Letting an employee go, no matter what the reason, is never an enjoyable task. The truth is - and leaders should never say this to someone who is losing his or her job - that it's tough on the boss. This is one of the heaviest burdens a leader has to shoulder.
Using the right terminology and following basic rules doesn't make it easier to let someone go, but it can ensure the process is carried out with honesty, integrity, and dignity.
Staff reductions are a reality, but by which method? Here's a quick look at different situations you might face as a leader:
Lay-offs
Be aware that this term has a specific connotation: it implies that a company is going to let the employee go for a short period of time, and then bring him or her back. If that's the case, fine. If a company has no intention of continuing employment in the future, then saying, "You're laid off," can have legal implications. Employees can - and have successfully - sued for wrongful termination when they were "laid-off" but never rehired when the company recovered.
Reductions-in-force
RIFs are similar to lay-offs but indicate that the termination is permanent. There is no expectation of rehire, and that should be absolutely clear to the affected employees. As with lay-offs, RIFs are typically a result of financial difficulties. If, for instance, a company loses several major customers, it may have to do a reduction-in-force.
Selective reductions-in-force
Here, the reduction is not across the board. Using the example of the company that lost major customers: say they had employees who were dedicated to these accounts. The customers cancelled the contracts, so the company no longer needs those people. The RIFs don't touch anyone else.
Furloughs
Like lay-offs, furloughs indicate employees will be rehired. During the debt crisis of 2013, the Federal Government furloughed some 800,000 employees, and private companies can resort to this option as well. Some employers give their people different furlough options: they may, for instance, have to work a four-day week instead of five or work two weeks on, two weeks off. Unlike lay-offs, employees might still receive benefits, such as health insurance or even sick days or vacation time to cover part of the furlough.
Termination for cause
Instead of letting someone go, temporarily or permanently, for financial reasons, terminating for cause occurs when someone has made an egregious error or has committed a fireable offense. Whether he or she breached contract, lost a major client through mistakes, violated a company policy, or committed any number of other acts, the termination is based on their behavior and/or performance.
Here are some guidelines to consider when letting someone go:
- Always terminate with dignity. This is critical for a few reasons. One, you're dealing with a human being who just lost his job, one of the most stressful events in life. And two, if you alienate, antagonize, or compromise the dignity of an employee, your chance of being sued for wrongful termination increases. Don't make him do the walk of shame; don't make him pack his belongings in a cardboard box while his coworkers and friends look on; don't have an armed guard escort him from the building (unless there is a real threat).
People don't become leaders because they like to let employees go. It is one of the most difficult, but often necessary, aspects of leadership. Make sure you are using the right terminology so employees have realistic expectations and that you always lay-off, RIF, furlough, or terminate with dignity.
Mike Harden has developed exceptional depth and breadth of knowledge over his 40+ year career as an entrepreneur, executive, teacher, mentor, and coach. Today, as one of DC's premier Executive Coaches, Mike helps good executives become great leaders. Contact Mike for an executive coaching session.