The Right Way to Lay People Off | Hacker News Reader

The Right Way to Lay People Off

bhorowitz.com

A few other items I expected to see:

1. Help each laid off employee land on their feet, whatever that means for them. This must NOT be lip service, but a legitimate effort. Hire an outsourcing firm, provide resume/career counseling, provide reference letters, or find job opportunities with vendors, customers, or industry contacts.

2. Make a clean transition. Give laid off people an opportunity to share what they were working on and debrief others. Even though they are leaving, many people value the work they have done and want to know that it's in good hands. If you don't do this, you might as well be saying, "We can figure out what you were working on without you." Nothing else you say or do will offset the damage this will do.

3. Find a way whenever possible for people to keep contributing as contractors or part-time employees.

4. Find a way for people to keep their health insurance.

5. Offer severance whenever possible.

As uncomfortable as a layoff can be, it's also an opportunity to show how well you can do the tough stuff. People will be watching and remembering; count on it.

Well done. In my opinion, this is a much better list than the linked article.

A nicer list, but not rooted in reality - a benefit the list in the article has.

(1) Costs practically nothing; maybe 2x 1099 months if you wanted to bring in a recruiter to mechanize the process of landing people on their feet. The letter of reference should be automatic, as would reco's on LinkedIn pages.

(2) Is something every soundly-managed company already does.

(3) Is actually a favor that ex-FTE's would be doing for the company; converting FTE's to contractors is the basic idea behind all outsourcing, and is something the post actually alluded to.

(4) It's your call whether 10-15% of the FTE cost you're recovering in your RIF is well-invested by paying people's COBRA. You're doing the RIF to pull money back in. We're just haggling over the numbers now.

(5) Not offering severance is a pretty sure-fire way to get your best players to accept their earliest palatable job offer. Where is it industry standard not to offer severance?

I don't understand the logic of (5). If I'm the best player on a team, I wouldn't expect to be fired, so why should I care about the severance package?

The best player that stays knows that they won't get severance in they are fired, so there is no incentive to stay if it seems like layoffs are coming again (or if they just get an offer).

If you're the best player on the team, (and the team is one that just laid of several of your co-workers without severance), then I'd assume you know you're good enough to job working for people who aren't assholes?

You might think you're the best player on a team. Your teammates might think you're the best. Your manager might think you're the best too.

But to HR you are infinitely interchangeable with anyone else with the same job title, don't kid yourself otherwise.

And when you're laying off staff from a reasonably large company because its bankrupt, would you consider the expense of extending health care coverage, keeping them on as contractors or part time, supporting their future job search, or otherwise extending your finances to support the people you're getting rid of because you cannot afford them?

In the context of the company and the article, your list looks less like a nice thing to do, and more like a way to ruin the company.

A well-executed layoff is the triple lutz of entrepreneurship, and your company may be ruined if your execution is short of flawless. You're going to cut some people, but you're also going to lose even more people. Companies will try to cut "dead wood", but the people who leave afterwards will tend to be A-players; they're the ones with the most mobility.

Some of Ed's suggestions cost almost nothing; for instance, being ready with an immediate offer a strong letter of reference --- that's just planning.

Other things do cost money. But if you're bracing yourself in anticipation of losing A-players after a layoff, consider whether saving that one extra headcount in HR or Marcom is worth what you can buy in risk mitigation with the FTE cash they'd free up.

Great list of additions to the post.

I just wanted to add that the one mistake managers are most likely to make is not laying off your direct reports yourself. There is nothing more cowardly than handing off the task of severing a relationship with someone you have worked with for years to a random HR guy. I have been part of such a layoff and I lost all respect for the managers involved.

I don't know about your case, but in general it may be possible that some "random HR guy" restricts the managers from personally informing their employees, maybe to ensure that all employees are given the same information (and not given information HR doesn't want to reveal). Maybe it's to prevent one manager from letting his/her subordinates spread the word.

Too bad. A good manager knows when to buck HR.

I manage people now. I don't care if the general counsel of my company restricts me, if I have to lay off half my team (or even one person) that worked with/for me for years, I would find a way of explaining the situation, taking blame (where due), and making sure they know I would do everything I can to help them find another job.

In my case, the only contact all of us had with the manager was an email the previous night, asking us to come see him in his office. When we reached his office, he was no where to be found, instead an HR person directed us to a conference room and finished the formalities. The only time I saw the manager is when he scuttled past the conference room to his office and stayed locked in there till we left.

