Not So Fast…What To Consider Before You Lay Off Your Employees

I know many employers and small businesses are in the process of laying off employees. If you are in the midst of this, I would like to ask you to take a deep breath and pause.

We should be hearing the details of the $2T stimulus plan momentarily. It sounds like part of the package will include forgivable loans if business owners use it toward payroll.

If you do need to make these changes, spend time thinking about your team and remember there are four types of employees*. Make sure you know which ones you have before taking action.

1.) “Stars”

Your “Star” employees have excellent performance and live and breathe your company’s core values. Retain them. Do whatever you can to keep them. Perhaps consider a small reduction in salary with a future upside. In our research, a top-performer is 3 to 10 times more productive than an average performer.

Can you identify your “Stars”? Here are some questions to ask yourself:

• If I could clone them, would I hire more of them knowing what I know now?
• Are they the type of person that can take the company to the next level?
• Are they the person I want on my team to make it through the next 90 days? Is this person innovative, a problem solver, resourceful, and a critical thinker?
• Do they “play well with others?”

2.) “Puppies”

Your “Puppies” are the employees that embody your core values and have the potential to be long-term key players. You want to keep them, as they are often hard to find when the economy changes. They are working for you because of your leadership, they love their job (See Patrick Lencioni ‘s podcast on Hard Culture), and they’re loyal. A few years ago, a CEO asked us to evaluate a key member of their leadership team. After the evaluation, I called the CEO and told her that if she didn’t keep this person on her team, I would hire her to be on mine! She was that good. This CEO was not aware of her own employee’s traits, problem-solving ability, and leadership skills.

3.) “Rats”

Regardless of the economy, there is no reason to keep a “Rat” employee on your team. Keep in mind that “Rats” can pretend to be stars when the light shines on them, but it does not last long. You may not know who a “Rat” is on your team, but the other employees do!

4.) “Enemies”

This may be an opportune time to let your “Enemies” go. These are the employees that can hold your company hostage. A friend of mine worked for an “Enemy” last year before the “Enemy” was promoted to a corporate job on the East Coast. Before he transferred, he had been responsible for 80% of sales in the Columbus branch. However, once he was gone, morale and sales across the rest of the team returned to their previous highs. If sales are down, this may be the time to identify and remove your “Enemies.” Your employees and customers will thank you.  Please consult with an employment law attorney before making any changes.

* This concept was originally shared by Jack Welch, former CEO of GE, and has since made its way through the EOS® community thanks to EOS Implementer Alex Freytag.