Cover Story
Painless layoffs
Harwick Standard President Jeffrey Buda says when laying off workers, you need to be fair and honest.
By Morgan Lewis Jr.
Smart Business Cleveland | August 2001
One of the most sobering results of the Workplace Practices Survey from the Employers Resource Council and
SBN Magazine is that 30 percent of employers report they expect to lay off employees this year. That's double the percentage last year, when only 15 percent expected layoffs.
We've heard a lot about fly-by-night start-ups and major corporations swinging the axe this year. But the companies in the survey average 82 employees and $36 million in annual sales. They are older, more established companies, where the average employee age is around 40. They employ workers in their prime earning years, men and women with established families. Laying them off can be one of the hardest decisions a company owner has to make.
Just ask Jeffrey Buda, president and CEO of Harwick Standard Distribution Corp. in Akron. Last year, Buda and his management team decided that running separate customer service and field sales support offices in Atlanta, Chicago and the Northeast didn't make sense with the technical advancements available. Buda designed a consolidation plan to centralize operations to the headquarters in Akron.
Although there were positions available to most of the 15 employees from those other offices, none chose to transfer, and Buda was forced to let them go.
"It is very, very difficult to do something like this," Buda says. "You have wonderful employees who have been loyal to the company, and now you're going to be letting those people go. You have to be confident that the talent that you're unfortunately letting go is going to be talent for someone else. Someone else is going to appreciate that talent, and they'll get good positions."
There were exceptions, but Buda says employee reaction was as positive as it could be. Most of the former workers sent him letters or e-mails saying they felt they were treated fairly during the layoffs. A potentially ugly situation was avoided.
"It was very gratifying to see that we handled it in the right way from a people issue," Buda says. "We were compassionate to their needs, and they appreciated that."
Here's how Buda helped make the layoff process a little less painful.
Be fair
Laid-off employees were issued severance packages, which according to most of the workers were fair and comprehensive. Human resource experts recommend that when you design a severance package, you prepare a full written explanation of benefits, including profit sharing, stock options, any bonus arrangements, medical insurance continuation and unused vacation days. Spoken agreements are dangerous.
Be open
There must be clear and open communication about when and why the layoffs are happening. Be ready to field all sorts of questions, but more important, know when to listen, Buda says.
People will react in different ways when they find out they are being let go. Experts say be sure to keep the first meeting brief and to the point. It's not likely that employees will grasp everything you tell them in that first meeting, so make it clear you will be available later for a review.
Take it slow
Buda closed the field offices one at a time, about a month apart. It's better to spread out a consolidation project and downsizing of workers, depending on how many employees will be let go. It's less jarring for the employees, and for customers, as well.
"The result has been a very successful transition and implementation," Buda says. "As much as I hated to see some of our people go, on the other end, I knew that they were talented enough that they would find something that they would be pleased with and be happy with, and I think that has happened."
How to reach: Harwick Standard Distribution Corp., (330) 798-9300
Morgan Lewis Jr. (mlewis@sbnnet.com) is senior reporter at SBN Magazine.
