Entrepreneurship and Layoffs

Many companies today simply do not have the revenue and profitability to continue to retain all their employees. Firing someone because of downsizing and economic conditions can be heart-wrenching. The successful executive entrepreneur utilizes their people skills to set them apart, and properly handling a “reduction in force” can, 1.)  help your company and personal reputation; 2.)  avoid giving you a bad reputation and; 3.)  make you a winner.

As the former CEO of publicly-traded Aris Corporation (formerly NASDAQ: ARSC), in 2000/2001 we reached a situation in the company where layoffs were necessary for the survival of the organization. As a business consulting specialist, Aris’ major source of revenue growth was tied one-to-one with employee growth and profitability was directly related to how well we utilized those employees. As demand waned, we were left with no other choice than to reduce our headcount. Those were very difficult times for me personally because so many of the people we fired had become my friends.  However, it was ultimately my responsibility to insure the survival of the company as a priority to any individual job.

We learned many lessons in those days and here are a few tips from our experience:

1. Prepare in advance. The larger your organization, the more preparation is needed by giving managers advance warning, gaining their insight and having a team carefully perform the financial analysis, personnel analysis and draft the message and timing of internal and external communications.
2. Review company policies such as the number of weeks notice, severance, outplacement service, use of company facilities and equipment that may be useful post termination.  Also review the policy for continuation of medical/dental coverage for former employees.
3. Consider the timing of the announcement. You can argue Monday or Friday but frankly, there is no perfect day of the week for announcing a layoff. What matters most is to allow yourself and your team sufficient time to helping employees recover from the initial, terrible shock.
4. You may want to consider following up with employees, including:
   • Insure that Human Resources is doing everything possible for those who are laid off.
   • Make telephone calls to your team’s collective network on behalf of employees, to steer the employee towards people who might advise them or even hire them.
   • Write a glowing letter of recommendation. Your company may prohibit this, but in a layoff situation, you may want to bend the rule.
   • If these are your friends, you may want to stay in touch with them by taking him and his family to dinner and calling them every couple of months. You never know when your kind actions will come back to help you in the future.

It isn’t any fun losing a job and it’s no fun to tell someone they’re losing their job. If you take the time to prepare, provide support, and to communicate effectively, you may just find the situation a little less painful. You want to be an Executive Entrepreneur? Then show it.