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Even in good times lay offs of people can happen for extreme poor performance or disciplinary issues. However, Lay offs in the time of recession is quite another things. Usually several departments gets notice to identify people they MUST reduce and find alternative team size planning.

What are the criteria and evaluation procedures should be to judge how many people should be in lay off and who should be targeted? How can you ensure that decisions of such layoffs are never emotionally driven?

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5 Answers 5

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I disagree with this sentence:

Even in good times lay offs of people can happen for extreme poor performance or disciplinary issues.

And thinking this way is probably why you aren't sure how to run a layoff. When people perform extremely poorly or have disciplinary issues, and you decide to terminate their employment, that's not a layoff. You fired them. A layoff is when there is just not the money (usually because there's not the work) to support the people you have. It typically happens in three stages, all optional:

  • Identify a large category (the Swindon office, the graphic arts department, the 3rd floor) that is costing more than it brings in and that you will simply close. You won't be doing that activity any more.
  • Identify particular individuals you want to "rescue" from that decision and bring to a part of the company that is staying open.
  • Identify particular individuals from the part of the company that is staying open who need to go, in order to make room for the ones you are keeping from the closed part. This may be complicated if the ones you want to keep decline your offer of a new work location or responsibilities - you can't always be sure at the start how many need to go in this step.

Another pattern is that you don't close some part of the company, instead you shrink the workforce by a certain number of people or a certain total payroll, so you just do step 3 above.

There are three ways to choose who goes in step 3 (and possibly who is saved in step 2):

  • mechanically based on time with the company. Most recently hired is first to go. People often think this is the fairest, but it's often not best for the company
  • keep the most versatile people (even if they're not the highest performers) so you can still offer your existing services with a smaller team
  • keep the best performers

It's important for your staff to know that a person chosen for layoff is almost never a poor performer. Firing poor performers is an easy way to save money and has usually been done before layoffs start. They might be an ok performer who is just not the best. They might be the best at something the company isn't going to do any more. They might be the best, but only at one thing and now the company needs people who are ok-or-better at two things.

It's up to you whether you tell anyone the reasons for your choice. I found the sentence "we chose who to layoff based on the mix of work expected in the coming months" made people feel better without encouraging them to come and argue about it.

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Layoffs are nothing more than a shortened period of the status quo. The top performers should be promoted, and those contributing the least value should be sacked.

When we were reorganizing, I remember the leader of our organization said it best:

"Yes, we are reorganizing. I suspect the people that fear it most are the ones that have the least to worry about. If you are engaged in the company, productive in your work, and genuinely care about your team, you are probably already doing the things you need to be doing. if this doesn't apply to you, I have to ask you two questions: are you applying yourself? And if not, why did you bother applying here at all?"

In other words, be the best worker you can be. In the long run, it's the only strategy that'll work.


If you are making the cuts, the same advice should apply. Keep your best talent, regardless of function, and use the opportunity to simply accelerate the departure of your underperforming colleagues.

Typically, in a layoff situation, you have eliminate a certain number or percentage of positions. Remove the psiitons, then fill those positions with your best talent. For everybody else in this game of musical chairs, when the music stops, the people without a seat need to go home.

If your whole function is made redundant, top performers usually have connections in other departments, or if nothing else, in similar functions at other workplaces. If nothing else, you will have the satisfaction of knowing you did all you could.

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Lay offs are a business decision. The best choice is to lay off those people whose loss will have the least impact on the bottom line. Any other decision is poor business and short changes those employees left trying to keep the business going forward.

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Generally managers are given a target number of how much they need to reduce the budget ina layoff or told which departments need to go entirely (suppose you are closing one whole line of business, the easiest way to do the layoff is to let all of those people go). Depending on the the country or the organization, you may have specific rules/laws about the order that people can be chosen for a layoff.

While it is true that it is prefered to keep the strongest performers when you can, layoffs are often about reducing functions. So it doesn't matter if your top performers are in the department you are told to eliminate entirely particularly if it is a specialist position and they cannot qualify for the jobs that are staying.

Further, the lower level managers are generally not consulted in a layoff )as they may be people inthe pool to be laid off) and they are the people who know the actual performance best. So if you as a lower level manager want to help your people be the ones who stay in a layoff, make sure they have the best performance evaluations the oprganzation will let you give them. Make sure to nominate your people for awards. Make sure to let senior mangers hear their names in a positive way.

Don't try to base your decsion on personal factors like who you perceive will be most hurt by the layoff. Everyone laid off will be harmed and you do not know all the factors in thier financial lives to know who will be most harmed. So don't lay off the single people because the ones with kids need the money more (Hey I have to eat too and I may have children and I don't have the luxury of a second income already coming in), don't layoff the women because they all have men to provide for them (we don't), etc.

Do try to identify who might have critical knowledge about the work that will be remaining and try to make a case to keep those people. We had a layoff one time where all the choices were made by HR and Finance (who work in a spearate state and thus did not personally know anything about the people except what was inthier official record) and they appeared to chose basedon a combination of performance eveluation or salary with no reagrd to how that woudl affect ongoing projects. We lost several key people on a multi-million dollar project. It caused delays and cost overruns.

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First of all know the law in your jurisdiction. Make sure you are not being discriminatory, that can lead to a law suit.

Understand why the layoffs are being made. Did you just lose a contract? Are you dropping a product line? Are you closing a store? Or are sales / profits down?

Can you absorb some of the people into other functions/ locations? Some organizations can reduce the number of people losing their job by freezing hiring throughout the company, and asking for current employees to transfer. Have you set up a way for other managers to reach out to your employees to fill their needs?

Once you have exhausted all the other options you then have to see who is left in the functions/ areas that have to be cut. If they don't have some skill that you will need in the vary near future you will have to let them go.

Let employees in danger of being laid off know as early as possible so they can look inside and outside of the company.

The worst situation is when you have to let people go from areas that are to survive the reorganization, but other more valuable people in areas to be cut need to be saved. The best approach is to do the cuts in two stages. First merge the two organizations, then a few months later cut the excess positions. The merger puts people on alert. Some will move on their own, thus reducing the number of hard choices. It also lets you do more direct comparisons of individuals.

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