Before Pressing the Layoff Button, Leaders Need to Ask Themselves 1 Question — Then Do These 3 Things

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Ethics, brand legacy and treating humans how we’d like to be treated — these all typically fly out the window when a company is scrambling to save either itself or shareholder confidence during a recession. Often, the impact of cutting employee numbers has consequences far beyond a CEO’s bottom-line goals.

For the ethical and emotionally intelligent CEO, CHRO and CFO, it’s important to consider both survivor employees’ and outgoing employees’ mental health, as well as the company’s reputation. Before pressing the layoff button, organizations need to ask themselves one question: “How do we want future employees and exiting employees to feel about how we serve our workers?”

I’ve heard finance directors and CFOs say, “We don’t have a budget to pay for people who won’t add value to our bottom line after they’ve been fired.”

This attitude impacts directors and managers tasked with implementing the layoffs. They lament: “I wish there was something I could do to take my sleepless nights and sense of guilt away,” and “I wish there was something I could do to help my people find work.”

What if supporting departing employees actually had a positive impact on the surviving leadership team and — as a result — the bottom line?

With a third of the global economy likely to be in a recession in 2023 according to the head of the IMF and Amazon kicking out 18,000 workers in the first week of January alone, here are three options when layoffs become your most difficult decision.

Choose your hero story for this new era

You’ll recall the first wave of layoffs in the tech space in 2022, shortly after interest rate hikes. It was unlike anything I’ve seen before — and I was there for some pretty horrific tidal waves of redundancies during 9/11 and the 2007-2008 financial collapse. Between 9/11 and the pandemic, exiting employees harbored feelings of shame, humiliation, guilt and denial at having been laid off, and organizations could avoid the topic with their employee and customer brand relatively intact.

Amidst continuing interest rate hikes during October 2022, we started to witness a surge of “looking for work” badge-slapping on LinkedIn profiles. People took Brené Brown-style “vulnerability” to heart and found directors and VPs sharing their layoff stories while asking people to help them find their next role. No doubt — uncomfortably — companies also accepted this new, more vocal behavior, too. No one and no brand could hide. In 2022, we tore through trends starting with the Great Resignation, then quiet quitting, then loud quitting. And companies have been judged based on the way they handled them all.

As an HR director, CEO or leader of a team, here are some questions for you:

What’s your employer’s hero’s story for your people from onboarding to exiting?
How does it relate to what your company stands for and who the product is consumed by?
What do you personally and professionally stand for?
What exit solution did you create for the company, the leader of the affected team, the departing talent and the survivors tasked with moving the company forward?
Who is supporting you during this time?

The social media savior

Do you recall the saviors on LinkedIn swooping in to help people? The ones who would offer: “Please contact me if I can help you find your next job,” not realizing that their digital transmission of hope would actually drown them in requests they couldn’t triage or meaningfully redirect. It can quickly deflate and embarrass the most optimistic savior rushing in to save people with the promise of a cruise ship only to realize you have a kayak.

These do-gooding rescuers on LinkedIn were everywhere, and theirs was a pretty heroic act. But imagine if two, five or even 100 people from your connections (and wider network) reach out: how do you avoid suffocating under the weight of requests?

Before leaping to the rescue, consider these questions:

What hiring managers, recruiters, headhunters or HR people have you partnered up with to share bona fide opportunities?
Can you be more specific about how you can help? For instance, can you offer two hours a week of resume reading, VC introductions, counseling, pitch deck reviews, interview practice and so on?
If you hear about people in your network who have been laid off, perhaps reach out to them directly so you know you have the capacity fully to support their transition.
How many people do you think you can help at any one time? One or two a month? Think carefully about this so that you manage your sense of success for yourself and those you decide to support.

The company owns the problem

Thanks to governance, ethics, compliance, good old-fashioned goodwill and a sense of doing the right thing, many organizations have been tweaking their layoff system for decades. Don’t be hard on yourself when, instead of getting the company back on track, you experience conflict, poor decision-making from others, sleepless nights or feel paralyzed by guilt or overwhelmed by your day-to-day being derailed with layoff decisions.

Here are some options to help you exit your talent with a clear conscience:

For your internal team:

Have your internal coach focus on leadership and team advancement to hack the new era. This will help the team avoid overwhelming and under-discussed guilt impacting innovation, gain a sense of the possible for the year ahead and get the business on track. I wrote about this here.

For the departing team:

Hire a coach for three to six months for your laid-off talent. The coach can support their transition, and help them deal with the trauma and the job search that could take months depending on their area of expertise.

Or,

Hire an outplacement service company. These services typically offer a cookie-cutter plan where the exiting employee and prospective job-hunter has to interpret the materials and execute them independently.

Or,

Provide a budget in the employees’ exit package to pay for a coach.

Layoffs can transform companies for better or for worse. How an organization handles those layoffs can affect its fortunes from that point forward. As a leader, what path do you choose?