Running Your Business

Small-Business Layoffs: Communicating with Compassion

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Posted by January 20, 2017

In a Fortune 100 company, the HR department can sufficiently insulate itself so that no person is ever responsible for laying off a friend or close co-worker. When it comes to small-business layoffs, no matter how well you’ve structured the business, everyone knows everyone and it’s impossible not to form friendships—so, small-business layoffs can involve a friend delivering the difficult news to another friend. Is there a way to make this an easy processs? No, and there should not be. Layoffs should always come after a serious, well-thought-out but difficult decision. However, there is a way to make it easier.

Preparing Before the Layoffs

When a business determines that it can’t support the number of people who work there, or that a path needs to change—for instance, a product line needs to be dropped—someone loses her job. Before that person is notified, HR needs to work closely with the decision maker to ensure that this is the best decision for the business. Sometimes managers see a financial statement, freak out and make a rash decision that can have unintended consequences. It’s best to ensure this decision is made carefully, and that the consequences are thoroughly examined.

If a product line is changing, then you need to figure out what will replace it. If you are only eliminating a position, plan how that position’s tasks will be handled. Will they be divided up? Will they cease? Who will tell the clients that there has been a change? Will those asked to take on more work be compensated? Figure all these things out beforehand.

Lay Off With Compassion

In the United States, severance and notification are not required by law, unless you have a contract or there are extenuating circumstances involving the closing of a facility or a widescale layoff. However, good companies realize that being laid off can be financially and emotionally devastating to the employee. Therefore, companies should do everything possible to smooth the transition.

  • Offer severance. No, you don’t have to. But yes, you should. Severance, at a minimum, should be two weeks of pay for every year of service, with a minimum of three months pay. Why? Because this person gave up the opportunity to do something else in favor of your business. Moreover, because they will have to find a new job and will need money to tide things over until they can find new employment. More importantly, it tells the employee that you care about her and her future. Also, it lets the other employees know that you care about them as well. Severance smooths the transition for everyone—including those who stay behind.
  • Never oppose unemployment. Yes, your unemployment taxes are based on how many of your former employees receive unemployment. No, that does not mean you should oppose unemployment. The layoff was a business decision, not a result of the person’s bad behavior. Trying to make the layoff look like a misbehavior issue or a resignation will increase the chances that the person will sue. Any lawsuit is bad for morale and your pocketbook.
  • Provide a good reference. When you lay someone off, she faces a tough road finding a new job. Don’t make it harder by refusing to provide a reference, or only stating dates of service. Help the person move along.

Be Honest With the Remaining Staff

When your remaining staff sees that Jane received severance, and had help finding a new job, they’ll be more likely to accept it as a business decision than they would if Jane was kicked to the curb with no help. This will help maintain morale.

Tell the staff what happened and why, and whether or not more layoffs are to be expected. Keeping employees in the dark makes their imaginations run wild. They will dream up worse things than reality. Say straight out, “We had a terrible fourth quarter and we can no longer afford to have two people in marketing, so we had to let Jane go. If anyone has any leads for her job search, please let her know. We have no additional layoffs planned and think we can move forward from this. We wish Jane the best of luck. She was a valued member of our team.”

Dealing With Your Own Emotions

Being laid off is awful. Delivering the bad news—especially if done several times within a short time span—can be emotionally draining. Acknowledge that. Recognize you are not a horrible person for letting someone go. This is a business decision. Business happens. Take time to process your own feelings. While it’s not your responsibility to find the employee a new job, providing support, networking opportunities and a good (accurate) reference can help the person move forward and help you feel better as well about being the bearer of bad news.

Layoffs in a small business are never easy, but they are sometimes necessary for the overall health of the business and must be done. It’s important that you do it properly to ensure that your own morale and that of your employees—both those that remain and those laid off—remain high during this tough time.

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