As I recently mentioned, my professional “Deep Intent” comes from the sad memory, of seeing brave and respectable men begging my grandfather for work, because of a sudden closing of their coal mines in Southern Belgium. Laying people off, no matter how economically justified and how much courage it takes from the leader to do so, should always be considered a failure, or at least a lack of foresight… Remember: Disruption only happens to the unprepared.

Switzerland has one of the most liberal labour law one can think of: people can be fired with a month notice but this is counterbalanced by a strong moral and ethical sense: A leader who has put himself in a position to lay his people off, is considered to have betrayed their trust and made them pay for his incompetence (or more often the case, the incompetence of his predecessor!)

But when, for whatever reason, we have to let our people go, who is taking care of those who stay? In the recent and dramatic lay-off of 17’000 people at N.S.N., the press understandably focused on the 25% of the workforce that was invited to go. How many articles did we read about those who will stay on board and need to find the resources to lead the ship successfully out of the storm?

A well known trauma for many survivors of the concentration camps was the feeling of guilt to being alive when their beloved ones, or some companions had passed away. So what do we do for those who survive a lay-off? What do we do to ensure that they bring their best brain, energy and support to the company in restructuring its ailing Value Capture and reinventing its Value Creation?

During the 1990’s, a series of poor business decisions at my favorite trousers makers (Levi’s) had brought the company to its knees (hoping History is not repeating itself, I left three Levi’s stores empty handed this Summer in the US as the mess and absence of service made it the most unpleasant shopping experience). The new leadership team felt that they had no other options than letting some of their employees go. However, probably thanks to their strong, at the time, “family owned” culture, this was done with as much tact and decency as can be in such a case: Those let go, were not “fired” and treated like heroes trying to disembark a boat too full to sustain all. They were celebrated and a sort of club was set so that they could still feel a part of the family. The engagement was taken to contact them in priority, should the firm be hiring again. This was done and Levi’s leaders were reportedly surprised to see how many people chose to come back, when re-invited.

Another example I like to frequently quote, in a provocative way, is that McKinsey gets a sizeable part of their business from people they let go… Too often the “up or out” system attributed to McKinsey is poorly understood. Better said would be “coach up or coach out”. The result is far more than playing with words: McKinsey develops people who will leave the firm. Those are coached out with respect and, in return, recommend the firm in their new job… I wonder how many other organizations who “fired” people, have been so eagerly recommended by them in their new positions?

Dealing actively with lay-offs and its consequences both on those leaving and those staying is a job that the leaders can’t simply leave to the H.R. function. Three psychological stages have to be gone through, in different ways of course, for both communities:

•  The Mourning stage: this is the critical step not to be missed and the most threatening and unpleasant to the leaders. It is where the traditional Shock, Denial, Anger, Bargaining and Depression that Elisabeth Kübler-Ross developed. It is the moment when the negative emotions are at their peak. I never forget that one of my first jobs with the Enablers Network was to accompany a leader who had decided to close a plant, in an already depressed region and had courageously decided to go and be with his people. The three days and nights of mourning we lived were one of the strongest and scariest moments of my professional life. Leaders have to remain authentic; they can’t play games and remain politically correct in front of the suffering. They have to remain firm and can’t collude with the people hard hit by the bad news; meanwhile, they have to show compassion and empathy. Understanding is not agreeing and they must show their people that they care about the pain, disappointment, anger and fear. It is virtually impossible to try and reason people at that stage. Their Neo Cortex is disengaged by the terrible news which threatens their survival, territory and habit (see post “What causes resistance to change?”).
• The Reactive stage: I was wondering why the leader I was accompanying wasn’t immediately telling the people the relatively good news: there would be a decent severance package and the commitment of the firm to retrain them to be more marketable. He replied: “They are not ready yet”… And he was right. After three days we saw the first signs of Acceptance (the last stage of the Kübler-Ross model) and some people came and asked: “Suppose we agree with this, what has the company planned?” This was the moment my client was waiting for and he started to engage with those who were ready. It is only at that stage that leaders can hope for holding a rational conversation with their people. Not before. Announcing the package would have been wasting the only positive ammunition he had. This stage is also where the two communities (those who leave and those who stay) need to be dealt with separately. Those who stay need to focus their re-found energy on the future of the organization. Those who leave need to be given more personal attention working on their own opportunities and redefinition of their future…
• The Anchoring stage: The main risk with the previous step is that people’s energy is still reactive, nervous and anxious. It is not yet firmly anchored in the constructive and positive world of what Antonio Damasio calls “Somatic Markers”. If we want people to move from intention to action, if we want to “anchor them” towards a positive journey, we need to create such “positive memories of the future”. And this, following several neuroscientists is best done through symbols, stories and metaphors. Here again the two populations need to be dealt with separately. In the case of our plant closure, the leader in question had prepared wonderful and authentic, credible stories, demonstrated his commitment to the people by coming back regularly on the site, tracking individual progresses of the people.

For us leaders, coming to the realization that mistakes have been made or that the “market turned on us” and that we will have to let people go, is a painful realization. The consequences are, of course even worse for those asked to leave. But being present, visible and engaged with both those who will leave and stay is absolutely critical if we wish not to loose our credibility and shorten the soul searching time, in order to re-engage our people towards a more hopeful future.

Given the fact that some of us may be confronted with such unpleasant decisions, we thought useful to share this. Have a good week all, mine will be in Parisfor a 350 people Convention.

Didier