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Layoffs


It looks like we're going to have to do a small round of layoffs next week.  It will be about 10% of the staff from my department - we're targeting the people we feel are poor performers, instead of going strictly on seniority.

I'm a project manager, so I'm in the unenviable position of having to justify this to the guys who work for me (no one who reports to me is being cut).  I'm not happy about it, but I do understand the company's reasons for wanting to trim some payroll fat (we hired way too many folks this year).

I've never been through a round of layoffs before, but I've read lots of horror stories about them.  There's probably no really good way to go about this, but I suspect there are lots of bad ways to do it.

Any suggestions for how to approach this?  I want to be sure the ones we're keeping don't lose all their will to live (and keep working) at once.  What's the best way to minimize the impact?

Anonymous
Thursday, April 24, 2003

Minimize the waiting. As soon as you know the names, tell them. The horror stories about layoffs all revolve around the workforce sitting around wondering who's going to be called next.

If you can come up with a decent solution to tell everyone simultaneously (email or notes on their desks before they come in) that makes it even easier.

I was going to say something about the contents of the notes, but thinking about it more, really all they care about are "kept" or "gone", so just make up some nice boilerplate about "we're sorry yadda yadda pack your bags" and send it.

However, (thinking on the fly here), you *might* put something in the email/note to the effect of "this may seem impersonal, but we (I) felt it would be easier on everyone concerned to find out as soon as possible rather than sit around waiting to be called into the Dept head's office. If you have anything you'd like to say or need to talk, please feel free to just drop by."

Yeah, I like that last part.

Philo

Philo
Thursday, April 24, 2003

Oh, and don't play delusional games like "we expect everyone to keep working hard until the announcements are made" - reality is that between the word "layoff" and the actual notice going out, there will be zero work done.

Philo

Philo
Thursday, April 24, 2003

Well written, Philo.

I'd be brief and truthful.  Tell them exactly what you've written here.  "Management has decided to lay off a few of the poorest performers in the company.  None of you will be affected.  Frankly, we hired too many people and we need to trim the fat, which will be about 10% of the company.  I'll let you know as soon as I've heard any more."

Brent P. Newhall
Thursday, April 24, 2003

I don't know if you really can minimize the impact. However, I would go with the personal touch because you simply don't know what someone you had to fire today will be doing in the future.

One Programmer's Opinion
Thursday, April 24, 2003

>> Minimize the waiting. As soon as you know the names, tell them.

How the heck is this supposed to work before the fact? Targets of layoffs and firings are a state secret in all companies until the deed is done. And you absolutely cannot tell people to not talk. They WILL. And anyone who is friend of a target will tell them.  This kind of news is never prereleased until the day-of, and usually simultaneous with the actual layoffs themselves.

Admirable, but once done, the 'victims' are "walking dead" since odds are they *will* hear about it.

Bored Bystander
Thursday, April 24, 2003

PS: Brent's approach is reasonable and workable.

Bored Bystander
Thursday, April 24, 2003

Whoops - I *completely* missed the "none are in my group" part. The "them" I was referring to were the targets of the layoffs.

Sorry. Nothing to see here. Move along.

Philo

Philo
Thursday, April 24, 2003

I would also be careful about "we are laying the dead wood, poor performers. losers, -your words here- "  Aside from it causing emotional turmoil, if you cannot prove it, then you are going to create legal hassles for yourself. 

I agree with the people who say get it over with quick.  No one is going to like this and even good performers feel vulnerable.  Over the years I have noticed my good performers feel they are working on the edge  and anyone could be let go at anytime.  The poor ones always seem surprised.  --- Maybe the subject of another thread.

Mike Gamerland
Thursday, April 24, 2003

Seemed like your company has incompetent senior management.  Layoffs are not something that should be happening just months after hiring several people (unless there was something unexpected and catastrophic) because they should not have been hired in the first place. I can't stand when they use layoffs as a way to excuse bad planning. If they are that bad at planning, the company will be on its way downhill fast.

The only good sign is that they are targeting the bottom 10% instead of doing it randomly.  When they do it randomly, they end making the top 10% run away.

