It’s raining pink underpants. But for those lucky enough to land a job as CEO of a major US company in recent years, the only thing crazier than the inflated compensation packages these CEOs received was the size of their severance packages when They got fired.

And what about those people who worked in good faith to execute those failed strategies? They beat each other loose with little to nothing in the way of parting.

This article is about the harsh reality of layoffs: how to do it legally, effectively, and with leaving and remaining employees in mind as you prepare your business for recovery. Feel free to share this information with a colleague or friend. And if layoffs and freezes aren’t in your forecast, congratulations.

Head count. The largest expense of a business and the first to be cut during an economic downturn.

And who better to validate our downward spiral than George Bush, who recently announced that the US economy is in a “tough spot” right now.

Tell that to the 9,000 people at Citigroup and 4,600 at AT&T who got their pink notes a week or so ago.

Whether you call it a layoff, reduction in the workforce (RIF), or downsizing, doing so can lead to legal challenges and leave you with a remaining workforce that is demoralized and unproductive. The more you know about state and federal laws and best practices for handling layoffs, the better equipped you’ll be to protect your business from operational and legal difficulties.

A literary landscape of layoffs

Layoffs have become all too common in the American corporate landscape. January layoffs rose 69 percent from December 2007 to 75,000, the highest number since August 2007, according to relocation firm Challenger, Gray and Christmas. The real estate and financial sectors were the most affected.

In the coming months, more layoffs are projected in the retail, professional and technical services, pharmaceutical, automotive, leisure and hospitality industries. A 37 percent increase in 2008 compared to last year makes this year’s forecast the worst in five years, according to a recent survey by Career Protection.

What do you say when you’re firing people?

How do you keep the morale of your remaining staff high and allay their fears about job security? And how do you protect your company from legal exposure regarding the documents you write when going through the layoff screening process?

Plan ahead and stick to the script

Perhaps the idea of ​​”writing” a verbal communication sounds insincere or contrived. However, as a representative of your company, it’s a good idea to plan ahead so you don’t say too much and leave your company in legal trouble, but still say enough to get the message across.

What you might say at the initial employee meeting

“Steve, in an effort to reduce costs, we are restructuring our business, and that will result in the elimination of several positions in our company. Unfortunately, your position is one of them, and I’m afraid we will have to lay you off. Today will be your last day of work with us, and we have information to share with you regarding your severance package, COBRA, and unemployment insurance. I know this is a lot of information to come to you at once, and I am so sorry to have to pass on this message to you. Before I go any further, I want to see how you’re doing. Are you okay?

“Just so you know: about 35 positions will be removed throughout the day. Out of respect for the other people involved, I would ask that you say as little as possible today. We would prefer to tell the affected employees ourselves; we want to prevent people from being find out about this through rumors if we can avoid it. Also, I know that some people prefer to leave quietly while others want to say goodbye to some close friends. We will respect any decision you make. How do you think you would like to handle that?

“Finally, I just want to thank you for all your hard work and dedication over the past two years. You have made this a better place and I am personally going to miss working with you. Thank you for all you have done.” made by us”.

Handling employee questions

If you speak quietly and with genuine concern, most employees will appreciate your candid approach. After your opening statement, expect some employees to question the reasoning behind the RIF:

Ask: Why was my position chosen for elimination?

Answer: It was a business decision. Please don’t take this personally; when there is a reduction in strength, the positions are removed. People who are attached to those jobs are later fired. It’s the hardest thing a manager can do – selecting positions to eliminate is so hard because you realize people’s lives will be disrupted. That’s why I’m so sorry this is happening.

Ask: Who else is getting fired? Am I the only one in our department? Because I?

Answer: Steve, I can’t share who else is being laid off in the department right now. We haven’t talked to the other person(s) yet, so please allow me to wait to answer that for now. [Or:] Yes, yours is the only position in our department that is being eliminated. Once again, he doesn’t feel that he has let anyone down. I want you to know that he may be considered for rehire once the hiring freeze is lifted. For now, though, please understand that we had to remove a position, and from a purely functional standpoint, his position made the most sense.