I was at a company that laid off a few dozen people on my team when things went south at the end of '08 (many more got the sack worldwide; I'm being intentionally vague on the company as it's irrelevant to the story). We were all remote employees so none of us saw anything; the only way I knew it was going on was the flood of "you safe?" messages I got over Skype. I figured something was about to happen, though; at 9pm the night before the layoffs, the CEO sent a mail calling a worldwide all-hands conference call for what would have been the day after the layoffs took place.

People's direct managers weren't the ones to make the calls to the unlucky employees, that came from their manager's manager, someone with whom we normally had no day to day interaction. It wasn't until the next day that we heard official word of what went on from company leadership.

During the all hands call we were told something along the lines of "we made some very deep cuts so that we shouldn't need to do this again." So it came as a surprise when one morning a few months later, I get half a dozen more "you ok?" messages. This time nobody heard a word from upper management, and radio silence from my super. Finally three days later she mailed to say that there have been layoffs and she herself was one of them.

It did a great job of inspiring confidence within the team. Out of the people who were left, quite a few jumped ship over the following couple months and joined a startup that looks poised to eat this company's lunch.

Moral of the story: don't make promises like "this isn't going to happen again" if you have no way to keep them. Communicate immediately, especially when people are geographically spread out -- the rumor mill actually runs a lot hotter when the "survivors" only have email and chat to keep in touch.

On the other hand, if you want to destroy morale and push your best employees to start polishing up their resumes, by all means follow the above recipe.

Your use of sarcasm made you difficult for me to read.

The biggest mistake is management thinking they can keep it a secret. It's never business-as-usual then it hits like a bolt of lightning. A project gets cancelled and a team has nothing to do, say. Or the nature of the work changes, suddenly it's about documenting everything and getting ready to hand it over. Things that have been long-planned are put on hold. Lots more meetings behind closed doors.

A manager's responsibility is to the company, not to his employees. If he can do the right thing for the company by keeping them in the dark as long as he can, he has no choice.

Actually, keeping an impending layoff a secret is possible. I was part of a sizable layoff at a medium-sized publicly traded company that was AFAIK a complete surprise to everyone below the director level. Certainly no-one else at my level, or even my immediate supervisor saw it coming. (To be fair the company had cut costs in other ways several months before due to the recession.)

FWIW the company was very professional about it, letting us work the rest of the week if we felt like it (not that I did as I started looking for a new job immediately), giving us access to an outsourcing firm, a reasonable severance package, and--most importantly for the US--paid health insurance for 6 months.

Given the financial necessity of reducing the company's headcount, IMO they did it just about as humanely as possible. But then again it's also good business as those who survived could plan their exits given the opportunity if they felt the company was being unfair, and those of us who were cut can get the word out.

a number of folks are suggesting that a variety of expensive things be done for laid off employees. certainly they are all very nice and thoughtful things to do for an ex-employee. but i am forced to wonder:

if i have to lay off $X employees in order to just stay afloat, then as a rule of thumb, what percentage of $X should i lay off on top of $X in order to free up the funds for these very nice things i'm doing for the laid off employees? certainly 1 additional employee must be the lower limit; what's the upper limit?

and, in a close knit team, would you rather 1) lose your job, but your buddy keeps his job or 2) you and your buddy lose your jobs, but you get a variety of nice things afterwards?

Budgets don't generally work like that. Layoffs count as a capital not an operational expense. You see this when big firms write down their earnings when they do big layoffs.

When your company is laying people off, you have to understand where your loyalties really lie.

Good point, but a minor correction: Layoffs are generally accounted for as "one-time charges," but technically they're not capital expenditures.

Two things I would have liked to have seen in layoffs I've been through:

1) Some understanding from management that these are "resources" or just $$ values you're cutting. These are people. People with families, bills, mortgages, and dreams. People who (like the article indicated) are still close friends of those who remain at the company. In most cases, people who've busted their ass for the company in the past.

2) Just once I'd fucking like to see at least 1 member of upper management affected by a layoff. They've got the biggest salaries, wouldn't you get the most "bang for the buck" by cutting a couple of them? But no, they're always immune. It's just the nameless faceless rabble that suffer for what are usually management mistakes to begin with.

Well, you haven't been looking hard enough. My father was the president of his division in a multinational company. Had roughly 250 employees reporting to him. They axed him and about 40% of the guys at his level world wide, but nobody below him. This lead to "head-less" divisions for the last 2 years (they just didn't replace the presidents) coasting along. Not sure what their game plan is long term.

A year after he was axed, sales were down significantly, and 15 people more people were laid off. A year after that, another 20 people were laid off.

Lockheed Martin is currently going through the same thing, 600 upper management positions in the last month.

