Letting People Go – the Do’s and Dont’s
In tough economic conditions, every business goes through a review of operations and for many of them, they will have to let some people go. I have recently gone through this with my new business and there are some salient lessons that can be learned in downsizing.
A month ago i decided that we needed to let 3 people go from our Arts Hub business. Now i made this decision because in tough times, i needed to rebalance the business and i wanted to move people from non-revenue generating roles to revenue generating role (sales) and the people i had were not sales people. The approach we took was to discuss the change with the 3 people concerned and to give them 2 weeks notice and then to give the an additional 2 weeks pay. They were not long time employees (around a year) but i thought they deserved a little extra. We also asked if they would like to leave immediately or if they would like to work out the time. They all decided they wanted to work out the time.
However, not everything went smoothly. One of the employees decided that the reason the changes were being made was because we were closing down part of the business and therefore proceeded to inform the customers that we were doing this. Unfortunately this was not true and he didnt follow the established procedure of getting sign off before sending out communications.
Once we found out what he had been doing, we immediately let him go and patched up he misunderstanding with the affected customers.
So what did i learn?
- Once you have made a decision, move fast. There is no reason to delay the inevitable.
- Have an open discussion with the affected employees – there should be no secrets and most people are understanding when you outline what is happening
- When letting people go, make sure that you look after them to the best of you ability – either pay them a little extra or help them find a new role through outplacement services – they are people and they deserve to be treated with respect
- Once you have informed someone of the changes, you should probably have them leave immediately.
- If you choose to keep people around for a period of time – watch them like a hawk.
- Once they leave, make sure that you review their emails to see what has happened and ensure that they have no further access to the business
- FInally – treat people with respect!
Letting people go is hard … but if you have to do it, do it right!
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I found this e-mail from Jason Calacanis to TechCrunch very useful as well:
How To Handle Layoffs
http://www.techcrunch.com/2008/10/22/email-from-jason-calacanis-how-to-handle-layoffs/
Especially those parts in addition to your recommendations:
1. Don’t spread layoffs over multiple rounds: This is a horrible idea because it creates massive fear and uncertainty inside of your organization. If you’re going to do layoffs, do them once, do them quickly, and explain to people that you’re doing just that.
2. Don’t lay people off one at a time, do it as a group. When I did layoffs at Silicon Alley Reporter the first time, I brought people in one at a time thinking it would be more humane. I thought I’d give folks more one-on-one time. The result was that folks were waiting at their desks and talking to people on IM the whole time waiting for their call to come into my office.
6. Don’t drag it out: It’s better to do these type of things at the end of the day, and if folks are done with their questions, let folks leave. Folks have families and a lot of issues to deal with, and there is no need to keep them around for the entire day or for a couple of more days. The folks who are left can clean up the loose ends.
7. Get everyone focused again: After the layoffs, you have to make sure everyone understands what the goals are–even if they haven’t changed–and get folks ready to kill it again.
Treat people with respect is absolutely the first rule!! Today I heard a friend had been let go from an hair styling apprenticeship. She walked in and was told, “We have good news and bad news. Good news is, we found a new apprentice. Bad news is, we don’t need you anymore.” Unbelievable.