How to Lay Off Employees

Step 3: Plan the Logistics and Execute

There is no great time for a layoff, but most experts recommend you do it in the middle of the week. Also, first thing in the morning is preferable, mainly so you don't have to sit around all day waiting to act.

If you are just firing one employee in a small, open office, to limit the gawking of others and the affected employee's embarrassment, consider firing him or her off-site, say, at the corner deli. But no matter where you hold the meeting, ask an HR representative (if you have one) or other senior manager to join you. "Often there is a credibility dispute and a question of what was said," says Rooney, and having an extra person in the room helps to mitigate that.

If you have several employees to fire at the same time, you'll need to carefully work through the logistics. You can't be in 10 meetings at once, and you want to avoid having employees all sit at their desks with sweat pouring down their faces, waiting to see if they will be called in front of the firing squad next.

Eric Spitz, CEO of Medford, Massachusetts, digital sports technology firm Trakus Inc., recently had to lay off 40 percent of his staff, or about 18 people. On the morning of the layoff, Spitz held a meeting for all employees and told everyone there would be a large number of layoffs, explaining the rationale behind the decisions. Then he told staff to return to their desks. "If they had an e-mail waiting for them," explains Spitz, 31, "they'd been affected and had to return to the conference room for their paperwork." The terminated staff then had until 1:30 p.m. to collect their belongings and leave.

As for the actual termination meeting, don't give long speeches, argue or allow a debate to ensue. You've made your decision, and you cannot allow yourself to be talked out of it. A meeting to fire someone need not last longer than 10 or 15 minutes. Explain your reasons, review the paperwork, and move on.

Step 4: Deal With the Aftermath

Even if you're firing one person, in a small company there could be a large impact on remaining staff. Be prepared to address them immediately, and assuage their fears that their necks may be next on the chopping block. Also, don't reveal details about the terminations-remember, many of your employees may be good friends with those ex-employees and may be emotional about the termination. After all, while you've been planning this event for weeks or even months, everyone else will feel like they were suddenly hit over the head with a sledgehammer.

Lastly, know that no matter how much careful planning you do, something will go wrong. So be flexible. Your employees may come in late or call in sick. Three people may be on vacation. Or, as has happened to this author, you may forget that it's "Bring Your Kids to Work Day" for the whole office.

Do your best, be decent, and if it helps you sleep at night, just remember this: By making your company more efficient, you're doing everyone a favor.

As a CFO, CEO and consultant, Dale M. Galvin has noticed an inverse relationship between the quantity of hair on his head and the number of employees he's terminated. He holds an economics degree from Cornell and an MBA from MIT, neither of which was able to save his last two companies from the guillotine. He is now traveling the world seeking new methods of making employees' lives miserable.

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This article was originally published in the October 2001 print edition of Entrepreneur with the headline: How to Lay Off Employees.

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