I concluded last week by noting that, sometimes, layoffs are unavoidable. Here’s what Jeff Pfeffer and I found were the four guidelines to making them run in as humane a manner as possible.

1. Prediction: Give people as much information as you can about what will happen -- to them as individuals, to their workgroups, and to the organization as a whole -- and when it will happen. This makes the layoff real for people and helps them prepare for the future.

2. Understanding: Explain why you believe the change is necessary. Human beings have consistently negative reactions to unexplained events. This effect is so strong that it is better to give an explanation that people dislike than no explanation at all -- so long as the explanation is credible.

3. Control: Giving people influence over what will happen is often impossible, but giving them influence over how it happens and when it happens is often possible.

4. Compassion: Senior executives should express human compassion, and when appropriate, sorrow, for the consequences of their business decisions.

Carol Hymowitz’s article uses the two rounds of layoffs at Martha Stewart Living Omnimedia to show how a company can use these four principles to protect employees’ mental and physical health and to sustain loyalty during a difficult time. I learned a similar lesson a few years back when I did a workshop with the senior management of Procter & Gamble on our book The Knowing-Doing Gap. When I mentioned prediction, understanding, control, and compassion, they explained how these principles reflected what they had learned about plant closings. John E. Pepper Jr., who was then P&G’s chairman, explained that they had learned plant closings do far less damage, in terms of lost productivity, retention of employees who are offered jobs elsewhere in the company, and lost sales in the city where the closing is done, when:

1. They explain how the plant closing will unfold in detail to both employees and members of the affected community. In particular, they announce the closing date and specific milestones well in advance.

2. They explain the business case for closing the plant in detail to both employees and the community.

3. They give affected employees choices over how they experience the closing, in particular giving them options about when and in what ways they find a job inside the company, along with other options such as help with finding a new job (or new career) outside the company.

4. They express human concern -- both in public and private -- to affected employees and community officials.

In other words, P&G executives learned that plant closings go better when they use prediction, understanding, control, and compassion as guidelines as they implement distressing -- and perhaps unavoidable -- organizational change.

HARVARD BUSINESS ONLINE RECOMMENDS:
Hard Facts, Dangerous Half-Truths, and Total Nonsense: Profiting from Evidence-Based Management (Hardcover)
The Hard Side of Change Management (HBR Article)
Overcoming Resistance to Change (HMU Article)