Layoffs

Monday's Wall Street Journal had a column by Carol Hymowitz about layoffs and some of the mistakes that managers make when handling them ("Though Now Routine, Bosses Still Stumble During Layoff Process", p. B1). According to Hymowitz, these mistakes include waiting until the last possible moment to notify those being cut, failing to provide necessary information about severance benefits, blaming those laid off for their own job losses, and failing to appreciate the impact of layoffs on those who are not cut. An interesting passage toward the end of the column reads

An equally big challenge for managers at companies contemplating layoffs is figuring out the actual benefits. Numerous studies by business professors and management consultants conclude that layoffs, while perhaps boosting the bottom line momentarily, rarely yield companies sustainable long-term savings.

Staff reductions cost companies valuable talent that frequently must be replaced at an even higher cost at a later date. They also hurt morale and productivity among survivors.

I'm not exactly sure how layoffs should be handled, but I've been through enough of them to have a pretty good idea of how they should not be handled. Here are Soletrain's Infallible Rules For What Not To Do During Layoffs.

1. Do not overestimate how much money you will save by laying people off, and do not underestimate the damage that laying people off will do to your organization. This restates and expands upon the portion of the column quoted above. Managers like to tell themselves that there are plenty of people in their organizations like Milton from Office Space who do very little except use their red Swingline staplers. Alas, this is usually not the case; and in any event, managers often do a poor job of identifying the Milton-like characters. The Miltons often stay after layoffs, while the anti-Miltons get axed. This means that layoffs will usually cut people who actually do work essential or at least very valuable for the organization (often times in ways that are poorly understood by management before the axe falls), and getting rid of them carries costs.
2. Do not lie, and do not pretend to know something that you don't. Lying during layoffs often takes the form of claiming that no more layoffs will happen. Managers can't really promise this, and employees know it. Making statements like this destroys whatever credibility managers might have left after layoffs. It can also work the other way: insisting that no more layoffs are currently planned when it's perfectly obvious that there will be more is also a bad idea, even if your claim is technically correct because upper management has not told you about their future plans yet.
   
3. Do not euphemize. People are losing their jobs. Do not sugar coat it or try to make it sound better by dancing around what actually happened. In the wake of a round of layoffs at my company in 2003, the president of the unit that I work in sent out an e-mail that was intended to announce what had been done. It did not. It was so couched in euphemism that one would have had to have known what happened to understand what it was announcing. Never once did it say that people had lost their jobs. Harvard Business School ought to do a case about it as a warning to future managers about the dangers of incompetent communication.
4. Do not obfuscate. At the very least, you ought to tell both those laid off and those remaining how many people are being let go, specifically what the layoffs are supposed to accomplish, how management will measure whether the layoffs actually accomplished their purpose, and what, in detail, the severance benefits being offered those laid off are.
5. Do not denigrate those who have been laid off. You'd think that this would be obvious, but you would be wrong. The same division president who sent out the worthless e-mail that I mentioned above later visited our facility. We should actually feel good about the layoffs, he said, because those of us who were left had obviously adapted to the changing global economy, while those who had been laid off obviously had not. I'm not kidding. He actually said this. He's one of only two people that I have met professionally who I think deserves to have bad things happen to him. Fortunately, he was forced out of the company earlier this year, although his despicable performance during layoffs probably had no role in his demise.