Not to complain "managment are people too", since clearly you don't want to think about it, but he had been with the company 28 years with 3 ownership changes during that time, started as a salesman and made it to president. There was no performance problem, it was a financial calc. His boss tried to save him (2nd level down from CEO) but the CFO overruled.

He was also 60 at the time which probably contributed. Considering he was planning to retire at 62 it didnt make much sense, because he just walked out with all of his plans and didn't train a replacement. Tell me it wouldn't make more sense to just have a transition period for 2 years?

You know, I have a hard time thinking of any company that was saved and rebounded, by having an accountant steer the ship.

I'm sure your Dad is an awesome guy, and I'm sure that being axed was a difficult thing for him, but....

If he was the president of a division of a multinational company, I'm sure he had to have been making a healthy 6 figure salary, had a good retirement plan, some good severance pay, etc.

You've got to admit that clearly, getting axed (as difficult as it might have been) was much easier on him that it would be on a low level line worker making a middle five figure income?

You're right, it was easier than it would be for most people. But that has nothing to do with his salary (less than you'd think considering his title) or anything like that, or the ability to find a job (harder at the upper level and when you're older), but on his own decisions and being frugal.

1) My parents live in the same house they bought 34 years ago when he was a salesmen, so the 25 year mortgage was paid off years ago. Sure they've renovated since then but every time they thought about going bigger, my dad used to say "there is no way a house is worth this much, there aren't that many people who make this much money in this country". I used to think he was naive, but post housing bubble it makes a lot of sense.

2) The last time he had bought a car (new or used) was 1999. And it was a Ford SUV. He got laid off in 2008, it has 130k miles at the time. They recently replaced it, with a 2010 version of the same car they plan to have for another 10 years, but he has since founded a new company and has income and investors.

Spending money wisely matters a lot more than what you actually make. At my company now a pile of the factory guys drive cars made in the last 3 years (probably leased), while in my engineering group the "newest" of the cars owned by the 6 of us is a 2006 Mazda 3. We all make at least twice the guys in the factory. I'll be digging around under my car to replace an oxygen sensor this weekend, even though I could afford to be buying a new version my car I'd rather put the money in the bank.

Why? Because I want at least 12 months of living expenses in the bank before I start buying expensive stuff, "just in case!". Wonder where I learned that from? Anybody can do this stuff, you just have to live within your means. And that is basically putting a lot of your net pay in the bank for a rainy day.

Years ago, I was laid off without any notice or severance pay from a small software company. To add insult to injury, my final paycheck was held up for months.

In the years since, I've had scores of opportunities to refer business to them, and in every case I've steered customers to their competitors. No one is happy about getting laid off, but if you give fair notice and severance, you can at least avoid a situation where you've burned ex-employees so badly that they'll actually go out of their way to cost you sales.

In the end, two of my co-workers from that company (also laid off in the same unceremonious fashion) started a competitive company that eventually put my former employer out of business.

Managers should keep in mind, BEFORE layoffs become necessary, that laid-off workers, understandably PO'd, sometimes hit back by suing the former employer for discrimination (age, race, ethnicity, nationality, religion), or for sexual harassment. The charge might be completely bogus, but fighting it can still be expensive. The employer may have to demonstrate, usually with contemporaneous written evidence (job evals, etc.), that there were legitimate reasons for the layoff or other action. See generally http://www.legalworkplace.com/layoffs_result_in_more_discrim....

To illustrate the point: A client of mine once had to do layoffs. One of the laid-off employees filed a charge with the EEOC. He belonged to Religion X. He claimed he was discriminated against because of it. In response, we pointed out who else belonged to Religion X: the guy's manager's manager; his VP; the COO; the CEO; a majority of the board members; etc. That was the end of that charge, but it still took some management time and legal fees to respond.

"If you hired me and I busted my ass working for you, I expect you to have the courage to lay me off yourself."

Overall a good article, but this line struck me as particularly poignant. Unfortunately, in some situations, a manager is not allowed to handle his own layoffs. :\

Emphasizing that the cuts are unrelated to individual performance is very important. It always bothers me when someone excuses a layoff as an opportunity to sweep out the deadwood. That's just rationalization. The exigencies of a layoff make it impossible to focus cuts on the lowest performers. Cuts have to be decided quickly, and usually focus on the least profitable employees. Take the time to figure out who is the deadwood and everyone else's productivity and commitment will be destroyed by uncertainty.

The layoffs themselves may not be caused by individual performance, but from the employees perspective the two may not be unrelated. At some point the manager has to justify the question "Why Person A over Person B?"...and that's when individual performance is likely to enter the equation.

