Lead with your Heart when Layoffs are Necessary
Howard Behar, Tugboat Institute Fellow
April 14, 2020
The challenges that the COVID-19 pandemic is presenting to businesses today are myriad. Among the most heartbreaking for Evergreen® leaders is the necessity, in some cases, of carrying out layoffs. For many leaders, this will be the first time they have had to lay off employees, and it’s hard to reconcile this move with People First principles. When you love your people, letting them go is an excruciating experience.
Even for those leaders who may have guided a company through layoffs in a previous downturn, it’s important to acknowledge that this is a unique situation. This could go on for a long time. People are dying. Your employees today are not only worried about losing their jobs, they are worried about their health and the health of their loved ones. It’s personal. It’s emotional. It’s uncharted territory no matter your tenure as a leader.
Against this backdrop, there is no denying the pain of telling a team member that the company can no longer support their position. Anybody who says they have a pain-free way of doing layoffs doesn't care about people. That said, there are steps you can take to approach this difficult task in a way that prioritizes the well-being of employees and aligns with the philosophy of servant leadership.
Be Transparent: Communicate Early and Often
I operate under the philosophy that, "Only the truth sounds like the truth." The best thing you can do is to be open and honest about what's going on in the company, as soon as possible, so that there aren't surprises. Your team deserves to see the real picture. You need to be as authentic and as vulnerable as possible.
Share the financial state of the company in the current situation and all the factors at play for your business and acknowledge the universal uncertainty and fear in this moment: “You know, we're all afraid. We'll do the best we can. We're in it together. We won't keep any secrets."
Be the First One to Take the Pain
Expect that you're going to have some pain in this downturn. Nobody's going to escape the impact of this deal. The people who work with you—your employees, your partners, your associates, and you will feel it in one way or another.
In this scenario, if the unique circumstances of your business require you to take cost cutting measures that affect your people, whether that means freezing salaries or retirement matching, reducing pay, or more extensive cuts through furloughs or layoffs, you have to be the first one to step up and take the pain. You need to share with your team how you will take the hit. Your people have to know that you're putting yourself up first.
If layoffs are a necessary piece your cost cutting plan, be sure to plan the communication and the practical steps of this process carefully to ensure it is as efficient and as humane as possible.
The communication around layoffs should begin as early as possible, through the transparent sharing of your financial situation. Go in with a plan: tell your people exactly what's going on and that there are going to have to be some layoffs, why this is necessary, that it’s not their fault, and that you’ll do everything possible to help them.
If you don’t have a clear timeline for announcing layoffs, at least provide a date that you will be able to share that information: “Here is when everyone will know if and how many layoffs we will need to make.” You can’t stretch this process out. It’s agonizing for your team. Once you have committed to making layoffs, the action itself needs to be taken within two-to-three days.
Do all within your power to only carry out one round of layoffs. Multiple rounds of layoffs are incredibly harmful to morale and to your team’s belief in your word. If you've got to cut, go as deep as you need to on the first round. Once complete, the people who remain know where they are and can move ahead with confidence.
Be as Generous as Possible
I have always believed that you should treat people even better going out of the company than you did bringing them into the company. That means providing as much severance as possible and, after you have completed a layoff, making a personal call to each employee who has lost a job. Find out how they’re doing; make sure you can help in any way possible. Remember that, especially in this current situation, people need emotional as well as financial support.
Empower Your Remaining Team
In the wake of a layoff, open, authentic communication is again essential because those who remain will still be fearful. They will continue to worry about their jobs, their health, and their families. Offer reassurance and calm and continue to be transparent: "Here's where we are. Here's what we're going do to try to get out of this. Here's why the decisions we're making will help to save the company."
Remember: It’s Not about You
As a leader charged with making these decisions, you will feel the pain of layoffs deeply. But remember, this is bigger than you; this is about the survival of an organization. These are the necessary steps to protect the jobs you can and guide the company to emerge from this so that you can welcome employees back. The thing that will define you as a People First leader in this crisis is the absolute understanding that your role is one of service—to the company and your team.
At the end of the day, the fact is that layoffs, no matter how well planned and executed, will be painful. But if you can do all within your power to act honorably, generously, and authentically—with love in your heart—you will be carrying out a People First process.
Howard Behar is the former President of Starbucks International and served on the Starbucks Board of Directors for twelve years before retiring. Howard currently serves on the boards of several for-profit and non-profit organizations and is also a Tugboat Institute Fellow.