The previous company I worked for did something similar, randomly laying off people including some who they hired less than two months before, and laying off people who were just promoted.  They still haven't had a profitable quarter in the 4 years since, and now they are a penny stock that got delisted from the exchange.

T. Norman
Thursday, April 24, 2003

Rather than saying you're laying off the poor performers, you might want to consider talking about prioritizing who you could keep based on whose skills best meet your current needs.  That covers both people who didn't meet your expectations and good people who have a skill set that you'd like to keep, but it doesn't make economic sense to retain.

You need to set expectations for the survivors as to whether management is going to keep doing more rounds of layoffs, and why your project was cut 10% rather than laying off the same headcount throughout the dept.

The franker you can be, usually the better. People will be very skeptical and sensitive to 'spin'.  If your project wasn't the only one hit it might help to discuss the burn rate and project when the next decision point (do we need to do more layoffs) will occur.

I've also noticed that giving the layoff victims most of the day to say goodbye makes it easier for the people who stay.  Survivors feel less quilty, and everybody is more comfortable because they can openly talk about the subject.  It also sends a message it was just business, that the people who were laid off didn't do something shamefull.

There are obvious risks in doing this, but keep in mind if you have one round of layoffs the odds are you'll have at least one more.

Eric Moore
Thursday, April 24, 2003

I had to collect my thoughts some more on this topic.

Yes, I also have problems with the way that the hiring binge, layoff, and quasi-performance issue was framed by the OP.
I worked for a real scumbag of a software dev company back around 1990. They had a mass firing a couple of weeks before Christmas of '90. A friend of mine was one of the affected ones. So I know exactly what those two faced lying management pricks did, and it sounded a *lot* like the sequence being described.

The pres. had a meeting of all employees in a meeting room on a Tuesday afternoon and stated that simultaneously, there was a mass layoff of something like ~23 people (about 10% of the company.) He said that it was tough, that it was just before Christmas and they were cognizant that it was a hardship, bla bla. He said it was a layoff. This implies "no fault".

My friend told me that every person that was laid off was told at their kissoff meeting that it was "really" about their performance; that they would be flattered with a more benign story publicly; but oh by the way don't bother to collect unemployment since this is "really" for cause and we won't pay it. (in this state, employers will not pay unemployment if they claim that the discharge was performance related.)

So, naturally these people starting applying for unemployment. The state board of employment services basically said "Up yours and f*ck you" to the company, and allowed unemployment to be paid for the entire lot. (excuse my language, I feel pretty strongly about such degradation of individuals.)
My cynicism about business owners, managers and execs has only grown from that point.

My point is: if it's a mass operation, then however the company does the ranking of the "targets" had better be their own little secret, any verbalized value judgements had better be entirely absent,  and everyone concerned had better get the message that they were "satisfactory" but the company simply was falling on hard times, or whatever.

Bored Bystander
Thursday, April 24, 2003

If you were going to be laid off how would you want to be told?  Think about it and you will have your answer on how to do it.

Rick
Thursday, April 24, 2003

But where is he gonna get ten strippers and that much jello by tomorrow?

Philo

Philo
Friday, April 25, 2003

Philo,

Working on CAMEL has its perks doesn't it?:-)

Prakash S
Friday, April 25, 2003


Just two things...

Anyone that performs a layoff via email (or other means that don't involve confronting the individual personally) is a coward.

Ten percent is really not that bad.  I believe Jack Welch recommends laying off the bottom 20% as an annual exercise in maintaining company performance.

Joe AA
Friday, April 25, 2003

Didn't General Electric decide that Jack himself came within that bottom 20% one year?

Stephen Jones
Friday, April 25, 2003

Regarding the "survivors": This is psychologically difficult because you feel angry (for the layoffs), afraid (who knows when it might be your turn) and guilty (because you survived).

I think the key is to make it about money and not performance, so pull the survivors into the room and give them "big picture" numbers - we cost X, we need to cost Y, laying off 23 people cuts Z dollars cost. This will help them feel safer about future layoffs. (If the numbers don't add up, start lookin for a new job for yourself so long - this company is on its way out).

