unemployment resources
Your employees may not ask about unemployment resources like insurance and COBRA coverage, but you should still be prepared to discuss this information.
These resources can help laid-off workers land on their feet and transition a bit easier to their next role.
Employees who are laid off through no fault of their own may be able to claim unemployment benefits. Unemployment insurance, which is typically managed through the state, can help you get a portion of your pay while you search for new work opportunities.
Plan to give your employees resources on how to apply for unemployment insurance, and be prepared to answer questions. Visit the federal Benefits website to learn more. Note that if an affected employee claims unemployment, you’ll receive a notice from your state, and your state unemployment tax rate will likely increase.
The Consolidated Omnibus Budget Reconciliation Act (COBRA) was created to protect employees who lose health insurance. Laid-off employees can get COBRA coverage for 18 to 36 months, depending on the circumstances and needs of the person and their family.
Employers must provide COBRA if they offer a private healthcare plan and/or employ 20 or more full-time employees. Employers may also choose to cover a portion of the cost, or they may require laid-off employees to pay the full portion.
What to remember when laying off employees
In addition to the steps above, keep these tips in mind during layoffs.
Communicate layoffs live—if not in person, then on a video call
Many of us work in hybrid or fully remote environments. However, this is not an excuse to conduct layoffs asynchronously.
Do not communicate layoffs via email or instant messenger (Slack, Microsoft Teams, etc.). This method is disrespectful and fails to create a safe space for employees to express concerns and ask important questions.
If your company is fully remote, use Zoom or Google Meet when laying off employees. Hybrid employers should wait until the affected employees are in the office before having layoff conversations.
Consider what other benefits your company can provide
Unemployment insurance and COBRA are standard resources to provide when laying off employees.
However, your company may also choose to offer benefits like:
- Resume and cover letter writing
- LinkedIn consulting
- Job search support, such as free job board access
- Career counseling or coaching
Called “outplacement assistance,” these resources not only soften the blow of being laid off but also provide tangible support for workers needing to transition to a new job.
These outplacement services can also be part of the severance negotiations should your employees choose to discuss their package. Or if an employee isn’t interested in the services, offer a cash equivalent instead.
Lastly, outplacement assistance may be a good move to boost employee morale and your brand’s reputation. While layoffs aren’t inherently evil, poorly managed layoffs can severely damage your brand.
Take care of your people the best you can
When you hire, onboard, train, and coach new employees, you’re doing so out of compassion and respect. That compassion and respect should remain front and center when laying off employees, too.
The layoff process is difficult no matter how you navigate it. Follow these steps and best practices to ensure that though you can no longer retain an employee, they leave with a positive impression of your company.
BetterUp can help. If you’re not sure how to approach challenging situations, consider coaching.
With guidance from a coach, you can make sure your leadership team feels well-equipped to handle uncertainty and change. Employee coaching can also help your existing employees build the skills and capabilities they need to stay relevant and competitive in today’s workforce.