If conducting a layoff makes you feel miserable and awkward, congratulations. You’re normal. But you’re probably going to be more miserable and awkward if you make these mistakes.
These “don’ts” come from Margaret Heffernan, who’s run five companies and written three books on management:
Don’t do it on short notice. That means “plan ahead.” In most instances, an owner or manager who has to lay off people in a hurry probably hasn’t been paying attention to the numbers, such as cash flow. You should know when the time is coming before it comes.
Don’t do it unilaterally. Yes, you’re the boss, but you should discuss the problem. Once you see those warning signs, work with your management people to establish some milestones that will indicate whether trends are improving or getting worse. Decide which of these will be the triggers for a layoff. Share information. Once you’ve established milestones that track short-term performance, share this with everyone in the business. Let them know that if they hit targets, cost-cutting may be averted, but if they don’t, it won’t. At this stage, it is perfectly feasible that some individuals may decide they want to leave. That’s fine. What you’ve done is show your employees respect by giving them choices.
Don’t ignore alternatives. If you have to reduce costs, it doesn’t automatically mean cutting jobs. You might be able to partner with competitors or vendors. You could renegotiate key cost-drivers, move premises or delay new projects. Make cutting people your last option, not your first one.