Laying Off Employees

Laying off employees is never pleasant. Most entrepreneurs hope they never have to conduct layoffs but occasionally it's necessary. If you find yourself needing to layoff employees, make sure you do it right.

One of the most devastating decisions you may have to make as a small business owner is the decision to layoff employees. No matter how you dress it up, this decision will have significant financial and emotional consequences for everyone involved.

Should you be forced to go down this road, your goal is to design and implement a process that minimizes the impact on the employees who are being laid off, as well as those who will remain with your company.

To do this, you will need to carefully follow a well-thought out plan.

Step 1: Be prepared

The right time to prepare the materials and information you will need for the layoff is before the layoff is announced to your employees. This means preparing the official notification letters, severance package details and documents, and job placement service arrangements ahead of time.

The upside of advance preparation is that your employees will have the information they need to take care of themselves and their families as soon as possible. It also conveys to your staff that you have carefully considered the consequences of the layoffs, and are doing everything in your power to take care of your employees.

Step 2: Call a meeting

Delivering the news to your employees is not a pleasant experience. However, you’re the boss, and it is your responsibility to inform your employees about the layoffs firsthand. Do not delegate this responsibility to an underling! If you do, you will lose the trust of your remaining employees and your business will suffer the consequences.

The key to informing your employees about layoffs is to prepare what you are going to say in advance. Help your employees understand the rationale behind the decision. As much as possible, try to explain what they can expect going forward, including whether or not the laid off employees may be rehired at a future date.

Your employees will react in different ways. Some will be angry. Others may be sad. In the worse case scenario, some may even be tempted to react violently. Be prepared to handle any and all of these reactions. Reassure them that you will do whatever is necessary to help them recover from the loss of their job.

Step 3: Take care of yourself

Many employers neglect to consider the impact layoffs will have on them personally. The fact is that you cannot avoid being affected by layoffs. After all, these are faithful employees and even friends who are losing their jobs through no fault of their own.

As a result, you can expect to endure feelings of anxiety and guilt. But through it all, keep in mind that the layoff is not personal. It is a business decision that is necessary to ensure the long term viability of your company, a decision that will provide job security for your remaining employees.

Find someone to talk to before, during, and after the layoffs occur. Some entrepreneurs rely on a support network of other entrepreneurs to help them get through this difficult time. Others turn to family, friends, or even counseling professionals.