James Cowan makes difficult decisions to stay in business at American Railcar Industries

Be professional

Your reputation can hinge on how you handle the act of laying off people. So make sure you’re clear with your people about how you want it handled.

“Any time we’re talking about cutting staff, until we’re ready to announce what the plan is going to be, it’s only fair that they hear it from management first and not through the rumor mill,” Cowan says. “None of us would want to be let go at the coffee machine or from the janitor. That will really get everybody in a panic. You have to announce that. Say it at the beginning of the meeting and say it at the end of the meeting. ‘This is truly confidential. It has to remain such.’”

If you do have leaks in your company about important items like personnel moves, you need to address them seriously and immediately.

“This is a terminating offense,” Cowan says. “When I say it’s confidential and you’re in the room and the door is closed, then you have to understand my trust in you and you keeping your mouth shut. We don’t want panic in the company. If I didn’t know who it was, I wouldn’t have the least problem telling them, ‘When I do find out who you are, you won’t be working here. You won’t be on the layoff list. You’ll be on the termination list.’ If that’s the problem, you have to put a bold, nasty statement out there.”

As for the actual announcement itself from the company to the employee who is being let go, it should come from the direct supervisor.

“Anybody that reported to me that I had to let go, I talk to them directly,” Cowan says. “If you need help with an HR professional, we have those on staff. It needs to be delegated. It’s part of their responsibility. It’s fun promoting folks and giving raises. But there are also people you have to fire, and sometimes you have to do layoffs.”