How to Lay Someone Off Due to a Business Financial Situation

Be compassionate when laying off an employee because of a business financial situation.

Few would argue that being laid off from a job is difficult. But many fail to realize just how difficult it can be to be the one laying an employee off. Business owners and managers often struggle with the decision and the process of laying off employees because of financial problems. Often, the employee has done nothing wrong that warrants his or her termination. Yet, because of internal fiscal issues at the company, letting an employee go becomes a necessary cost-cutting measure. Although nothing can alleviate this difficulty, there are some best practices you can employ when laying an employee off because of a business financial situation.

Instructions

1. Warn your staffers ahead of time that the company is likely to make cuts in the near future. If possible, provide them with a time range for when cuts will be made. Keeping the prospect of downsizing secret from your employees only serves to breed contempt, according to Robert Sutton, a Stanford professor of management science and an expert on laying off employees.

2. Deliver the bad news in private, in person and preferably on a Friday. Keeping the initial announcement of the lay off private is the respectful thing to do. You will have the opportunity to deliver the bad news to the rest of the staff at the beginning of the next work day. You also want to deliver the news in person so as to personalize the message. Finally, laying someone off on a Friday is standard industry practice because it allows the laid off employee a weekend to enjoy his free time rather than a freed-up workday to contemplate the loss of his job.

3. Provide the employee with a clear reason why he or she is being laid off. Explaining that you are laying off your employee for internal finance reasons will help create an understanding between you and the employee. This, in turn, can make the bad news a little bit easier to bear for the employee, since he or she will know the lay off was not because of poor performance or a workplace infraction.

4. Provide your employees with some sort of severance package that includes various options, such as extended health care or payment. According to Sutton, this empowers the employee and gives him or her more of a sense of control during the lay off process.

5. Inform the employee of their unemployment options. You may want to provide your employee with the contact information to the local unemployment office. If you wish, you may delegate this task to your human resources department, which should already be equipped with the proper knowledge and resources for the employee.

6. Be compassionate toward the employee. Use your power of empathy to put yourself in his or her shoes and be sensitive to his or her situation. Do not discuss how difficult the lay off is for you.

Tips & Warnings

• Do not call security to escort the employee out of the building unless you truly feel threatened. This shows a lack of compassion and will be visible to your other employees, some of whom may feel uneasy with your heavy-handed approach.

References

• Wired.com: How to Lay Someone Off
• Fast Company: Is there a good way for companies to lay off employees
• Building a Civilized Workplace and Surviving One That Isn't; Robert Sutton; Feb. 2007