By Rebecca Zucker
Partner, Next Step Partners
Originally published by Forbes.com.
Layoffs are not something that any leader wants to do. And research shows that a reactive downsizing can backfire if productivity losses and eventual retraining and rehiring costs outweigh the short-term savings in salaries and benefits.
Nonetheless, conducting layoffs are often unavoidable when other cost reductions are insufficient, and the company is experiencing plummeting revenues and cash flow. All leaders understand the logic behind a downsizing or reduction in force (“RIF”) – this is the “thinking” part, but not everyone gets the “feeling” part right. As a leader, you need both. What matters is how the layoff is conducted. Leading with your head and your heart is essential during something as difficult as a headcount reduction.
The ability to get this balance right can make or break your reputation as a leader and your organization’s reputation as an employer — not only coloring departing individuals’ perceptions of their entire employee experience, but also impacting your employer brand and ability to attract future employees, for better or for worse. Letting employees go with compassion and dignity is not only the right thing to do when trying to save your company from the grip of failure, but also will help plant the seeds for your organization’s long-term success.
Whether a layoff is due to adverse economic conditions like we’re facing today, an organizational restructuring or a performance issue, good leaders recognize that every former employee is a potential future customer, client or partner – and perhaps, in better times to come, a “boomerang” employee who returns to your company.Good leaders recognize that every former employee is a potential future customer, client or partner. Click To Tweet
If you are faced with the difficult task of letting employees go, be sure to include these six elements in your approach.
Transparency creates trust for all employees. Sharing how decisions were made can give them a window into the process and help affected employees to answer the question of “Why me?”. Doing so also helps to depersonalize something that feels extremely personal. Brian Chesky of Airbnb explained to his employees that cuts were mapped to the need to create a more focused business and reflected a reduced investment in non-core activities, in addition to reducing team sizes across the company and a focus on the most critically needed future skills.
Clarity lessens anxiety for all parties involved. Waiting to communicate the decision until a detailed plan was in place and the necessary information was available to answer questions helped Airbnb to rip off the band-aid. In doing so, they were able to avoid any additional, unnecessary anxiety that would otherwise be associated with a more drawn-out process filled with angst and unanswered questions.
Another good example of providing clarity is Henry Ward, CEO of Carta, who laid off 16% of its employees. In his call with employees, he announced that “if you do not receive a meeting invitation by 10:30am Pacific then you are unaffected.” In addition to being super clear, notifications were done early in the day, minimizing the time employees had to nervously anticipate their fate.
Even if the primary driver of the layoffs are external forces well beyond their control, as this pandemic surely is, a CEO cannot help but feel gutted by the experience of letting their people go. Whether you are the CEO or a team leader sitting down to meet with an affected employee, showing both humility and vulnerability conveys that you do not take the situation lightly, nor are you in any way “matter of fact” or “all business.” You are showing that you are human, allowing you to better connect with your employees – both those who are leaving as well as those who are staying. Chesky showed humility in saying, “Throughout this harrowing experience, I’ve been inspired by all of you.” Ward shared, “I am privileged to have worked with all of you.”
Ward also showed vulnerability by saying he needed a script to rely on – not only to remember all of what he wanted to say, but also to have something to lean on, worried that he might not get through it. He also apologized in advance if he sounded matter of fact or robotic, explaining that it is how he copes with this type of difficult situation. This also gave others a small view into his inner world. In addition, he admitted to having many restless nights and expressed how sorry he was that everyone, “as Carta employees, Americans, and human beings,” had to go through this.
Work is dignity. Departing employees may have lost their work, but do not let them lose their dignity. Notification meetings should be done one-on-one, whenever possible, so each person can be spoken to privately and treated with care, allowing individual questions to be answered. Let the affected employees be the one to tell others that they will be leaving and give them enough time to say goodbye, as both Airbnb and Carta did. Remind them of their talents and strengths to help ground them as they navigate the rough waters ahead. Let them know they made an important contribution to the company. Chesky said, “One of the most important ways we can honor those who are leaving is for them to know that their contributions mattered, and that they will always be part of Airbnb’s story.”
There are many elements you can provide to help make this transition easier for departing employees, knowing they will have a difficult road ahead. Be as generous as you are financially able to in providing severance, career transition services and paying healthcare premiums. Consider accelerating vesting for the first year for newer employees who are leaving, or even rounding up to the next cliff for all departing employees if you are able. This provides not only potential for wealth creation, but also allows them to remain invested in the company’s success. If you don’t already have one, create an alumni directory (Chesky even posted a directory of departing employees on social media saying companies would be lucky to hire the people included — it has now been viewed by over 250,000 people).
Beyond creating a directory, use this as an opportunity to create a robust alumni community if you don’t already have one or jumpstart a dormant alumni group – one that can share new job opportunities, introductions and even plan virtual networking events. Both Airbnb and Carta have provided many of the above-mentioned elements of support.
Do not assume that if someone’s job was spared that they are feeling fine. Survivor’s guilt is real and may be exacerbated by ongoing anxiety that they might be next to be let go. Acknowledge and address these feelings – don’t skirt over them. Provide people with the forum to express what they are feeling, individually and as a team. Part of being compassionate is recognizing and creating space for someone else’s feelings, even if you don’t have these feelings yourself or can’t relate to them. In the months ahead, it will also be important to make sure people aren’t feeling overwhelmed as your organization tries to do more with less, so you may want to check in more regularly with your remaining team members.
Layoffs are hard for all parties involved, in different ways. They are, of course, hardest for departing employees facing an uncertain future and livelihood. If you are conducting layoffs, you can help make it a less painful process by showing compassion and employing the elements above. In doing so, you will not only create valuable goodwill, allowing departing employees to look back on their time at your organization more fondly, but you’ll also show the broader business community and future talent prospects that you have a heart. And in doing so, you will ultimately plant the seeds for your organization’s long-term success.