7 steps for making IT layoffs as painless as possible

When layoffs become necessary due to poor market conditions, increased competition, overly optimistic planning or any other reason, it’s often left to IT leaders to make the tough decisions and to deliver the bad news to the team. Yet before deciding whom to let go, who needs to stay and how to minimize the impact on essential IT operations and services, it’s important to approach the assignment like any other major project. What’s needed is a plan that defines goals, sets a timeline, minimizes disruption and anticipates potential problems.

The following seven steps provide an organized path to effective staff reduction with minimal pain and confusion.

1. Confer and plan

To reduce the possibility of making ill-informed and potentially costly mistakes, Alan Zucker, founding principal of IT advisory and training firm Project Management Essentials, advises working closely with the enterprise’s human resources and legal departments.

“Layoffs are governed by both local and federal regulations,” he explains. “Large corporations generally have well-established procedures to insulate themselves from legal actions from the impacted employees.” While following HR and legal requirements can be frustrating at times, these rules exist to protect the enterprise and its leaders from costly lawsuits and fines.

After acknowledging that laying off team members is inevitable, establish a solid plan of action, says Dan Kelly, a senior partner with The Negotiator Guru, a firm that specializes in helping clients negotiate and manage complex IT contracts. “It should start by creating a layoff justification document and setting clear communication channels, from announcements to exit conversations.”

2. Compare current and future needs

Before making any final decisions, IT leaders should take a cold, hard look at their organization’s existing infrastructure and responsibilities. Ensure that the future organizational structure — after a workforce reduction has been completed — will still be able to adequately support enterprise needs and goals.

“The threshold as to what is adequate has to be determined upfront in conjunction with business leaders,” says Krishna Kutty, managing partner and co-founder of management consulting firm Kuroshio Consulting. “Without this clarity, you may end up understaffed in areas and overstaffed in others.”

A logical first step, one with little or no impact on full-time permanent employees, is eliminating or phasing out non-essential contract and temporary workers. “As an employer, you don’t have the same commitment toward them as to regular employees,” Kelly explains.

When it comes to assessing the full-time staff, Zucker warns that layoffs should never be used as an expedient way to “clean house” by getting rid of underperforming or unwanted employees. That’s an issue that should be approached separately from a layoff program, he notes.

To identify exactly which employees should be laid off, it’s necessary to review all current and planned IT operations and services. Zucker suggests categorizing specific job functions as either “mandatory” or “discretionary.” “Discretionary functions can be eliminated along with their employees,” he says. “Mandatory functions require a more thorough analysis.”

A teamwide examination is the best way to pinpoint which staff members should stay and which should go. Who has specialized knowledge and skills that can’t be lost? Who has a broader array of skills that support multiple functions? Kelly suggests conducting a comprehensive assessment of each staffer’s skillset.

“Let each employee assess his or her own skills, followed by supervisors evaluating their direct reports,” he advises. Kelly recommends that the assessments should cover education, technical abilities, management talent and people skills. “Then start placing names next to each skillset to decide which employees should stay,” he says.

3. Anticipate opposition

In today’s ultra-litigious business environment, it’s possible that one or more employees won’t leave without first putting up a fight. “I think you should expect that a reduction involving a significant portion of your employee base will result in lawsuits,” Kutty warns. “Ensure that your company has employment practices liability insurance coverage, has put controls in place to reduce vulnerability to lawsuits and has an excellent employment law attorney.”

To head off potential legal trouble, employees selected for severance should be reviewed to determine whether any of the affected individuals fall into a protected class, such as a race, gender, ethnicity, national origin, disability or age classification.

“If there’s a disproportionately larger percentage of any protected class that’s affected by the layoff, this will need to be evaluated and substantiated,” Kutty says. “For example, you will have to determine if you can adjust your selection criteria to limit the impact on those groups while still meeting your business goals.” Besides working closely with HR, she suggests seeking advice from an employment attorney, since the vetting process can be complicated and treacherous.

On the other hand, the mere possibility of lawsuit shouldn’t deter a manager from laying off any particular employee. “If your organization has engaged in proper pay practices, is respecting laws and has treated employees fairly and consistently with no disproportionate effect on certain groups, don’t fear a threatening letter,” Kutty advises.

4. Be open and honest

Rumors can quickly erode staff morale and performance, so it’s important to disclose the truth as expeditiously as possible, even if no final decision has been made on the need for layoffs or, at a later stage, the timing or number of terminations. Accurate communication should begin flowing through the organization in a matter of hours. “If the communication draws out for multiple days, it can create additional stress and anxiety,” Kelly warns. “As a result, the productivity of your entire team will be affected.”

Reductions in force should always be positioned as a business event rather than a reflection of personal performance. “As a leader, we should do our best to communicate this message,” Zucker says.

5. Break the news gently and compassionately

The layoff process should be a highly coordinated and structured event organized with HR’s assistance. “Typically, there’s a bare-bones script provided to the manager conducting the layoffs,” Zucker says. “The impacted employee is told that their job has been eliminated and that a package describing the severance process is being sent to their home.”

Kutty also recommends using a prepared script, as well as a list of responses to anticipated questions. “You have to deliver the news in person … and with a sincere approach,” she advises.

6. Ensure security and safety

While it doesn’t happen often, management needs to consider the possibility that a dismissed employee might try to inflict harm on themselves, co-workers or enterprise assets. “Having extra security personnel on-site is a common practice [to guard] against physical violence,” Zucker observes. Ensuring that at least two IT or HR representatives are in the room when the bad news is delivered is also a widely used security technique.

If the departing employee has any enterprise assets in his or her possession, such as a phone, tablet, notebook or storage device, the device or media should be handed over immediately. Additionally, as soon as the meeting concludes, the manager should notify IT and security supervisors to immediately terminate the now former employee’s access to enterprise systems.

7. Wrap things up

It’s now time to meet with, support and reassure the remaining staff. “Conduct a group closure meeting with your staff so you can minimize, to the best of your ability, their concerns about job security,” Kutty says. Even if it isn’t possible to guarantee that there won’t be any additional layoffs, transparency and honesty will go a long way toward reducing organizational turbulence, she notes.

Employees want stability and a clear understanding of what happens next, Zucker says. “When you meet with the employees, explain the new ‘go forward’ plan,” he suggests. “Encourage managers to meet with their teams the next day to address specific operational questions.”