Because Person A is paid more than B, is older, lacks a critical skill or difficult-to-replace experience, has less seniority, has distracting family obligations where B is single, or maybe A just doesn't have as warm a personal relationship with the manager as Person B. There are plenty of bad reasons A might get the boot.

And that's assuming the manager has any discretion. Often it's whole departments that get cut, for purely financial reasons.

Considering how many posts there are on HN about how difficult it is to measure performance, I'd be skeptical just how well the average company can rank performance, especially amidst the stress and time constraints of a large layoff.

It doesn't work like that. The CEO decides, we need to lay some people off. The CFO decides how many. The senior management work out they need so many of this job title, so many of that job title afterwards. Then HR makes a list based on their #1 priority: not getting sued. Which means that if all your COBOL developers happen to be $minority, and your company is getting out of COBOL, then most of them are probably safe.

Basically the people who make the decisions are several layers removed from anyone who would have day-to-day knowledge of you or your work. It really is nothing personal.

I'm surprised that he says to make the announcement before telling the laid-off employees one-on-one. When I was at GE and they had layoffs, the individuals were told first, and then there was an all-employee meeting to announce the layoffs. I thought that worked out fine. That way, the people who are in the meeting don't have to freak out and worry about being laid off. Does anyone here have experience either way?

> The individuals were told first, and then there was an all-employee meeting to announce the layoffs.

That was my experience. I guess that's what they learn in business school. ;)

Didn't rumor get out as soon as the one-on-one meetings happened? Someone was bound to notice all those meetings, or maybe some employees were laid off before others and got the chance to spread the word?

There weren't any rumors that I was aware of, but I also wasn't one of those guys who spent a lot of time gossiping about that kind of thing. I think it happened extremely fast with the one-on-one meetings in the morning and the group meeting right before lunch. There wasn't much time for rumors to spread.

also, do not give a million dollar bonus to executives in the same year.

Before I got laid off, someone in my friend circle asked me a question, would you quit your job if your employer gave you a 2 1/2 month pay just for quitting? I thought about it for a day and it sounded like a great idea. That's almost same amount YC gives you to start a start-up.

When My manager along with HR announced the news to me, there was a broad smile on my face to their confusion. It did not make me feel bad at all.

I had a similar experience, only I was able to get early word that layoffs were coming and so I "volunteered" to "take the bullet" so that someone else could avoid being laid off. I'd been wanting to leave anyway, but had golden handcuffs keeping me there.

Used the money to start a company.

This completely misses the human equation. What people will remember is how much notice they were given, and whether they were provided with some kind of reasonable severance. If people work their hearts out for you and lay them off without notice, that's just bad business.

At the same time, if I know layoffs are coming and I'm likely to get cut, guess how much work I'll be putting into the company.

It doesn't matter how likely you actually are to get cut. Turns out everyone feels their job is at risk until they know it isn't, so productivity falls across the board.

If you consider you employee mindless drones who do not notice or care that their colleagues have been laid off on the spot without any advance notice or severance, then, by all means, lay off left and right as much as you please.

His point on notice was that waiting enough time to give notice was damaging. When you decide you need to amputate, you don't let the problem get any worse. An announcement that there may be layoffs would be good, but he stresses that layoffs should happen as soon as humanly possible after that decision is reached.

Please do cut off my arm before the gangrene spreads.

Understood, but I fundamentally disagree with it. Your employees aren't diseased limbs - they're people, just like you, who have families and mortgages and obligations of their own. There's no acknowledgment of that at all in his article.

I have a friend who worked at a fairly large, private company. He was layed off but given more than three months notice. It sounded like the best possible way to be layed off.

Every time that an employee is shocked that s/he is being layed off, it is a failure of management. All of your employees MUST know where they stand in the organisation. And when the layoffs come, and eventually they will, where will you be on that list. But, this should also not be used as a trump card all the time. Otherwise good people will make sure they leave than work under this constant threat.

I don't think it is a good idea to tell the company at large before the individuals who are to be fired are told - that just seem bad.

Also, you should be prepared to answer the question "why did you choose to lay me of and not $otherPerson?"

One of the things I think is most important is that employees should not be utterly surprised if layoffs occur. They should be well informed, and invested enough in the company to be aware that the company is having problems. Senior management should be communicating company performance long before layoffs are needed.

I've now seen several examples in small companies where the CEO has held back the bad news until layoffs were required, and the morale of the remaining employees was much worse than it should have been because of it.

It would be nice to differentiate between "laying off" and "firing".

I think there is no right way to lay off people.

are all the ways equally bad, though?

Reading advice from a guy that quotes Kayne West just can't be healthy.

And who also mis-spells "Kayne" while attributing him. :-P

...is not to tell them via sending them this article!

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