A Guide to Layoffs: How to Avoid Them and, If Necessary, Handle Them the Right Way

In today’s turbulent business environment, many companies have struggled to stay above water. I know a thing or two about overcoming this kind of adversity: I started my current company, Fingerpaint, in 2008 at the peak of the Great Recession. Despite this, I’m proud to say that I have never laid off an employee due to a downturn in business.

Personally, I advocate against using layoffs as a means of saving money. They put your company culture in peril, as your remaining workers will be distracted and in constant fear for their own jobs. Additionally, with a smaller workforce, the quality of your company’s output may suffer, which could spark further losses and difficulty.

I know that, in some circumstances, layoffs may be unavoidable. Below are some tips I’ve learned to avoid staff reductions, as well as some advice on how to handle them with empathy when they are absolutely necessary.

Trim Back Your Budget

The first tip to avoiding layoffs is taking a critical look at your budget, where you might find significant opportunities for saving that you initially overlooked. For example, a company with a mobile sales force might consider reducing or eliminating travel costs and handling things virtually instead.

If you haven’t evaluated your vendors in a while, it might be a good time to shop around to see if you can find better rates or renegotiate rates with your current suppliers. If you offer a lot of in-office perks like catered meals or snacks, consider scaling back until you’re in a better financial position. Every step you can take to trim excess from your budget helps you maintain your complete staff.

Innovate to Find New Revenue Streams

We all know the saying: “Necessity is the mother of invention.” Hopefully, your business exists to address the needs of your customers. As time goes on, those needs might shift, and there might be opportunity to innovate and meet the consumer where they’re at.

Evaluate your business to see if you can offer new products or services. By adding additional revenue streams, you might be able to make up for the downturn in business that had you considering layoffs in the first place.

Reallocate Staff to Different Positions or Projects

I would also recommend assessing your current staffing model. Are there areas of your business that are growing even during difficult times? Reallocating staff to other areas of your business or assigning them to work on new offerings you introduce could be a way to make sure time is being used productively while also keeping everyone on payroll.

Additionally, if you work with freelancers or temporary employees, consider bringing their work in house to save on those costs, as they can add up quickly.

When Precautions Aren’t Enough

Even if you take every step you can to avoid layoffs, the business climate may simply be too difficult to navigate without a reduction in staff. In this case, it’s best to be as transparent as possible with employees as you seek to ease the pain layoffs can cause.

Don’t Drag Out the Process

If you are moving forward with layoffs, I would recommend doing them all at once. Don’t conduct layoffs over a course of multiple waves. This will only increase the stress of your remaining staff members. It’s best to rip the band-aid off so that you can assure your remaining employees their jobs are safe and redirect their focus back to work.

Communicate, Communicate, Communicate

Communicate clearly with both the employees you are terminating and those who are remaining employed. It’s best to be honest with everyone about the reason for the layoffs, and people much prefer overcommunication in these circumstances to a lack of information.

Layoffs and bad news in general can set the rumor mill in motion, so give your people opportunities to ask questions, and be sure to answer them honestly. Those who are still employed will appreciate your candor, and your business will recover from the shock of the layoffs more quickly as a result.

Offer to Help

Finally, see what resources you can provide to the people you’re laying off. Can you give them passes to a career fair? Can your recruiting team help them update their resumes before they depart? Any assistance you can provide, including making introductions or helping people navigate the unemployment system, will go a long way. Not only are you doing the right thing for your former employees, but you’re also keeping your company’s culture and reputation in a positive light.

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No business leader relishes the decision to lay off staff, but many could handle it better than they currently do. When you communicate clearly with all of your employees, start with empathy for everyone, and help those you must let go, you’re making the most of a bad situation. Handled the right way, even moments of crisis can be opportunities to reinforce your company culture and reinvest in organizational values.

Ed Mitzen is the author ofMore Than a Number: The Power of Empathy and Philanthropy in Driving Ad Agency Performanceand the founder of Fingerpaint.