More Layoffs Are Coming. This Is How CEOs Should Handle Them
Originally published at Forbes.com
Is there a best way to say “you’re fired”?
Unfortunately, 2023 was a year of notable mass layoffs, and 2024 is likely to have its share as well. This January alone, tens of thousands of workers have been laid off from dozens of technology companies, including household names like Alphabet, Amazon, Meta, Microsoft, and Salesforce. That’s the most since March 2023, when nearly 38,000 people in the industry were laid off.
And that’s just one sector of the economy. In finance, BlackRock recently cut hundreds of jobs, while Citigroup plans to cut tens of thousands by 2026. Then there’s Macy’s, which has laid off thousands of people amid various store shutdowns.
These are difficult times for impacted employees, but also CEOs. There is nothing harder for a CEO than to eliminate someone’s job. But every CEO (or manager headed toward the top job) will have to do it eventually. No one escapes a managerial career without having to lay off employees on numerous occasions.
The truth is that the sorts of massive workforce reductions on display now—where tens of thousands of jobs are at stake—will only really affect a tiny fraction of CEOs. Even for them, it may be required only once during their tenure.
Still, layoffs happen. Firings happen. CEOs may need to terminate certain individuals for poor performance. It can also happen where a job function is no longer needed or a skill set is obsolete. Similarly, a merger or acquisition may create two incumbents for a single job.
And so, how can a CEO handle the tough, emotional duty of eliminating a job? First, let’s separate the rules for mass public layoffs versus more individual, localized terminations and reorganizations.
For a mass layoff, here are the best practices:
Announce right away that it is coming, and when. The rumor mill already knows it's coming and that will keep the workforce anxious and unproductive until an announcement is made.
Execute it in a short period of time, with a clear set of dates—when it will start and when it will be over.
Stick to a uniform process for notifying the people affected and explaining the arrangements being made to help them transition.
Use a consistent set of policies for determining severance and related benefits, generally based on length of service or job grade level, so no one discovers later that they were treated differently than a similarly situated colleague.
Even outside of mass layoffs, these best practices often still apply. However, individual terminations and reorganizations come with their own set of rules.
Most managers will tell you that they often retained a low performer longer than they should have kept them. Companies generally know who is not pulling their weight because their managers and co-workers are the ones who tend to pick up the slack or clean up the mess. And when that low performer is ultimately let go, the reaction within the company often goes like this: “We wondered how long it was going to take the boss to do what we all know should have been done a long time ago.”
Ultimately, the first rule for the manager is to acknowledge that the company remains reluctant to fire people. But, as managers, our duty to our employees requires us to take on this task for both the benefit it brings and the standard it sets for those who work diligently.
If you’re the manager in charge, you should handle the firing yourself, but keep a third person in the room with you, so there is no ambiguity about what is said. And get to the point right away: “Jim, I have some bad news. Your employment is being terminated and I wanted you to hear that directly from me.”
For these more localized decisions, I like to see the best practices through an “A through F” lens:
Act: We already discussed inertia, or the reluctance to act and how it’s best to be decisive. Everyone is relieved when you act.
Brevity: The person will hear nothing after you say ”your employment is being terminated,” so stay with the headline. Don’t justify, elaborate, argue, or debate.
Certainty: Make it clear that the decision is not changeable and that the arrangement for their release is already signed and sealed. Make the process about moving forward.
Dignity: Never belittle or condescend. Never say something like: “You had to know this was coming.” In select cases, once a release has been signed in a way that commits the company to severance benefits, there may be a reason to describe it as an early retirement or a voluntary resignation on a mutual agreement basis to pursue other alternatives (i.e. lifestyle or location).
Empathy: Don’t sugarcoat or minimize the impact, but communicate to the individual that you understand it is not the result anyone wanted. Then, you can share that the company will help put arrangements in place to facilitate the transition.
Future: Avoid, deflect, and redirect the understandable desire to argue, justify, or negotiate. Since the decision has been made already, the message is how to look ahead to the future.
Once it is clear that the person won’t be disruptive, bitter, or litigious, you or a well-regarded outplacement firm can be helpful in identifying future options and assisting a former colleague in need. Just make sure that the person’s file shows compliance with the company’s policies for “notice of performance” issues before you start the process, using a qualified labor attorney to review and confirm the file.
No one wins if the person being terminated becomes part of litigation that inevitably goes public. Stick to the best practices and spare yourself any headaches later.