Leading Your Company Through Layoffs

How to Lead Your Company Through a Layoff

How to Lead Your Company Through a Layoff

It’s never easy to be a leader, but it’s certainly simpler to be a leader in good times than in bad. When profits are down and your company’s back is against the wall, you may have to confront an ugly truth: it’s time to let some of your team members go as part of a layoff.

The key is to be as transparent as possible and to ensure that your company remains in compliance with the applicable labor laws.

Here are three suggestions on how to manage your company through this difficult situation:


  1. Create a communication plan.

Dragging out the layoff process builds employee anxiety and hurts productivity. Having proper communication can improve transparency and relieve stress. Depending on the size and culture of the organization, it may make sense to call an all-hands meeting or a departmental meeting first before speaking with employees one-on-one. The company’s leaders should hold themselves accountable for the reduction in force and explain what went wrong and how they are fixing it.


Meanwhile, the company should have a plan for communicating with the media and public about the layoffs. To get ahead of any negative publicity and appear more forthright, it is a good idea to send a press release or publish a blog on the company’s website while you announce the layoffs internally.


Finally, keep in mind that labor laws may also require you to take steps to provide advance notice of a layoff or plant closing, depending on the size of your workforce, the number of employees affected, and the circumstances surrounding the reduction in force. The federal Worker Adjustment and Retraining Notification Act (WARN) requires employers with 100 or more employees to provide advance written notice of a plant or facility closing affecting at least 50 employees at a single worksite at least 60 calendar days in advance. They must also provide advance notice of a mass layoff that affects 500 or more employees (excluding employees who work fewer than 20 hours a week) or that affects between 50 and 499 employees (excluding employees who work fewer than 20 hours a week) if the affected employees make up at least a third of the company’s workforce. To set WARN in motion, the layoffs may occur on one date or over a period of 90 days.


If the layoffs are due to unforeseeable business circumstances or a natural disaster, or if the company is faltering and cannot obtain the money it needs to avoid closing a plant, advance notice may not be required under WARN. Otherwise, employers must notify employees, including managers and supervisors, of the layoffs, as well as employee representatives, the state agency managing dislocated workers, and the chief elected official of the local government where the worksite is located.


About half of U.S. states have additional laws governing layoffs. For example, California’s WARN Act covers employers who employ at least 75 employees.


A violation of WARN can be costly: an employer may be required to pay affected employees wages and benefits for the period of the violation, up to 60 days.


  1. Train managers on how to deliver the layoff message.

It is the responsibility of HR and legal to work together to create talking points for the managers, including what should and should not be said. Managers should be prepared to have packing boxes and tissues on hand in case they’re needed. Separately, managers should deliver the news to each employee individually who is being laid off. Managers should give employees the time needed to pack their belongings, whether that’s immediately or over the weekend when fewer colleagues are present.


  1. Talk with the remaining workforce about the future of the company.

Employees who survived the layoffs will likely have questions about whether more layoffs are pending and their job security. Provide an opportunity for them to ask questions about the reasons for the layoffs and the plans to move forward at small team meetings.


Employer Compliance With Labor Laws

To learn more about how to comply with federal and state labor laws like WARN, including poster requirements, visit our Labor Law Updates center at postercompliance.com.