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Schubart: How to manage lay-offs

02/11/09 7:55AM By Bill Schubart
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(HOST) Commentator Bill Schubart has co-founded, grown and down-sized two companies in his life as an entrepreneur. He has learned much about people from the difficult experience.

(SCHUBART) A friend was just laid off - badly, I must add. It's not that her employer did not have to lay her off. That wasn't the question. The "badly" part is how it was done.

There is no right or wrong when it comes to the need to reduce a workforce. There is, however, a right and a wrong way to do it.  I've done it, and I've not always gotten it right, but I've tried to learn from each experience.

Work force reduction can be less traumatic in an open workplace culture where the company's performance is shared routinely with employees - not detailed financial data, but trend indicators of the company's performance. In an adversarial workplace culture where information is jealously guarded, people often assume the worst or wonder, "What are they hiding?"

What's to hide anyway? Don't for a minute assume employees don't know what is going on within a company. When a parent tries to hide their spouse's alcoholism from the children, it only sets off a crazy-making sense of unreality. It's better simply to tell the truth. When one is faced with reducing a workforce, candor won't lessen the stress or personal pain, but employees will at least understand the reason for the lay-off.

Most important: An individual, often with a family, is losing his or her job. This is not the time to use email, the phone, a pink slip or a surrogate. It's a time for compassion. Ideally the CEO, or a division head, or both, sits down personally with each person being laid off and explains what is happening and why, acknowledges their distress and apologizes for the need to eliminate the position. He or she must take the time to listen to the pained, angry, or sympathetic response, so that the person knows they're speaking with a human being. A compassionate ear can ease a difficult circumstance. It's also in the best interests of the company. Leaders should be held accountable by their boards for doing it properly.

We teach by example. The remaining workforce will watch how layoffs are communicated and managed. This will say more to them than any personnel memos, employee handbooks or posted mission statements.

A 60-day notice of a forthcoming layoff gives people the opportunity and dignity to seek new employment while they're still employed. There's little risk to the company, and key employees needed for the short term can be offered retention bonuses.

Marching workers to the exit, leaving their personal items to be shipped later, is an unnecessary humiliation unless the employee presents a risk to the company or former colleagues. People who have worked there for a long time and been trusted in the past ought to be trusted to take time to say goodbye and receive the sympathy of colleagues.

Our employees will treat our customers in the manner in which we treat them. This is perhaps the most practical reason to behave as a human being when managing lay-offs.
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