Ask: How can it be? Who’s going to do all the work I do once I’m gone?

Answer: With the removal of your position, other members of the department will have to take over the remaining job tasks that you have handled thus far. That’s something we’ll just have to deal with in this new “reduced” mode. Travis is here with us from human resources to discuss some of the details related to his severance package and other important benefits details related to this layoff.

when one is enough

When a person is selected for firing from a comparison group of employees with the same title, expect the person to say, “Wait. You can’t fire me and keep Heather. I have more longevity than her.”

Your answer: “I recognize that. However, I want you to know that we considered tenure in our decision. We also looked at performance evaluations, progressive disciplinary warnings, attendance records, education levels, and technical and skill certifications when determining who would be eligible.” qualified to assume the remaining duties after the downsizing We determined that based on all of that historical information along with our assessment of who would work best in the post-layoff environment, you would be selected for layoff Are there any other questions Could I vouch for you?”

Script for remaining employee meetings

In general, it is better to cause “group closure” when there are layoffs or layoffs. Give employees the opportunity to voice their concerns publicly and hear directly from you what happened. This not only minimizes job security concerns for the employees themselves, but also reduces rumors.

A sample script to help you after the RIF occurs

“I wanted to call you all to a meeting to follow up on the layoffs that took place in our department today. As you may be aware, two members of our department have been laid off. The company has provided the affected employees with a severance package and is working with them during this transition.

“Of course, no job security guarantees can be given, but as far as we know, there are no other layoffs planned in our department at this time. I wanted to let everyone know to allay any fears you may have about your own job security at this time.

“We wish those laid off well, and have treated them with the respect and dignity they deserve. I know I can count on your support to do the same. I also want to remind you that if you receive reference check phone calls from prospective employers or recruiters, those calls should be forwarded to me. In turn, I will pass them on to human resources per company policy. Please note that laid-off employees have received copies of their last three performance reviews and can share them with potential employers for Demonstrate your strengths and areas of professional development.

“If there are no more questions, I thank you all for coming. I appreciate your patience and understanding, and I look forward to getting through this difficult period.”

Warnings about written documentation

Line managers are often asked to select people for layoffs based on certain criteria. For example, if you are asked to remove 12 people from a 15-person department, you might be asked to justify your decision in terms of whom to retain and who to fire.

When that is the case, it may be recommended to create a comparison group evaluation form that highlights performance reviews, oral or written disciplinary communications, attendance records, seniority, experience prior to joining your company, education and technical skills or certifications.

Such documents are intended to encourage an objective review process, but in the event of a discrimination class action lawsuit, the documents become subpoenaed in the discovery process. One way to decrease the chances (there is no guarantee) that this documentation will be subpoenaed is to designate the documentation as attorney-client privilege.

Your internal or external attorney will recommend that you write at the top of each evaluation page: “Privileged and Confidential: Prepared at the request of (name of attorney).”

The legal rules and guidelines of attorney-client privilege are beyond the scope of this article. Just be sure to consult with a lawyer first before drafting any documents related to a termination. More importantly, don’t write freely without taking into account the fact that your notes can be blown up in front of a jury to prove illegal motives on the part of management.

The goal of any termination is to treat employees with dignity and respect. The key way to accomplish this is to communicate openly and honestly with those laid off and with those who survive and take on the remaining job responsibilities.

Retain the best talent

It may seem unrealistic to focus on retention when people are being laid off, but there is no other time when retention becomes more important than when a company is laying off workers. Critically assess who talent you need to retain and do everything you can to do so, including giving them a defined and key role in turning around after layoffs.

The above is based on information provided by The Society of Human Resource Management. This material is provided for general information only and does not constitute or replace legal or other professional advice.