You depend on your team to make your business profitable, and they depend on your business to make a living. That’s why it’s incredibly unfortunate when you have to let an employee go for financial reasons.
“Reducing staff is perhaps the most difficult employment decision a manager makes, especially when they have no other options and it becomes necessary to eliminate a role that has nothing to do with an individual, or his or her performance,” says Susan Cucuzza, founder of Live Forward LLC, a professional coaching and development firm based in Cleveland. It can be particularly wrenching in a small business, where employees are often treated like family.
Unfortunately having to trim staff is sometimes an unavoidable reality and should be handled delicately. Here’s a guide on how to best facilitate the process.
1. Initiate the conversation. To downplay attention from other workers, Cucuzza says you should ask the employee into your office through whichever channel you normally use—phone, email or walking up to their desk.
2. Watch your language. Your employee might already be suspicious and feel tense, so it’s important not to beat around the bush. Cucuzza says to first briefly explain the state of the business to provide context—i.e. “As you know, we have been challenged to look closely at our costs.” Or, “The economy has brought us financial challenges to work through, including reducing costs in a number of areas.” Then go straight into the reason for the meeting—i.e. “While we have tried to reduce budgets and costs in every possible way, we unfortunately need to reduce our headcount. Your position is being eliminated.”
3. Provide sympathetic support. Cucuzza highly recommends having a box of Kleenex in the room because an emotional reaction is common. Explain that it was a very difficult decision to make and that it was not performance-based—the position is going away. If you want to, in an effort to show support, offer to serve as a reference for them during their job search.
4. Go over the logistics. Though it’s an emotional meeting, it’s important to go over the procedural details. Here’s what Cucuzza says to remember to discuss:
- The employee’s last day
- Method of final paycheck (which might include vacation/time off payout)
- Severance package terms
- Logistics and timing of packing up their belongings
- Collection of company property (i.e. laptop, employee ID, office keys, company credit card, etc.)
5. Have a discussion with the rest of your staff. The employee—or employees—being let go isn’t the only who feels the tension. Chances are the rest of your employees are extremely nervous after seeing one of their own being let go. Cucuzza recommends having a staff meeting as soon as possible to explain the business situation that led to the layoff. If it is a one-time event, Cucuzza says to tell the team that there’s no plan to reduce more staff, but the company must continue to monitor its financial situation. Then, she recommends opening up the floor for them to ask questions, vent or express what they feel.
“Answer as many questions as you can that do not violate the laid-off employee’s privacy or reveal confidential information,” she says. “The bottom line is that you want to be as open and transparent as possible.”