Try to arrange small sessions with someone in authority to vent and discuss. In my experience people talk anyway, so rather offer them a structured, understanding environment to rant at you, rather than have them hang around in bars getting more and more upset outside hours. Try to talk about how you feel too; it makes it easier for people to be honest about how they feel.

Astarte
Friday, April 25, 2003

Joe - the advantage of email is that you can tell everyone at the same time. Like I said, the layoff horror stories I've heard are where people are waiting to find out who got the axe and there's a "death row" mentality in the office.

Laying off one person by calling them into your office is the right thing to do - it's happened to me, and I appreciated the personal approach. But more than about four people and word gets out and then it doesn't matter how you deliver the news - people just want to know.

And of course once the news is delivered then calling them into your office just wastes their time. I still think explaining WHY you're doing it via email ("So we can notify those affected as quickly as possible") and offering the open opportunity to come talk about it is a decent solution.

Philo

Philo
Friday, April 25, 2003

I think if someone were notified of being laid off (i.e. made redundant) in the UK by email then they'd likely end up with a wrongful dismissal claim.

In the UK as well, redundancies are the the post and not the person, if there is a need to make posts redundant then there is a  process that has to be gone through, I think its 6 weeks notice at a minimum but I could be wrong.  That's notice to the workforce as a whole, not to those posts which have been identified.  There's a bunch of criteria commonly used to decide between those that have the same post, generally last in first out.  That's not to say that managers don't take the opportunity to remove deadwood and settle scores in the process.

If an individual was let go because of performance then it cannot be treated as redundancy and the disciplinary process must have been gone through, if that process hasn't been followed then again there is a basis for a claim of wrongful dismissal.

Simon Lucy
Friday, April 25, 2003

Simon - do you mean to say that a face-to-face dismissal is more defensible than a written one? Or did you mean email as opposed to a physical letter?

Philo

Philo
Friday, April 25, 2003

A face to face interview is the only acceptable form.  Certainly it has to be in writing to confirm it because there are all sorts of contractual  and legal issues to cover.  But the actual breaking of the news must be done in person.

I've seen what it does to organisations though, I've seen lines of people queuing up outside a directors office as he dealt with each one (it always seems to be Christmas).  Its always brutal but is has to be done with respect.

Having said all that, I got my own redundancy news from my boss at Novell by phone, but then he was in California and I was expecting it.  Still he handled it as well as could be expected.

Simon Lucy
Friday, April 25, 2003

Geez - if my name was on the list of "the following x number of people must see the director this afternoon" and the first few got laid off, I'd just pack up my desk and leave.

Is it just me? Does anyone else here feel the need for your boss to hold your hand and explain to you why you won't be getting a paycheck any more? To me, it's a boolean, and if I'm fired, just let me go home.

Philo

Philo
Friday, April 25, 2003

Re sacking someone by email constituting grounds for unfair dismissal - there was actually a case like that in Australia recently.

The guy was sacked by an SMS message to his mobile phone. I believe the employee has taken legal action and has a case.


Friday, April 25, 2003

Layoffs are always brutal to both those being laid off and those left with jobs. The right way to do it is to minimize the amount of pain/fear/doubt involved. I was laid off in the 3rd round at my company and pretty much liked the style they used.

On the day of the layoff, the manager would individually tell the people being laid off that they were needed in a meeting in the conference room. The highest manager would then let the people know what was going on and then the managers would answer any questions that they could. Then the HR person would take over and do the rest (severance, COBRA, other benefits, etc).

While the HR person was running the meeting, the managers would informally gather their remaining people and let them know what happened (and who it happened to). That way there wasn’t any problems with people wondering if there would be another meeting later that day...

Once the HR person was done, the managers would escort their people back to their desk to have them clean it out (boxes were provided). The managers weren’t overly supervising the process (i.e. no “that’s a company paperclip, leave it”), but were there to be both supportive and to both answer questions (“can I take this book”) and ask any final questions about the project the person was on.

