Downsizing? Business Leaders Share Tips on How to Conduct Layoffs

Business leaders share essential tips on how to downsize with tact and professionalism.

No business owner wants to conduct layoffs. It is often an emotional and stressful scenario for all parties involved. However, layoffs are an unfortunate part of business life, especially during economic turbulence or poor business performance.

According to Nolo.com, “In many cases, by the time the pink slips get passed around, most of the workforce will already know that layoffs are coming. They will be aware of declining profits, changes in the marketplace, or the elimination of a product line, and that combined with closed-door meetings will get tongues wagging.”

But there’s a right way and a wrong way to do them. So, we asked business leaders (i.e. human resources professionals, attorneys, and entrepreneurs) to share their essential tips on how to downsize with tact and professionalism.


1. Remember the little details.

“Remember that the little details matter. It is important to remember that employees are all people with family, friends and financial responsibilities and being laid off, even when it has nothing to do with their performance, is a very difficult and often embarrassing experience. Above and beyond all the legal considerations when conducting a layoff, I always tell our clients to remember the little details: Do you have tissues in the room? What arrangements can you make for the terminated employee to be able to clean out their desk in a dignified way? Have you given the employee a resource to contact at a later time that they can ask any questions that arise after they have left? If they are upset let them have a moment to gain composure before you exit the room. These seem small, but they are important and all too often forgotten; remember that these are human beings and they deserve to be treated with dignity, respect and compassion.”

– Melissa Gillespie, Director of HR of HR Knowledge, Inc.: @hrknowledgeinc


2. Always utilize objective factors.

“Layoffs should focus on the elimination of non-essential positions; they should not be used as a convenient way to circumvent performance counseling and exit particular employees. Once non-essential classifications are selected, the ‘safest’ way to select employees for layoff is through objective factors, i.e., last in, first out. When this is not possible and subjective factors are used, it is important for the employer to document the non-discriminatory, measurable criteria used in selecting employees for layoff. To avoid future legal woes, the criteria measured must be based on actual performance and not the characteristics of the individual. Ensure due diligence. Review performance evaluations, warning notices and productivity reports, and conduct an objective analysis.”

– Paul L. Tetzloff, Attorney of Newmeyer & Dillion Law Offices: @NewmeyerDillion


3. Ensure timely communication.

“Quality communication is essential to layoffs at a startup. It starts long before a layoff occurs: employees should understand the risks involved working at a startup and it’s your job as a CEO to make it clear that job security isn’t part of the job description. The business and product can pivot abruptly, requiring completely different skills sets over a matter of weeks or months. Feedback should be given on time and on schedule  (i.e., a layoff for performance reasons shouldn’t be unexpected). Lastly, even though startups are risky, layoffs are a difficult part of life, and effective communication can make this easier. Helping former employees find new jobs, and communicating your support as your company changes direction helps everyone involved make the transition.”

– Ian Campbell, President of What Goes With This?: @ypcrumble


4. Consider reputation management.

“As layoffs happen, you’ll need to ensure that there are no external signs that business is not proceeding as usual. This will ensure your clients or customers don’t question your ability to provide your service properly or deliver your product on time. Once the departing employee has moved on, there is little damage they can do to your brand if by all appearances you’ve done nothing, but continue traveling the high road.”

– Shane Davis, President of Kickin’ Digital Marketing: @guyisageek


5. Assist with employee transitions.

“Be transparent in the layoff communication to allow people some transitional period and to prepare emotionally. Provide face to face time, counseling opportunities and connect them to employment services. It is important to treat people with respect; human beings [have] feelings and emotions.”

– Dr. Emad Rahim, Chief Learning Officer and Co-Founder of www.globali365.com: @DrEmadRahim


6. Measure twice, cut once.

“Don’t spread the layoffs over multiple rounds. Multiple rounds of layoffs can be crushing to employee morale. If you need to layoff people, you don’t want the people that remain to be demoralized, afraid that they will be next, and start jumping ship. Multiple rounds of layoffs create the impression that things are getting worse and that management doesn’t know what they are doing. Better to be aggressive in the first round (and hire people back when the situation improves), then to having to repeat layoffs.”

– Marc Prosser, Co-founder of Fit Small Business: @fitsmallbiz



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