Managing a Layoff – Part 1
A Detailed Account of Downsizing a Team By One Manager at a Fortune 500
EDITOR’S NOTE: The following comments chronicle a layoff event that occurred at a Fortune 500 Company, as recorded by a manager in the organization. This is the first in a 4-part series. Key details are omitted to keep it anonymous, however the timing, details and commentary are factual. The days identified record the timeline of conversations. Also included are some of the author’s observations on the process as it happened, as well as other notes, concerns and suggestions for other managers going through similar events.
Some call it a layoff, some call it downsizing and some call it restructuring. Others call it a reduction in force (RIF), and yet there are some managers who refer to it as being made redundant. And just a few months ago, I heard a new term that sounded even more politically correct, yet almost inconsiderate: “We’re right-sizing the business.” Regardless of what you call it, downsizing a business is hard, emotional and frustrating for everyone involved. I recently managed a layoff in my organization, and had to deliver the bad news to some of my employees. I wanted to record the conversations and events here on MRH so that I could share the experience and process with you to let you know what it’s like managing a layoff.
Leading Up to The Announcement
Day 1: Rumors were abundant. Sales were down and we had failed to win a couple of large contracts at the end of the prior year. Further, our CEO had made vague comments alluding to an upcoming restructuring in a recent quarterly earnings report to Wall Street that had everyone nervous. Despite these signs, I was optimistic that the heavy workload and long hours my team was working would prevent my staff from suffering the fate that I could see coming for elsewhere in the corporation.
Then, a sudden meeting notice popped in on my calendar from my boss with the subject of ‘CONFIDENTIAL.’ Though there could have been any number of reasons for the meeting, close contacts elsewhere in the company had alerted me to a possible reduction in force coming just a week prior. My boss’s tone said it all. “I’m sorry to say, team, that we will have to reduce some of our employees to get our costs under control. We are in the very early stages of this process, but I wanted to let you know it’s coming.”
I was told I needed to reduce 7 heads out of my team of 30. Another manager in my office, Jeff, was given 4 out of his team of 25.
We asked a number of questions about the upcoming layoff, including:
- Can we do a voluntary layoff, to allow people who want to leave to separate from the business?
- How was the number of people to be let go determined?
- What is the timing and plan for communication?
- Will the Business Unit Director address the situation to all employees?
- Why do we feel this is better than any alternatives?
- Can we move employees to other departments to fill critical needs?
- Can we bring in lower level managers to support or help plan?
- Some employees affected may be brand new – are there ethical concerns with this?
Unfortunately, details and answers were very vague. Having been with my team for a few years, I was personally concerned because this would be the third major organizational change in just over a year, and I knew employees were still in a fragile state of mind following the prior two events. Later on that day, though, we were informed that we needed to start ranking people using a template we would be provided by our Business Unit the next day.
Deciding Who to Let Go
Day 2: We were given a template to use to help us begin the task of reviewing names. A ranking system was created, with which we would examine our employees. Each employee would be evaluated based on various dimensions that represented the necessary skills and behavior to do their jobs, resulting in a composite score. Barring some sort of critical business need, the lowest ranking individuals would likely be the names we would ultimately let go.
“Other than financial benefits, the only good thing that comes out of downsizing is that it gives you a chance to remove lower performers from your organization.”
Jeff and I met in my office in order to do the scoring together; we both valued the feedback we could offer to each other on our respective employees. To make sure we were as objective as possible, we did not look at or sort by the composite scores until we completed the evaluation for all employees. Furthermore, although we had been requested to only evaluate employees in specific pay grades, Jeff and I felt we should look at all employees in all pay grades within our organization to ensure we were making the best decision. The reason we chose to do this was simple: other than financial benefits, the only good thing that comes out of downsizing is that it gives you a chance to remove lower performers from your organization. Jeff and I were in agreement on this approach.
In terms of the performance dimensions considered, we looked at the following categories when ranking employees for the layoff:
- Leadership – The ability and potential for the employee to lead a team, take initiative and their tendency and willingness to be proactive.
- Communication – The effectiveness and clarity of the employees communication style and skill.
- Resourcefulness – The employee’s ability to solve problems, engage with others and pursue resolution.
- Process Management – The ability for the employee to recognize the need for, and to follow process and protocol in order to get desired results.
- Teamwork – The ability to work as a member of a team, and to work well with a diverse group of individuals.
- Decision Making – The employee’s ability to synthesize information, ask calculated questions and to make decisions in a timely manner.
- Learning Potential – The employee’s ability and tendency to learn new things and his or her willingness to step into unfamiliar circumstances.
- Customer Focus – The employee’s drive and effort placed on meeting customer timelines and schedules.
- Critical Skills – The possession of critical skills to the business, such as legacy knowledge, key customer contacts, critical duties, certifications, etc.
We also scored employees on some of the technical and job-specific skills that our teams needed to do their specific jobs.
Our scoring system was kept simple to let the data drive the decision. We gave 1 point for falling short on expectations. We gave a person 2 points if they met expectations of their responsibilities. And we gave 3 points if we felt they exceeded expectations and had the ability to teach others.
Once we had our list of names, we averaged the results and sorted by the average score. Next, Jeff and went through the list of names between our two teams to validate where each name ranked in our list. The haste by which we scored employees concerned both of us, so we spent another hour discussing the names, modifying scores as we compared employee A to employee B. “John is really good at communicating when compared to Mary; they should not be scored the same in that category.”
We also spent time discussing potential: “Suzie is new – only been here 6 month – but she shows exceptional talent and I can see her going far.” And we considered different scenarios: “Bill can be hard to work with and scores pretty low here, but he has been here so long that we’d be losing a lot of knowledge if we let him go.”
After a couple of hours, Jeff and I had our list. We looked at the eleven names at the bottom of the list one last time before submitting it. It was not clear if this list would be taken as final, or simply for consideration at the Business Unit level, but both of us knew that the fate of those eleven names was likely that of severance package.
Missed Opportunity with Ranking Employees
Though we followed the ranking system provided, I was concerned that the procedure did not account for fit. That is, the reason they ranked low in some categories was because their work preferences conflicted with some of the categories in which we had to rank them. But some of the names who appeared on our layoff list would have been very well suited for critical vacancies on other teams. For example, one employee, Michael, struggled with some of the financial analysis work he was required to do. But his interpersonal skills were fantastic, and he would have made a great representative for our Customer Service team, which had an opening.
Though we recommended some employees be transferred in our submittal to the Business Unit, there seemed to be little interest in filling other critical roles and keeping knowledgeable people in the company.
MANAGING A LAYOFF – PART 2: CLICK HERE
MANAGING A LAYOFF – PART 3: CLICK HERE