Why I Never Lay Off Employees — and How You Can Do the Same

I hate layoffs for all of the reasons most people do — they derail people’s lives, they hurt the business, they kill morale… the list goes on. But the main reason I hate layoffs is because they only occur for one real reason: management and ownership screwed up.

If you have to let go of someone because their position is being eliminated, or because it no longer makes sense to pay their salary, it’s because you as a business owner either didn’t plan for growth responsibly, you incorrectly assessed the value of a position or you couldn’t sustain the level of business you were previously.

So, people’s lives get derailed and in some cases financially ruined for an extended period of time because the management and ownership of the company they work for made a miscalculation. I signed-up every single one of my co-workers to do a job for me. Their life shouldn’t have to change if I make a mistake.

But that’s not to say that we as business owners make flawless decisions every time when it comes to staffing. We don’t always nail our growth projections, and the dollars and cents don’t always add up exactly as planned. I’ve personally made the mistake at my agency, Drive Social Media, on several occasions. Yet after 7 years, (the early ones with a fair share of roller-coaster moments) I’ve been able to avoid EVER laying off an employee. This isn’t because I just continue to pay people who I don’t need. It’s because we take steps to make sure it doesn’t happen from the moment we begin recruiting for a position.

As you grow your business, harness new technologies and find faster and more agile ways of doing things, certain positions become unnecessary and/or superfluous, but those same circumstances create the opportunity for new positions. It is your duty as the steward of your business to forecast these, and prepare months and years in advance. The repurposing of employees is a pathway toward saved revenue, higher morale and a secure future — not to mention a big piece of value to use during recruitment.

Success in Action

A little over three years ago, we had to let go of an account manager, leaving her role vacant. Normally, this wouldn’t be a problem. You get your recruiter on it, hire someone who’s capable and boom, you’re good. The problem was that we knew we would be eliminating the position in about nine months — too long to crowdsource the role from the rest of our team, but not long enough to make it attractive to a quality hire as a short-term position.

We didn’t want to hire someone and then turn around and lay them off in less than a year, so we looked at what openings we’d have coming up. We knew we were adding a community management role to our teams, so we went on the lookout for someone that was qualified enough to handle the account management role but also had the requisite skill set to handle the community manager position as well. We hired her, she excelled in both roles and when the need came for a leadership position, she was able to just as smoothly transition into that position.

How You Can Make This Happen

1. Hire People — Not Positions

Don’t just concentrate on filling a position — focus on getting valuable assets into your company. Every hiring decision should be made with the big picture in mind, and looked at as an opportunity to pack your organization with more talent.

This will allow you to not only insulate yourself from layoffs, but it will also open doors for your company by being able to be experimental with your team.

A few months ago, I felt like we were at the point where we needed to start ramping up a larger PR strategy. The problem was, I didn’t know if sinking a bunch of money into PR made sense for us yet. I had a professional acquaintance who had been very successful in the PR space and I felt like he’d be a great fit for our team, I just wasn’t sure if his strategy would work.

Instead of hiring him as a PR director and risking having to eliminate his position in the event that he wasn’t able to secure the PR opportunities we wanted, we hired him for an open senior copywriter position. We had him work a dual role of a copywriter and a PR director for a few months. Best case scenario, the PR efforts worked and we make him focus on that full-time once we see the results. Worst case, the PR efforts failed and I end up with a slightly-overpaid copywriter.

The move panned out. The PR strategy immediately starting paying dividends, and we were able to move him off of the production team and into a full-time PR role. And we did it without ever running the risk of having to lay a person off because we took a gamble on creating a new position.

[Related: Hire Fearlessly — Pursue Cultural Add Over Cultural Fit]

2. Maximize Efficiency Before Creating New Positions

While it may be tempting to add more manpower and expand the size of your team as your business grows, it may not always be necessary when you think it is. For instance, at my agency, we have three production teams (we call them pods) in our main office. For a long time, most of them each had around 35 clients on their roster. That doesn’t mean that our teams can’t handle more than 35 clients — it just means that’s how the client load has been distributed.

Recently we’ve had a large influx of new business. But that doesn’t mean we immediately build a new team to handle the increased workload. We push our existing teams to see what their maximum client load is that they can handle. We examine inefficiencies in our processes and streamline as much as we can. We’ll reallocate work from our St. Louis office to our Nashville office. Once everything has been pushed to its maximum in terms of efficiency, then we look at expanding our team, build a new pod and then reallocate the extra work that our other pods are doing to that new pod.

The point is, if you set a benchmark for what an ideal workload is, you don’t have to be married to that benchmark. Push the boundaries and see what people can handle. When your employees have a larger workload, they’ll naturally try to find more efficient ways to do the same job. This will not only make your processes more cost-effective, but it stops the business from bringing on too many people too quickly.

3. Respectfully Move People Out

Maybe you’ve already gone down the wrong path, made some misguided decisions on staffing and are now hemorrhaging money on a position or positions that aren’t giving you a return. You’re still able to solve the problem without laying anyone off if you help them secure a future opportunity.

One company that has perfected this is Acceleration Partners. Acceleration Partners has a program called “Mindful Transition” that makes break-ups — whether they be the decision of the employee or the leadership team — less difficult and more amicable than simply laying someone off. This program helps their employees find their next opportunity before terminating employment.

As Acceleration Partners founder Bob Glazer has stated, “Once you have decided to part ways with an employee, be flexible. You should allow time off for interviews and work to develop exit timelines. However, make it clear that your assistance comes with expectations, and put those in writing. Departing employees need to maintain their standards of work, be transparent about their job searches and agree upon firm departure dates.” This kind of treatment not only protects your business’s reputation while mitigating the risk of an employee claiming unemployment — it’s just the right thing to do as a business owner.

[Related: How to Manage Performance In Agile Teams]

Treat employees like a person, not a number. It’s not just your responsibility to make sure your coworkers have work to do — it’s also your responsibility to be able to help provide them with a happy life. While you won’t always know what’s going to happen with your revenue streams and cash flow, you will always know what to do with your employees to provide the best possible outcomes for all involved. Be smart, be proactive and be kind, and you won’t find yourself in the uncomfortable position of having to eliminate someone who’s done exactly what you signed them up to do.

Josh Sample is the founder and operating partner of Drive Social Media, a St. Louis- and Nashville area-based digital marketing agency. A serial entrepreneur and marketing strategist/consultant for over a decade, Sample, with his team, has implemented and executed data-driven digital marketing strategies for thousands of companies, ranging from startups and single-person businesses to multi-million dollar organizations.