Downsize with dignity

 

 

Illustration by Dave Cutler

W hen one Chicago-area Rotarian learned recently that he was losing his job at a media and marketing company, the notification was terse. All he learned was that the cut was happening for business reasons. “It was just, ‘You’re done. Goodbye,’” he recalls.

He was left feeling shocked and betrayed. “The real impression was that they just didn’t care about how I felt about it, how I was treated, or what my feelings might be as an employee or a human.”

In some situations, layoffs are a painful but necessary step for a company. When business owners and managers handle those layoffs poorly, they intensify the distress of both the pink-slipped employees and their co-workers. Layoffs are seldom going to be beneficial to all concerned, but if your company must let employees go, you can do it in a way that passes The Four-Way Test.

IS IT THE TRUTH? Honestly explain the financial circumstances behind the downsizing to the people you’re letting go, and have truthful discussions with your remaining workforce too. Robert J. Bies, a professor of management at Georgetown University’s McDonough School of Business, says there are three critical questions that “survivors” will want you to address: Why are we having these layoffs? How are they going to affect me? and Will there be a happy ending? Respond realistically. “Never say there’s going to be no more layoffs, because you can never guarantee that,” Bies says. “It turns out people can handle the truth. What they can’t handle are lies and misrepresentations.”

After Laura Bertolli, president and CEO of Bertolli’s Auto Body in San Rafael, Calif., had to let her shop manager go to reduce expenses, she spoke with the rest of the staff. “I was very worried about morale,” says Bertolli, a member of the Rotary Club of San Rafael. She explained why the move was necessary and answered her employees’ questions, which ranged from concern about the shop manager to what the change meant for them.

Though they were surprised by the layoff, her staff became re-energized after Bertolli increased the hours she spent at the shop. “They saw my commitment to making [the business] successful,” she says.

IS IT FAIR TO ALL CONCERNED? Many company leaders don’t want to warn staff that cutbacks may be ahead, perhaps fearing that employees will quit. “Generally, that’s not what happens,” says Kate Nelson, a partner with Change Guides in Cincinnati, which offers consulting and training in organizational change. “People usually appreciate being given the notice. They feel like they’re being treated fairly, so they treat the organization fairly back.”

You can also demonstrate fairness by letting laid-off employees stick around for a time, if possible, after receiving the bad news. Forcing people to leave quickly “doesn’t allow them to wrap up projects, to reach out to customers, to allow for transition,” says Leila Bulling Towne, a San Francisco-based executive coach. “It doesn’t allow me to say goodbye to people.”

WILL IT BUILD GOODWILL AND BETTER FRIENDSHIPS? Don’t turn an uncomfortable situation into a cold-hearted one. In April, Chuck Morris, a member of the Rotary Club of Knoxville, Tenn., reduced the staff of his marketing firm, Morris Creative Group, from nine to five. He handled the layoffs in person, and in doing so, he became emotional. “I felt like I had failed them, and I also knew what they were going to be facing out there,” he says.

Though letting his emotions show was not what he’d intended – he had planned to come across as comforting and strong – Morris sensed that his employees appreciated the level of authenticity. “If I had appeared to be really composed and, ‘Well, just business, guys,’ that wouldn’t have been consistent with who they knew me to be,” he says.

Even a few words of appreciation can help soften the blow. One Rotarian in Connecticut was let go from a small software company in June without any acknowledgement of his years of work. “A note of thanks costs nothing,” says the former sales manager, and its absence “shows a complete disregard for employees and their value and their contributions.”

WILL IT BE BENEFICIAL TO ALL CONCERNED? When layoffs are unavoidable, there are ways to make them less painful. Bertolli gave a severance package to her departing employee, who had been with the company for nearly eight years. She also wrote a two-page letter of recommendation. “It was the way I would want to be treated,” she says.

Small businesses that can’t afford to pay severance may be able to offer other resources. Perhaps you can provide the employee with temporary office space or speak with those in your network who may be hiring. Such support “helps the victims out and sends a powerful signal to the survivors that you care,” Bies says.

Rotarian Herbert J. Taylor, who wrote The Four-Way Test in 1932, credited it with turning around the fortunes of the Club Aluminum Products Company, where he served as president. When employers are truthful and fair, and strive to build goodwill and benefit everyone concerned, they are “almost certain to do the right thing,” in Taylor’s words.

“In a layoff that’s handled correctly, at the end of the process, people who have been laid off as well as all the people who are left behind still can feel good about the organization,” Nelson says. “They can feel like people have been treated fairly and with respect and dignity.”

Mindy Charski is a Dallas-based freelance writer specializing in business.