The only sticky situation is when someone isn’t at work the day they’re to be laid off. That happened to me, I was on vacation (at Disney World) the Monday it happened. I returned to work early Tuesday morning and my boss came over about 15 minutes after I arrived and we went to a conference room where an HR person was waiting – I was out the door by 8:30. One of my fellow team members started vacation that Monday (for a week and a half) and didn’t find out he was laid off until he returned. The fact that we were laid off wasn’t told to anyone until we were told first.

I’ve been laid off 3 times and this was the best one. Of course, I’ve heard that they aren’t doing mass layoffs any more, every so often one or two people are let go – this is by far the worst way to do it since it prolongs the fear/doubt of your remaining workers (unless you’re trying to encourage that sort of thing).

RocketJeff
Friday, April 25, 2003

1) I thought at GE it was the bottom 5%.  20% is pretty high.

>My point is: if it's a mass operation, then however
>the company does the ranking of the "targets"
>had better be their own little secret, any
>verbalized value judgements had better be
>entirely absent,  and everyone concerned had
>better get the message that they were "satisfactory"
>but the company simply was falling on hard times,
>or whatever.

YUP.

If your company is calling it a lay-off, management has probably decided that increased premiums for unemployment insurance is cheaper than the potential lawsuits from firings.

Lots of companies use layoff-time as a good time to get rid of the "dead weight" that they were too scared to fire in the first place.

Companies have to have the gumption to pull weeds as they grow.  Otherwise, the final pruning is _FAR_ more painful.

JMHO ... I've been laid-off once and survived a round at another company.  IMHO, the best way to mimize the damage is to provide a nice severance package - 3 or 4 weeks per year up to 3 years, 2 weeks per year beyond that, or something like that.  PLUS accrued earned time off.

regards,

Matt H.
Friday, April 25, 2003

In 8 years of professional work, I've been hit by 1 layoff and survived 4. (One of the "survivals" happened the day after I started the job...) It's incredible to think how much downsizing there is going around.

In all cases, the survivors were not notified that there had been redundancies until after all those affected had been informed first.

Also, it's been clearly emphasised that it's the role that's being made redundant, not the person. I believe that's law in the UK, as we laid off a Java-only developer last year, and as a result can't hire any new developers doing Java projects.

I don't think there's any good way of doing layoffs, because it's a pretty depressing thing for everybody concerned. Nobody ever wants to lay off people.

Better than being unemployed...
Friday, April 25, 2003

There are quite a lot of redundancies going on in the UK right now, so I thought it might be useful to post the bare bones of UK employment law in dealing with this. I hope it's useful!

Simon Lucy is right in saying that in the UK it is the position and not, in the first instance, the person that is made redundant. The actual law is Section 139(1) of the Employment Rights Act (ERA). This essentially says that an employer may dismiss an employee on grounds of redundancy

"if the dismissal is wholly or mainly attributable to:

(a) the fact that his employer has ceased or intends to cease -
(i) to carry on the business for the purposes of which the employee was employed by him; or
(ii) to carry on that business in the place where the employee was so employed

(b) the fact that the requirements of that business
(i) for employees to carry out work of a particular kind; or
(ii) for employees to carry out work of a particular kind in the place where the employee was employed by the employer

has ceased or diminished or are expected to cease or diminish"

This means that it is reasonably straightforward to make an entire class of employee redundant, for example to shut down a factory or a department, but it's not quite so easy to get rid of, say, 10% of the programming staff. In the latter case employees have a right that the selection process treats them fairly and equitably which in practice this means that the process must be objective.

The objective measure could be as simple and "last in first out". Equally it could be performance related, but it must be objective and be applied even handedly to all employees in the class. An employer could, for example, justify using (quantitative) performance appraisals as the basis of selection, but probably not the opinion of a single manager.

