Un-Hiring Your Employees

Whether You’re Firing or Cutting Back, Letting Go is Part of Being in Business

The Labor Department recently reported that small businesses account for a disproportionate share of job loss in the current economy. Companies that employed fewer than five workers—where 5.1 percent of the private-sector workforce is employed—accounted for 14.5 percent of all job losses in the fourth quarter of 2008. Whether your business is one of the many that has had to downsize in the last year, or you’ve realized an employee is no longer a match with your organization, it’s likely that in the course of owning your business, you’ve had to let someone go. Usually ranked as one of the hardest parts of owning a business, here are five ways to make the process easier.

1) Prepare. Once you’ve accepted that making a staff adjustment is necessary, laying out your plan is key. Like any other business decision, it’s important to carefully strategize and follow through on your process. Consult with an attorney and determine what (if any) details you want to cover with the individual(s) you’ll be letting go.

2) Call the meeting. You’ll want to make sure that the meeting is private, attended only by you, the employee and a witness. In a small business, this can be challenging. Consider hiring a consultant to help with the process to ensure everything is handled properly and both you and the employee are represented fairly.

3) Start strong. Tell the employee the purpose of the meeting within 30 seconds of them entering the room. Chances are, they’re already aware that this isn’t a typical meeting. Be straightforward while being respectful and, especially in the case of a layoff, compassionate. Prepare yourself for an emotional response and do your best to maintain your dignity and composure.

4) Wrap it up. In many instances, this step is the hardest. Business owners have two options: you may allow employees to collect their belongings or you may have another employee collect things for them. Don’t forget to collect keys, ID cards and other company property in the employee’s possession. Depending on the situation, it may be advisable to escort the employee to their desk during the collection, but it is not always necessary. Many employees prefer to collect their belongings after business hours if given the option. Plan to have someone available to assist them with this process.

5) Inform other employees. When one of your employees leaves, even of their own volition, communication with your remaining staff is critical. As the business owner, keeping the reputation of the terminated employee(s) intact is important. You’ll also want to keep the details confidential. The most important aspect of this step is communicating job security to your remaining staff. Self-preservation is usually the greatest concern for employees who continue on after a layoff.

Please note: Since there are a lot of legal issues surrounding employee termination (and employment laws vary from state to state, and country to country) it is always a good idea to seek the advice of legal counsel.