With the Canadian economy continuing to deteriorate, IT companies are beginning to realize that cutbacks may be necessary for survival and competitiveness.
But at crunch time, delivering the dreaded message to an employee that he or she has been laid off can be a daunting and very distasteful task.
And if improperly done, it can also negatively affect a company’s reputation, morale and stakeholder trust – putting the organization in a worse-off place than it was to begin with.
Terminate employees with dignity, or your actions will come back to haunt you, cautions Richard Bayer, CEO of the Five O’Clock Club, a New York-based outplacement and career coaching organization for professionals and executives.
He says if the public presumes your organization treats individuals poorly, your company’s reputation could be damaged, scaring stockholders and deterring the most qualified future employees.
Existing employee morale could also be diminished, leading to poor productivity or high turnover. For these reasons, managers need to downsize with dignity, Bayer said.
Letting people go in a gentle manner can set terminated employees up for success, keep remaining staff calm, and maintain a positive environment in the community.
“To attract the best and brightest, companies must learn to terminate employees with dignity, now when things are bad, and continue those practices in better times,” Bayer said. “The same care that is taken when hiring should be exercised when letting someone go.”
Bayer provides seven tips for kinder, gentler layoffs, which benefit the company and the ex-employee.
1. Put your policy in writing
Every organization should be prepared for the possibility of layoffs and have their termination policy in writing, he says.
Companies need to have a formula for determining who should be let go and why, and employees should understand this logic as well.
This decision should not be left up to lower-level managers, who may frequently change. Instead it should be a company-wide policy.
Managers, Bayer said, should bring this document to the termination meeting. They should know it well and be able to answer questions about it during the meeting, and also afterwards – responding to queries by other staff.
Other experts emphasize the need for termination policies and procedures to be as “objective” as possible.
“Use hard numbers, such as number of sales made or cases closed,” said Aleicia Latimer, associate general counsel and human-resources services manager, at Fort Lauderdale, Fla.-based AlphaStaff Group Inc. an HR outsourcing firm catering to mid-market businesses.
She said after the layoffs, managers should also be able to explain this policy to other employees who may be nervous about their own fate. “You don’t want people quitting because they are worried, so you need to have these conversations and explain your plan for moving forward.”
2. Remember to be humane
While the decision to terminate an employee during a rough economy is usually based purely on economics, managers should consider the feelings of the employee, who may feel like their world is collapsing, Bayer said.
“A person is not always let go because they did something wrong, it can be for a lot of reasons and their dignity should be kept intact.”
The soft skills of managers or HR officers could be improved by asking that they attend seminars or discussions on the topic and ensuring they are handling the termination meetings in sensitively.
“Organizations have long trained managers to improve their hiring and interviewing skills. The same degree of training should be given to managers for the hard task of letting people go.”
3. Write and follow a positive script
When letting an individual go, managers should mention positive elements of the employee and mention positive ways they contributed to the company. Creating a loose script with kind words you can mention about the individual is always helpful.
“Kindness can really help a person move forward,” Bayer said. “In a downsizing or merger, it is easier to assure people that this is a no-fault situation, but even here self-esteem can take a beating, and positive scripts are essential.”
It can also have positive benefits for the company.
One of the biggest reasons individuals had for deciding to sue their former employer was the way they were treated at the termination meeting, Bayer said, not the amount of money offered in the severance package.
4. Be honest
Latimer said terminated employees deserve to hear the truth about why they are being let go and employers should not beat around the bush.
Even if the decision is purely economics-based, there are reasons for choosing one employee over the other and HR officers should be able to pinpoint this reason.
Latimer said good documentation is the key here. “Many managers have abandoned performance evaluations, but these are important because at least you have them for back up if you need to refer to it during a termination meeting.”
Bayer said managers should come to the meeting prepared to provide this information and it should coincide with the company’s termination policy. A general rule is to be as open and honest as possible.
“People are more likely to feel empowered if they understand what’s going on.”
5. Prepare a severance package in advance
A severance package should be provided when possible, Bayer said. Latimer agrees: “it doesn’t always have to be huge, but you should be giving something.”
The business world is competitive and word of severance packages will get around. Ensuring employees are taken care of and receiving a fair amount is necessary.
This should include pay, insurance coverage and career coaching to assist the individual in their future endeavors, Bayer said. Most companies provide only cash, but more assistance can definitely be given.
Details of the severance package should be prepared in advance and brought to the termination meeting as well.
6. Keep security away
Avoiding “sudden death” discharges is critical to saving the dignity of the fired individual and for maintaining company morale, Bayer said.
While layoffs are often kept a secret until the termination meeting, the employee should not be expected to immediately leave the premises or be escorted away by security.
“We’ve all heard the horror stories where fired employees are escorted from their desks to the door by security,” Bayer said. “In these cases, the person is treated as a threat. The trusted employee has suddenly become a danger. This certainly creates the impression that the termination is a punishment, causing humiliation and resentment.”
Rather than embarrass the individual, employees should be given a decompression period to tie up loose ends, close up e-mail correspondence and vacate his or her desk.
7. Tell them you will provide a reference
When an individual is dismissed from their job, the biggest concern is whether or not they will receive a positive reference for their job hunt.
All employees will want a good reference and many organizations are reluctant to confirm what they will say out of fears of being sued.
“Agree on a story or explanation on why the layoff happened so you are both on the same page when a reference is requested,” says Bayer.
Both sides are going to want to move forward and settling this issue will assist in the employee’s new job search and improve the organization’s reputation.
“It is worth the effort to reinvent strategies on references and convey good news about people to prospective employers,” Bayer said. “Even those fired for poor performance deserve to have their good points preserved in the record.”
