The Manager's Conundrum: Whom to Let Go in Times of Downsizing

When I was a first-time manager, I experienced firsthand the impact of #layoffs within a large enterprise. The process was harsh and indiscriminate, as entire teams were disbanded, leaving behind a trail of disappointment and confusion. It was a stark contrast to the compassionate image the company had worked to cultivate, and it left a lasting impression on me.

Layoffs are a nasty business

Layoffs are a commonly used strategy by companies facing financial difficulties, such as declining revenue, increased competition, or industry shifts. In a memo to Google employees, Sundar Pichai, CEO of Alphabet, explains that the company's recent layoffs resulted from hiring for a different economic environment than the current one. Such decisions are not easy, but they are an unfortunate reality when companies must find a way out to stay competitive and maintain their financial stability.

Companies may also use layoffs to restructure, streamline operations, or cut costs before an acquisition or IPO. It can be a controversial decision when CEOs use this opportunity to unload underperforming employees. Salesforce's CEO, Mark Benioff, recently sparked backlash when he publicly criticized the performance of remote new employees during a company-wide call. Statements like these can be hurtful and demotivating for the employees impacted by layoffs, and it's important to consider how a company communicates the decision to its workforce.

Layoffs are a complex and delicate matter. The process can often be impersonal, particularly in large enterprises, where entire teams or groups may be targeted for elimination, leaving little room for individual consideration. As a manager, you are faced with making a decision that will impact the lives of the people in your charge. No one's ever ready for that. Moreover, there is no playbook for deciding whose name will go on the list and who will be spared the bad news.

HOW to decide, and what steps to take?

When determining whom to lay off, you may want to consider a few key factors:

There's always a list!

In any organization, there is often a list of employees who may be considered for layoffs. This list may be a spreadsheet with numerical data or a confidential memo shared among upper management. Regardless of its appearance, its existence means the contents can be open for discussion and negotiation. Don't wait for the list to come to you. Seek it out.

Negotiate!

As a manager, you must advocate for your team during layoffs. One way to do this is by negotiating with upper management to minimize the number of layoffs within your team. This approach allows you to preserve the expertise and knowledge of valuable employees and reduce the impact on your team. Additionally, consider finding alternative roles for good employees within different groups or keeping them on as contractors. Furthermore, discussing pay cuts as an alternative to layoffs can be a viable solution. Having difficult conversations is never easy, but it can be preferable to losing valued employees entirely. Building trust and political capital in advance may help you navigate the situation more effectively.

The no-brainer: Low performers go first

Employees who have consistently underperformed and have been the subject of performance improvement plans should be prioritized for layoffs. This group should be negligible if you and your HR partner have effectively managed performance in the past. This approach allows for a swift resolution without needing a prolonged evaluation process and may result in a more favorable severance package for the affected employees.

It's essential to remember that an employee's performance may not reflect their overall capabilities but rather a result of a poor fit with their current role or manager. Instead of dismissing employees in a harsh or unprofessional manner, it is crucial to handle the situation with empathy and professionalism. This approach avoids negative consequences, such as social media criticism, and ensures that individuals are treated with respect during difficult times in their careers.

Focus on the dream team

Don't assume you should not consider your best employees for layoffs. When restructuring your team post-layoffs, it's essential to focus on the skills and expertise necessary to overcome the challenges ahead. Your ideal team pre-layoffs may differ from the team best suited to meet the new business reality. Although it may be hard to let go of valued employees, it's essential to consider which individuals possess transferable skills that align with your future goals. By strategically re-building your team based on the challenges ahead, you can ensure that your organization is well-positioned to succeed in the new business environment. It's important to remember that a dream team that has yet to change may not be adequately prepared for the future.

Generalists over Specialists

Nowadays, we see the formation of specialist roles more than ever before. Chances are your team comprises a few generalists and a couple of specialists that practice a small portion of your domain exclusively. It would be a mistake to assume specialists are more valuable. Layoff of specialists may impact the overall operations less, as their functions can often be absorbed by other employees or outsourced. Generalists have a more comprehensive range of experience and may be more valuable in the long term as they can quickly adapt to new roles or projects.

Look for volunteers

Once layoff rumors circulate, it's natural for team members to reassess their motivations and personal goals. As a manager, you can use this process to your advantage by suggesting during a team meeting that this may be an opportunity for some to depart the company with a generous severance package. Some employees may use the severance to start their own business or take a sabbatical. By bringing up the possibility of downsizing, you may help expedite personal decisions and prevent employees from leaving the company at an inopportune time.

Consider personalities

Even the most amiable individuals can become toxic in the aftermath of layoffs. The surviving team may experience feelings of insecurity and reassess their relationship with their job, the company, and specifically their manager. It's important to understand that their perception of you may change, potentially negatively, due to the layoff decisions made.

The team dynamic will likely shift after layoffs, and choosing team members with stable and resilient personalities is crucial, even if they don't meet all requirements. Maintaining stability within the team is vital to avoid further disruption and sustain productivity.

People layoff = project downsizing

A widespread belief among executives is that layoffs will not impact the progress of ongoing projects. However, this is a fallacy. Managers need to reassess and realign their plans at the time of layoffs to guarantee that their team can meet expectations. To ensure proper preparation, you'll need to include a section in your layoff list outlining the impact on your team, their deliverables, and results in the following 6-12 months. Communicate the post-layoff scenario and the necessary resources and conditions for success. Thoroughly covering all angles will prevent uncomfortable conversations down the line.

Be aware of biases, and use them strategically

You're sitting in front of a list and need to make decisions. At this point, it's essential to be aware of biases and take steps to mitigate them. Be aware of personal biases and seek input from diverse colleagues, specifically your HR and Legal partners. Take steps to ensure the surviving team is diverse and balanced to avoid legal trouble and benefit from various perspectives and approaches. Presenting potential biases to your HR team may even save a few team members from being laid off. All is fair in love and war. You are a general fighting for its soldiers.

Carefully respond to rumors

Managers faced with company-wide layoffs may feel uncertain and caught off guard, especially if they are their team's first point of contact. To handle this situation, it's crucial to remain composed and gather as much accurate information as possible. However, it may not be your responsibility to communicate the news to your team if you don't hold a leadership position, such as CEO, Head of People, or CMO.

Rumors can negatively impact your team's morale and productivity, so it's important to communicate with them proactively. Acknowledge any rumors they may have heard and provide any information you can share. Reassure your team that you will communicate relevant updates as soon as they become available. This approach can help ease the negative impact of rumors and provide your team with a sense of support and stability during challenging times.

This, too, shall pass

Layoffs are never easy for anyone involved and can leave a lasting impact on employees, teams, and the company as a whole. The process of deciding who should be laid off can be complex and difficult. Still, considering factors such as performance, future goals, and employee motivations can help managers make smart decisions. It's important to handle the situation with empathy and professionalism and to focus on rebuilding a well-positioned team for future success. Managers must recognize that every layoff decision has consequences, and it's crucial to approach the situation with care and consideration for all parties involved.

And remember, this, too, shall pass.

Good luck!