Audio version 9 mins or it’s on Spotify
A Gut-Wrenching Experience
Laying people off is a gut-wrenching experience for anyone who likes their staff. And that’s most small-medium business owners. You work right alongside them every day, and they do a good job. You know all about their three adorable children. You know they’ve been having difficulty making ends meet lately since they bought a modest house.
And now you have to tell them it’s over, at least for the medium-term.
It’s not like big companies, where the CFO just goes ‘reduce headcount by 12.5%’ and the victims get batch-whacked by generic HR operatives.
When you’re laying people off, it’s obviously a brutal blow for them. It’s hideous for you. If you have to do it, it’s essential to do it right. Particularly when it’s in large numbers and chaotic circumstances like now.
Your People Will Remember March 2020 Forever
The actions you take through these few weeks will be remembered for decades.
Will you throw your staff over the side the very moment revenue stops? OK I get it if you’re a restaurant or bar that runs on razor-thin margins, as soon as you close there’s no cash left. But is laying people off instantly really necessary for every business?
Our view is that our single most important thing is supporting our people. It’s taken us a decade to assemble an incredible team who will generally walk over broken glass* for us and our clients.
Here’s what we’re doing. Two weeks ago, as the curtain started to come down on the events business, we worked out how much cash and receivables we had left. It was really important to let people know where they stood as quickly as possible, rather than leave them hanging on the industry rumour mill.
We had all-staff meetings in each state and gave everyone a detailed picture of how dire the situation was, and what we planned to do. The week we held the meetings, we hit zero revenue as the government banned any event that we were likely to work on.
That plan is to keep most of them on shorter working weeks until we don’t have the cash to do that. How long we can do this is shifting fast from day to day. There’s some government stimulus cash coming. But we are also owed a lot of money that we’re now unlikely to see until 2021. If those debtors survive.
We need to keep enough cash left to put the business in cold-storage for a while, so we’re able to get it started again when the all-clear whistle blows and start employing people again.
But wherever it ends up, we did the best we could for our people and I’m guessing they will remember that for a while.
Here are six tips to get through this as best as you can.
1. Tell Them In Person
Word on the streets is there were a lot of layoffs via bulk email last week, well before the indoor gathering restrictions came in.
If you have hundreds of casual staff, there’s not much alternative.
But if you’re an SME, be fucking ashamed if you did that. You need to tell them together. Hold a well-spaced meeting in the carpark. Do it on Zoom. So they at least feel together when it happens. Rather than alone and unwanted, going home to be isolated with a family already consumed with a full catalogue of anxieties, feeling like they’ve let everyone down.
Emails are cold. Doesn’t matter how well written or how thoroughly checked by HR. They get misinterpreted in ways you cannot imagine, because you’re not there to answer questions. They will leave simmering resentment and ill-will that you could have dealt with verbally on the spot.
A year from now, you’ll be trying to recruit good people and they will not apply because they heard you were a fire-by-emailer in 2020.
2. Stick To What Affects Them
Get to the point quickly, do they have a job or not? You’re wasting your breath with anything longer than a two-minute preamble, because all they’re hearing is an inner monologue going:
Do I still have a job?
Do I still have a job?
Do I still have a job?
Do I still have a job?
All your material about future company strategy and emerging from this stronger or whatever is irrelevant. They want to know the facts and figures of how much money they’ll be getting to survive on, what happens to their leave and other entitlements, and if you plan to keep the business going post-virus.
They’ll want to know how long the virus shutdown will last, and the correct answer is you don’t know. So say that. Don’t speculate about stuff you read on Facebook. It’s really unproductive in this, the most unpredictable business environment in our lifetimes.
3. Different People Take Bad News In Different Ways
Some people just seem to be cool with it. Others might scream and shout. It’s all OK, people will respond in ways that have been hard-wired into them since childhood. It’s not a moral failing to take it badly.
This is a time to be patient, and work through people’s concerns in the way that suits them best. Let the meeting be over when they say it’s over.
4. Know What You’re Actually Doing
Are you standing people down? Making them redundant? Putting them on paid leave then unpaid leave? Do you know the difference? You need to know so you can tell them the real story. Right now businesses are furiously calculating if staff on two or three days a week are better off on the new, larger Newstart, now rebranded JobSeeker Payment.
This blog is not the place for detailed analysis of awards and workplace law, because I’m not a pro in those areas and it’s too many words. However, you should set aside an hour or two to read the Fair Work Australia Covid updates. We’ve spent a lot of time in there in the last week, most of what you need is in there. They’re updating it pretty frequently, every couple of days.
There’s a handy redundancy calculator here. If you’re letting someone go, you need to know the exact numbers of what they get. Especially if you’re thinking about redundancies, they can be expensive enough to kill your business on the spot.
The approach you take obviously depends on what your long-term goals are. Are you closing down the business, never to return, or hoping to regroup post-virus?
Staff layoffs are a bit of a regulatory free-for-all at the moment. Trading while insolvent is now legal for the next six months at least, and it’s hard to see minor Fair Work infringements being heavily punished in the corona aftermath. But it’s still important to do the right thing by your people wherever you can.
5. Openness Works
As you can probably tell if you’re a regular reader here, we’re very open about our business. That whole ‘need-to-know’ secretive management style just feels like an outdate 90s vibe to us.
In regular times as well as virus crises, we do all-staff presentations with figures on how the business is going, because if it’s going well, they’re going well.
And if it’s going badly, it’s vital they know the score. So when you’re doing meetings like the ones we’ve just had, you’re presenting hard facts rather than just executive platitudes like ‘well-positioned’ which mean nothing.
It’s pretty striking to see people come from other businesses and just go: wow you guys just tell us everything. It really does motivate them to do a better job. And the ones who pay attention will be better future managers, because they’ve seen hands-on how any given operational change has a direct effect on next month’s P&L.
Or did, and will again one day when we can start trading again.
6. Look After Yourself
If you feel the pain of laying people off, you finish the hard conversations absolutely drained, plus guilty that you’re still here with a job**. It is a fucked-up experience and one that does more damage to your system than you think. Try not to work all through the weekend right afterward. This virus caper is a long game and you need to be intact for everyone else who depends on you.
(I am particularly poor at resting or relaxing after extended high stress, but I genuinely believe this hypocritical tip to be correct).
Until next week, comrades. Best of luck out there.
* Metaphorical broken glass, we’re very safety-conscious here.
** A job but perhaps not in the fully paid sense. Plenty of biz principals I know are working 5 days for a 1 day salary now.
More Covid business survivor tips here Covid 19: Nine Tips For Business Survival and here What Now? Covid Business Survivor 2.
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More sage advice, thank you biz-yoda.
Good to focus on the heart/feelings when economic decisions are required.
What’s your thoughts on Career Transition services at the moment Ian? If done right, they can provide helpful reevaluation for ultimate career happiness…and soften the blow. BUT, they are mainly promoted as getting your next job, and there just aren’t the jobs right now? If you give the choice to the employee – “do you want $2K-$3K on career support or into your account right now”, most would probably say in my account, but is the long-term bigger picture offering the better option for some?
Ian, you’re a truly class act.
Sorry just saw this but thanks Paul!