Good ways to deliver bad news

Open talk, empathetic listening make staff cuts more than a cold exercise in cost saving.

The e-mail came Monday, April 6, in the wee hours of the morning.

“Regretfully, the firm has to engage in some significant spending cuts,” it read. “This now must include laying you off, effective immediately. I have enjoyed working with you and have appreciated your help. If you have personal items in the office, you are more than welcome to collect them at your convenience.”

Sydnie Taylor was shocked by her boss’s e-mail. A paralegal at a Houston law firm, she’d been preparing to go to work when she happened to check her e-mail at 6 a.m. “This could have been handled much more appropriately,” she says.

Many laid-off Americans share the sentiment. In an era of mounting layoffs, 88 percent of employees rated the handling of their layoff as poor or very poor in a new survey by Telonu.com, a workplace ratings site based in Milpitas, Calif.

But other companies, aware of the importance of treating people well, are taking a different path. Faced with the difficult process of downsizing, they’re talking openly and listening empathetically – not only with the people leaving but also with those staying. And they’re laying the groundwork for improved worker loyalty and, sometimes, an internal cultural change that should pay huge dividends when business recovers and the economy prospers.

“Despite the horror stories of surprise pink slips and rude security escorts from workplaces, most employers and managers care very much about their employees and do not relish some of the hard choices required by the current economy,” says Maury Hanigan, a layoff coach in New York.

The trick is how to do it well.

To avoid confusion, executives at Continuum, a design and innovation consulting firm in West Newton, Mass., spent weeks planning the best way to lay off 18 employees – a 14 percent cut in staff.

At 11:30 a.m. on a Tuesday in March, executives met with the workers they were going to let go – individually and in groups of three or four – to explain the situation. At noon, the entire company assembled to hear details.

“Our whole culture is built around transparency and candor,” says Kory Kolligian, Continuum’s chief operating officer. “The most important thing is for people to understand why these decisions are being made. Our revenues are smaller than they have been. We cut costs in every way before we cut salaries and people.”

THE IMPORTANCE OF INTEGRITY

To ease the transition, Continuum increased its severance package and paid full health benefits for those leaving. When work picks up again, the company will bring people back on contract.

“People were upset to be laid off, but not upset by the way we handled it,” Mr. Kolligian says. “Even when we’re constrained by the economy, we can’t lose sight of fair play and integrity.”

Fair play and integrity are key elements of a successful layoff, workplace specialists say.

“When organizations treat people with respect and dignity and use fair procedures, they are signaling that they care about the well-being of their employees,” says Edward Kass, a lecturer at the University of California, Berkeley. “When employees feel that the organization cares about them, they reciprocate by caring about the organization’s well-being and act accordingly.”

Employees at Agilent Technologies knew well in advance that they were going to be laid off when the Santa Clara, Calif., maker of measurement equipment downsized several years ago, Mr. Kass says. Those slated for layoff “actually felt bad for the people doing the layoff and worked very hard right up to the last moment.”

The best organizations do not simply get rid of people, they rethink their culture and build better relationships with employees and customers, says Aniel Mishra, a visiting professor of business at Duke University in Durham, N.C. “Companies need to focus not just on getting smaller but on getting better and more innovative.”

When High Steel Structures in Lancaster, Pa., needed to trim its staff, executives were “very upfront” about it, Mr. Mishra says. Six months later, business improved. Although everyone had found a permanent job elsewhere, they all came back, a testament to the company and the way it handled layoffs.

The best companies approach layoffs as a last resort, says Amy Lyman, director of corporate research at the Great Place to Work Institute in San Francisco. She is seeing more creative approaches to avoiding layoffs. That includes creative scheduling. Some companies are switching to a four-day week. Others are using time off without pay and furloughs.

A few larger organizations are also creating online and real-world networks for their alumni, where they can stay in touch with others who went through the layoff, says David Grossman, president of a communications company in Chicago.

One company, Astellas Pharma US, is not reducing its own staff. Yet it is launching job-search workshops for laid-off family members of its employees. The full-day workshops include job-search counseling, networking advice, and career-building guidance.

When downsizing is necessary, Ms. Lyman finds that the best firms “go what they consider the extra mile in providing benefits, extending health insurance, and making COBRA payments,” which extends healthcare coverage for the unemployed.

If businesses don’t handle layoffs properly, they risk lawsuits. Nearly 90 percent of discrimination charges filed with the Equal Employment Opportunity

Commission are related to employee terminations, says James Bucking, an employment lawyer in Boston.

AVOID PUBLIC SHAMING

One bad practice is to make employees feel like criminals once they are notified that their job is being eliminated, says Paul Falcone, author of “101 Tough Conversations to Have With Employees.” “Be sure to explain to the employees that their computer might not work when they get back to their desk, that it is simply standard procedure, and if there’s anything they need, it can be arranged to get that for them at a later time. More importantly, don’t have security escort the individual back to his desk and off the property, unless you’re in a high security-type of business. No public shaming is necessary.”

The best companies do just the opposite, expressing respect.

“Sometimes managers are afraid to say they’re sorry because it infers some kind of guilt or responsibility for the individual getting laid off,” says Mr. Falcone.

“But hearing ‘I’m sorry’ and ‘Thank you’ is a universal human need that allows us healthy closure on unexpected changes in our lives, including job loss. Don’t let someone walk out the door grumbling, ‘After all these years of dedication, they didn’t even say thank you or that they were sorry for letting me go.’ ”

As Kass says, “It costs so little to treat someone with respect and dignity and listen to their point of view.”