It’s obviously important to ensure that layoffs are conducted legally and that there are no ensuing court cases. It’s worth checking with a lawyer beforehand to make sure that all procedures and paperwork are in order. Mistakes can be expensive. A US company recently had to provide about US$1 million in back pay, after it had failed to comply with the Worker Adjustment and Retraining Act.
The act covers companies with over 100 employees and requires them to give 60 days advance notice if they are going to lay off more than 50 employees or over one third of their workforce.
It also makes good psychological sense to give your employees an advance warning. The prospect of layoffs may increase gossip and anxiety in the workplace, but people will have a chance to prepare emotionally and financially. If you announce layoffs, you will need to justify them in clear and logical terms. Your company needs to state a good business case for layoffs and stick consistently to it.
You also need to have clear business criteria for the people who will be laid off. Firing a disproportionately high percentage of minority employees could invite legal action for example.
If a number of managers are to carry out layoffs, they need to maintain a consistent position. There shouldn’t be any perception of possible favoritism or bias. One way of maintaining consistency is for employees to be addressed in a group, and for their questions to be dealt with publicly.
Clearly, most employers prefer to lay off poor performers first. But you need to have a process in place before firing for poor performance or disciplinary problems
Laying off people should be the last step in a review and counseling process, where your employees are given clear feedback on what you expect of them and how they are falling short. This will not only minimize the risk of litigation, but it will also give you the chance to rectify problems and possibly retain the employee.
Replacing an employee could cost you up to twice their annual salary, when all associated costs and disruptions are accounted for. So it can be much more economical to improve rather than fire poor performers.
However, decisiveness can also be a virtue. Instituting a probationary period for new employees can give you the chance to assess who is going to work out, and make firing less problematic from a legal perspective.
When the time comes to dismiss a worker, it’s important to minimize the emotional stress involved. For example, it’s better to arrange a meeting early in the week and early in the day, so that nobody is sitting around stewing and worrying.
A meeting should be set up in a place that is private. At the same time, it could be useful for you to have a witness present. And if your firm has a security officer, then it may be wise to keep them within earshot, as it’s never possible to be sure how people will react.
However, the days of firing employees and having them marched out of the building by an armed guard are mostly gone, as it’s unnecessarily brutal.
Meetings should be no longer than necessary. Although you should state a clear reason for a layoff, you should avoid debate. There’s no point in assigning blame. That would just be rubbing salt into the wound.
You should make it clear that the decision is final and irrevocable, have the proper paperwork at hand and make all details on issues such as severance pay clear.
Treating your employees with respect and courtesy is not only the decent thing to do – it can minimize the damage to your business.
Employees are likely to move on to other jobs, perhaps in the same industry, and they may talk about their former employer. So minimizing bitterness is in everybody’s interest.
Copyright 2001, RAN ONE Inc. All rights reserved. Reprinted with permission from www.ranone.com.