There are selection criteria that the ERA explicitly forbids employers from considering. These are reasons related to assertion by employees of rights to:
    health and safety under section 100
    working time / time off (s101A)
    statutory rights (s104)
    minimum wage (s104A)
    protected disclosure (s103A)
    trade union membership or non-membership

For example, you cannot be made redundant just because you were the one person who stood up and demanded to be paid the minimum wage, or an equal wage to your male/female colleagues, or leaked to the press the fact that your employer had dumped a ton of pesticide into the local reservoir or whatever!

Employers do, however, have a couple of things on their side. First, the ERA includes a catchall clause allowing dismissal for 'some other substantial reason'; this is most often argued to justify dismissal in the context of business reorganisations that do not meet the statutory definition of redundancy but that the employer can argue are necessary for the continuation of his business.

Second the ERA requires that in determining whether a dismissal is fair an Employment Tribunal must give consideration to the size and administrative resources of the employer. In practice what this means is that not only can you expect a big employer with a well paid HR department to have everything written down with all the i's dotted and t's crossed, but also that they will follow their processes scrupulously. On the other hand a small outfit can get away with out formal HR policies provided that they don't actually break the law.

One last thing. If you are being disciplined or dismissed for any reason you have an absolute right to be accompanied to any formal interviews by a colleague or by a trade union representative, even if you are not a member of the union and the company doesn't have union representation on site. What is more, the company must tell you this. If they don't and, particularly, if it's not in any HR policy that they publish, then you have a good case to claim that dismissal was technically unfair. Likewise, you must be given access to any 'evidence' that is used in the selection process.

Please note that I'm not a lawyer, so this posting should not be taken as anything like a complete description of UK redundancy rules. My strongest advice is that if you hear of redundancies coming, consult a good employment lawyer straight away, not after it actually happens. This is one of the strongest reasons I know for being a trade union member. If you know what your rights are then you are in a much better situation than if you don't!

DR
Friday, April 25, 2003

"My strongest advice is that if you hear of redundancies coming, consult a good employment lawyer straight away"

Why?
So you can sue to keep your job?
Would you *really* want to work in the environment that would follow?

IMHO, suing to keep your job is like accepting a counteroffer, for pretty much the same reasons. Just don't do it.

Philo

Philo
Friday, April 25, 2003

Saying to your employees, "We're going to use this as an opportunity to remove some of the dead wood," is an admission of managerial incompetence.

Dead wood and problem employees should be removed continually, through reviews and remedial action.  One of the biggest shortcomings managers have is the unwillingness or inability to tell employees that there's a problem with their performance, and that it has to be fixed or else.

Many years ago, when AMD had its first layoff, Jerry Sanders made two classic mistakes: he announced the layoffs well in advance of the actual terminations, and he gave the press the, "we're going to get rid of the dead wood" line.  Did wonders for employee morale.  Eventually he retracted (or "clarified," maybe) his dead-wood comment. 

Hardware Guy
Friday, April 25, 2003

If you take the 'we're getting rid of the dead wood' line, think what you will say the next time round and some of your guys are affected. Also what will they think this time if they have friends who are laid off?

The truth is always best in the long term.

David Clayworth
Friday, April 25, 2003

Philo:

I don't want to start a flame, but I have to argue my position.

"Why?
So you can sue to keep your job?"

The reason why you should consult with someone who understands employment legislation and employees rights is precisely so that you don't end up in litigation.

You have to realise that for a lot of people, particularly in the UK and Europe where labour mobility is not as high as the US, loosing ones job can be very serious. The way I look at it, it's similar to companies recruiting customers. The cost of obtaining a new customer inevitably being higher than that of retaining one, companies should do their utmost to retain customers. Likewise with jobs; if you have one you like you should do your best to keep it as it's a lot easier than finding a new one.

Given that UK legislation insists that the process by which employees are selected for redundancy be objective, equitable and transparent, it is well worth treating the process like an inverse recruitment procedure. You wouldn't go into a job interview unprepared and expect to get the job. Likewise you shouldn't expect to enter a redundancy selection procedure unprepared and expect to retain your job. Part of this preparation is understanding your rights and obligations.

