Handling layoffs

Zac Sprackett

Chief Product Officer (CPO) at SugarCRM



Coming to the realisation that you need to lay people off is one of the hardest things a leader has to do. On one hand, you have an obligation to keep the company on solid footing to continue to provide a stable and viable place of employment for those who remain. On the other hand you must select those who will no longer be employed and provide them with a dignified experience while remaining compliant with the laws in your region.

Actions taken

The first step is usually to determine how much budget will need to be saved. In general you will want to cut deep enough that you only have to cut once. Remember that with layoffs, there is usually severance involved, so ensure that you work with finance to understand how this will impact the overall budget. No matter what you do, your staff will worry that they are next. Layoffs that feel constant will quickly alienate your best people.
In general when approaching layoffs, it is important to remember that you are eliminating a position rather than terminating an employee. While it can be tempting to use layoffs as an opportunity to get rid of low performers, it is important to understand that should you wish to reopen the position within a reasonable timeframe, you will usually need to offer the role to the laid off employee first. You should consult with HR or a lawyer to understand your legal obligations. Once you have determined that cuts are required, it is important to act swiftly to minimize the risk of information leaking out to the employee base. In general, people can sense that these kinds of events are coming and motivation and job satisfaction suffer as a result. If you have an HR department, they will probably have some advice on how to handle the actual procedure. You will want to consider how to get through the actual layoffs quickly and with as much dignity as possible for those who will be let go. If lots of people will be let go, it is important to think of how to quickly communicate to those who are staying know what has happened and that the layoffs are now complete. In the meantime they are thinking the worst and the best ones are probably being recruited. During the actual layoffs, my preference is to handle them one individual at a time. I've seen layoffs where they split people into groups and one group remains. This felt inhumane. During the event, it is best to have two people in the room to provide some protection should it become a legal matter. I provide a brief explanation and let the employee know that they are being laid off effective immediately, thank them for their service, and ask if they have any questions. When at a company large enough to have an HR department at this point I would turn it over to HR to explain the severance package and terms. You might think that your role is complete once you get through the layoffs themselves. Trust me, they are draining enough that you will wish it was. You have a further responsibility however, and it is arguably the most important. The team that remains is now looking to you for comfort, direction and motivation. It is now imperative that you explain to them why the event had to occur, how you have taken the necessary measures to try and ensure this is a one time action and what you will do differently going forward to improve the health of the organization. You need to have a plan here.

Lessons learned

I try and help those who are being let go to transition as smoothly as possible. I will usually gather a list of open positions to try and give them some short term hope to focus on. I will offer to provide references and help them in any way that I can. Many times employees will be immediately overwhelmed and won't take you up on these offers. I tend to follow up a couple of weeks after the layoffs have occurred and reiterate the offer. You should know that there is a much higher chance of losing additional employees due to attrition in the six months following a layoff. You should focus on making your employees feel appreciated and reinforcing the plan to bring the organization back to a healthy position.

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Zac Sprackett

Chief Product Officer (CPO) at SugarCRM

Leadership DevelopmentCommunicationOrganizational StrategyCulture DevelopmentPerformance ReviewsFeedback TechniquesCareer GrowthCareer ProgressionSkill DevelopmentOvercoming Bias

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