How to Fire with Fairness

The economic crisis linked to Covid-19 will, as we know, lead to numerous layoffs. How, as a manager, can you handle this difficult period and ensure that those who remain stay just as engaged?

A leader's true talent lies in knowing how to fire with fairness — that is, with equity and benevolence. Those who can pride themselves on it are unfortunately rare. Yet they are the only ones who remain credible after having laid off one or more employees. Being a leader in good weather is relatively easy, and most business schools teach it. Remaining a good leader in bad weather demands considerably more talent. And whatever the context, a layoff is an extraordinary revealer of the quality of leadership. Being able to lay people off without damaging the trust or reducing the engagement of those who remain is the ultimate test. When we talk about layoffs, we cannot consider cost reduction alone. Other criteria must be taken into account, such as the change in the engagement level of the "survivors" or their residual trust in management. Yet few organizations measure this.

The questions few executives ask themselves

While there is no miracle recipe, there are questions that must be kept constantly in mind. For an economic layoff, the first is to know its objective: is it simply a short-term cost reduction, or does it aim to ensure the sustainability and success of the organization? If the only success criterion is making savings, there is no point reading what follows. In the second case, the priority should be to strengthen the involvement of those who remain. Otherwise you will never achieve an optimal level of productivity. Here is a series of unavoidable questions, because they inevitably affect the engagement level of your teams. Each negative answer signals a failure to do things fairly:

1 — Will the "survivors" feel that things were handled equitably?

Equity is a central concern for every human being (and even for animals). It is therefore up to leaders to demonstrate it, notably through their own exemplary conduct. In most economic layoffs, management unilaterally imposes a workforce reduction that is perceived as an easy solution to correct the management errors that led to the need to cut costs. When it is the laid-off employees who pay for these errors, while those who made them get off lightly, there is obviously a sense of injustice.

A collective layoff should only ever be a last resort, after exploring all other alternatives to ensure the organization's survival. Involving your employees sometimes makes it possible to find other solutions, such as a salary reduction across all staff or other cost cuts they might suggest. To avoid layoffs, Mitsubishi, for example, had the courage to cut its executives' compensation by 45%. For there to be a sense of equity, employees must be convinced that the contemplated way of reducing costs is coherent. Leaders who fail to set the example, continuing to make reckless expenditures, lose all credibility. The same applies to rules that defy common sense, such as blind hiring freezes that take into account neither the circumstances nor, ultimately, the company's interest. The criteria defining who leaves and who stays must also have been established and applied fairly. Leaders often think this is the case, whereas employees do not perceive it the same way.

2 — Was the dignity of people preserved?

Believing that financial compensation alone will be enough to satisfy the victims of a layoff is a fiction. A classic example of an attack on dignity is the immediate departure after the announcement — box under the arm, escorted by a security guard under the shocked gaze of the survivors. The unfortunate laid-off employee is not only treated like a criminal but, on top of that, in front of everyone. Beyond questions of equity, most reproaches regarding layoffs, whether economic or not, bear less on the layoff itself than on the way it is carried out. As with managing a pandemic, managing a layoff is prepared before the crisis. Waiting until you have to lay people off to think about how to do it is like waiting for the pandemic to order masks.

3 — Was the process carried out with benevolence?

When employees cannot count on the benevolence of their leaders, they automatically stay on their guard. This posture obviously undermines trust. Firing without benevolence therefore has a dramatic effect on engagement. Be careful, however, not to confuse benevolence with kindness. To be benevolent is to act (sincerely) in the other person's interest — one can, for example, be benevolent without pleasing the other. Contrary to a common idea, being benevolent does not mean treating others as you would like to be treated yourself. It rather means treating others as they want to be treated. This requires understanding the perception not only of those who are laid off but also of the survivors. Even if this balancing act is not easy, it is indispensable.

Unless one is sadistic, having to lay someone off is an emotional ordeal. To make it less painful, many managers unconsciously shift the burden of responsibility for the layoff onto the person being laid off, particularly when they cannot take refuge behind the so-called inevitability of an economic layoff: the employee worked poorly, behaved badly, no longer has all the required skills, lacks this or that. Yet, as in a separation or a divorce, responsibility is rarely the sole doing of just one of the two partners. Placing the entire burden on the person being laid off is not benevolent. You must also help the remaining employees manage their survivor's guilt. Since this syndrome has been abundantly described by psychologists, no one can ignore it. Having their psychological well-being at heart is a mark of benevolence toward them.

4 — After the layoff, do the survivors retain a sense of psychological safety?

Because it is important, the sense of safety sits at the base of Maslow's pyramid. Beyond physical safety, which is obvious, psychological safety is just as essential. When one of their colleagues is laid off, each employee imagines they could be in the victim's place. To check whether they would then be treated well, the survivors will reflexively look for management's failings. This is an inescapable defense reflex. The problem is that executives then find themselves constantly judged by their employees. And every misstep by the manager reduces the trust their teams place in them.

Contrary to certain limiting beliefs, firing with fairness is possible. It is obviously difficult. But equitable and benevolent layoffs are within reach of leaders who care about preserving the trust and engagement of their teams. It is also a key ingredient in the survival of organizations.