As an ex-employer, an ex-employee and now someone who sits on the panel of the local Employment Tribunal (the UK civil labour relations court) I can tell you that the people who bring unfair dismissal cases as often as not did not have a good understanding of their rights at the time they were dismissed. Usually they have consulted an employment lawyer after they were unfairly dismissed and, even if their claim is successful, the best that they'll get is compensation. I don't know how it is in the US, but in the UK the Tribunal can award compensation (principally loss of wages and strictly according to a statutory formula), but not *damages*. In my opinion the compensation rarely recompenses for the heart ache and stress that an employee and their families have been put through, even if they've been lucky enough not to loose their self estime, credit rating, house ...

Almost axiomatically people who do understand their rights don't end up at a Tribunal. They use this knowledge either to avoid dismissal or to negotiate an acceptable redundancy package; or they understand that the process used to select them was fair and accept that there is no chance of bringing a claim. In either circumstance, the Tribunal doesn't see them.

"Would you *really* want to work in the environment that would follow?"

This one is really subjective and depends entirely upon personal circumstances and the job market. Five years ago probably not. In five years time and today's job market, definitely yes; even if just as a holding pattern whilst looking for another job. Don't forget, if your company is laying people off, chances are that everyone else is too.

In the UK an employee who is unfairly dismissed is entitled to seek reinstatement to his former job or reengagement in an equivalent (or better position). I don't have personal experience of this, however I gather that one of two things generally happens. Either (i) the employer has no fundamental problem with the employee and reinstates him. The employer may well then be far more circumspect because any subsequent victimization or harassment of the employee could lead to him quitting and making a claim for constructive dismissal; Or (ii) the employer refuses to reinstate or reengage the employee and the employee walks off with substantially more compensation (between 6 to 12 months salary) that he'd get for a simple, fair redundancy. Again, there are 'get out of jail free cards' for the employer, but once a court has told you to do something, you'd better be damn sure that you have a first class argument for not.

I'm not going to even try to argue that UK employment legislation is good (or bad); whether it hinders growth because it introduces restrictions into the free movement of labour; or whether it protects the weaker from exploitation by the stronger.  Those are truly ideological arguments and settling them is why we have a democracy (and why we should if needs be fight to retain it, enough said). The law is what the law is and if you're subject to it in one area, you might as well make use of it in another.

DR
Friday, April 25, 2003

"we're targeting the people we feel are poor performers"

This means nothing. 'Feel' translates to 'the people we don't like'.

Realist
Saturday, April 26, 2003

"You have to realise that for a lot of people, particularly in the UK and Europe where labour mobility is not as high as the US, loosing ones job can be very serious."

And of course the two are highgly connected: if you can't fire someone, you're not going to be very willing to hire someone.

As for the original question, how big is the company? If 10% is 10 people, that's very different than if it's 1000 people. If 'poor performance' is being claimed, is this part of a regular performance review system? Even if you don't need one for legal reasons, everyone will know to be nervous at the same time. Kind of the opposite of an annual 'performance' bonus.

mb
Monday, April 28, 2003

Dear mb,
                Employers are always claiming that the reason they don't hire is because its so difficult to hire afterwards. It is of course normally rubbish.

                I lost all respect for the IMF when I saw their recommendations for Spain one year. They flew in a lot of interns just out of business school who intervewed a couple of employers and then repeated what they had been told: that employers weren't hiring more because it cst them so much to terminate a contract. At that time 97% of all contracts were temporary contracts, which cost the company nothing at all to terminate.

              Now in fact in Spain there is a serious problem of job immobility but it has to do with the housing market. You can't sell your house and relocate elsewhere in much less than a year, and are likely to lose a fortune. Add to this the language problem between EU member states and you see why the EU labor market is not a mobile as that in the States.

              And for your information in UK law you are not entitled to any payment either for redundancy or unfair dismissal until you have served two years except in exceptional cases.

Stephen Jones
Thursday, May 01, 2003


I was sacked of Vivendi Universal and I got
12 Millions Euro for that ...

I actually do not mind being fired ;-)

Jean Marie Messier
Former CEO of Vivendi Universal

Jean Marie Messier
Wednesday, May 07, 2003

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