As recently reported, the fortunes of Yahoo’s CEO Marissa Mayer continue to fall. Among other critical errors, Mayer has made major errors handling layoffs across the company. First, as rumors turned about potential layoffs at Yahoo, communication lines somehow got crossed and 30 employees who were not even on the layoff list were let go (they were later told this was a false alarm). Second, and more seriously, the company has landed in court over accusations of illegal layoffs. In early 2016, a former Yahoo employee filed a lawsuit in a district court in California alleging that he was part of an illegal layoff at Yahoo in 2014. According to California law, layoffs that effect more than 50 employees in a 30-day period in one location require a minimum of 60 days notice. The filed lawsuit alleges that Yahoo never provided impacted employees with 60 days notice, despite firing 1,100 employees in a short period in late 2014 to early 2015. While Mayer’s problems run deeper than poorly handled layoffs, Yahoo’s mishandling of terminations has by no means helped Mayer or the company’s position. Indeed, Yahoo’s mishandling of terminations stands as an example of just how damaging poorly handled terminations can be.
Steps for Effectively Handling Employee Terminations
It would be an understatement to say that termination is never fun, but it’s true. With the exception of a few sadists, no one likes to terminate employees. Kelly Oliver, who offers executive training to small firms in the fields of architecture, law and finance, explains that when she goes into a firm to carry out a climate assessment, she often finds that a firm that appears to be in crisis is really just being brought down by one or two employees. “I recently carried out an assessment of a very high-performing architecture firm where employee morale had hit rock bottom,” Oliver explained, “Through my interviews and observations, it became obvious that one very toxic senior designer was the problem. When asked why he hadn’t been fired after years of abusing staff and junior designers, the senior partners simply said that they didn’t have the heart to fire him! This is very common—even effective leaders often lack the skills required to handle terminations, whether it’s a single toxic employee or a mass layoff. People either ignore the problem or carry out the termination poorly, but both missteps can be avoided with the right training.”
Among the steps one can and should take when dealing with a single termination or mass layoff are the following:
Carry out Regular Performance Reviews
The clearest way to make layoff decisions is to rely on performance reviews. However, if you’re going to rely on performance reviews, ensure your performance reviews are carried out on a regular basis and using standard criteria. If the reviews are inconsistent (e.g., different criteria is used for different employees), this basis for determining layoffs may come back to haunt you in the end.
Understand Your Legal Obligations
As noted above, Yahoo’s critical error was failing to follow its own state-based legal obligations. It’s important to know when and how you can terminate employees. Ensure your legal counsel and compliance officers are consulted before proceeding with a layoff.
Have Your Paperwork in Order!
Prior to meeting with an employee about a termination, ensure all the necessary paperwork is in order. This includes a detailed letter outlining the status of the employee’s benefits, vacation time and so on; details on final paychecks and severance (if relevant); and information about the time frame for the termination. Notably, when terminating an employee, you are legally obligated to provide information on COBRA, pensions and/or 401(k)s.
Set a Time and Place for the Termination Meeting
Find an appropriate place to carry out the termination meeting—ideally, this will be a private and comfortable setting. It is also best to choose a room that will enable the employee to quietly leave the building without encountering their colleagues. In short, this is not an activity recommended for a glass-door room.
Prepare your Team
While you may believe a termination is required, don’t assume your team will necessarily agree. Indeed, assume that whenever you terminate an employee, they are likely someone’s friend and confidante too. For this reason, it is also important to prepare your team. Sending out a clear message about the why the termination took place is also important.
For more on how to effectively handle employee terminations, see eLeap’s training video: Managing Terminations: Your Legal Responsibilities.