Making the worst task slightly easier for all
Countless times last year, architects were called into a principal’s office and told they were being laid off: the depressed economy brutalizing the blameless. That thousands of professionals have lost their jobs is bad enough, but the psychological harm to the firm and those lucky enough to remain can also be damaging. With the possibility that more layoffs will occur this year, how can firm principals make staff cuts less painful? To what extent can and should you delay the inevitable? When everyone knows the ax is about to fall, how do you maintain staff morale? How do you conduct the dreaded conversation? How can you make a person’s departure less painful?
Firm principals and industry consultants offer a variety of suggestions. Hugh Hochberg, a principal of the Seattle-based consulting firm The Coxe Group, says he has observed several strategies for postponing the day of reckoning. These include across-the-board salary cuts, shortened work weeks, unpaid furloughs, outright layoffs, and combinations of these. Voluntary early retirements have been less viable this year than in the past because retirement funds were slashed in the banking crash. In a professional services firm, where the greatest expense is payroll, there are few options for belt-tightening.
Inevitably, the day comes when the existing or expected workload doesn’t match the number of employees. Who should go? Hochberg says the choice depends on how many staff members have left already. “The first round of layoffs,” he says, “tends to target people at a low level in the firm; they are more ‘expendable’ because someone else can do their work. The second round tends to go after some of the more senior people. And in the third round, firms need to consider laying off principals.” Hochberg points out that principals might be expert in delivering large, complex projects, but none of these appear on the firm’s horizon. Senior principals may be especially vulnerable if they are not adept at lower-level work like building information modeling.
The New York firm Cooper, Robertson & Partners suffered a 30 percent loss of staff in 2009. Because the firm nurtures a strong sense of family, these cuts were extremely painful. To decide who to lay off, president Karen Cooper recalls, “We looked at the work the firm had in hand and the work we thought the firm would be doing. Some staff could be transferred to other studios because of their skills, but others just didn’t mix with the existing work.”
As management contemplates whom to lay off, staff is busy worrying about the outcome. They invariably speculate about whether they’re vulnerable. This guesswork can be devastating for morale. The advice Hochberg gives his clients is, “Tell the firm what’s going on rather than let them form their own ideas; they won’t all be right.” Cooper’s firm does this in monthly staffwide meetings. “In addition to our usual announcements and project reviews, we give an update on our financial status. It’s not in the same depth as the update we provide our ownership, but it gives people a sense of where we are in the business cycle. It helps because then there are no real surprises. Some sadness, but no surprises.”
Allan Kehrt, a partner of KSS Architects in Princeton, New Jersey, has a similar approach. His firm lost 20 percent of its staff in 2009. “After a round of layoffs, we want to make sure everybody understands we don’t want to do this. We tell the remaining staff: ‘We’re done for the time being. We’re in reasonable shape for the next six months; please relax.’ ” Nevertheless, he points out, staff suffers survivor guilt and goes through a mourning process. He makes a point of discussing these feelings openly.
Architectural intern Beth Schaffer is one laid-off worker typical of many. She was not cut in the first round of layoffs, but even though her firm tried hard to maintain staff morale, she still worried. “It’s hard to play the guessing game: Who will go and who will stay? You can’t figure out what to expect.”
Telling a staff member they must leave the firm is painful for the employer but devastating for the employee, so employers should treat the announcement with tact and sympathy. Although some firms call together a group of those to be laid off and tell them all at once, consultant Hochberg believes it’s better to have the conversation in a private setting. “We’d never do this in groups,” says Cooper. “A studio head plus one of our senior people meet with everybody individually. You get a gamut of responses, and I think the fair thing to do is allow those people to speak and ask questions.” Most important, according to Kehrt, is not to beat about the bush. “We tell them we have to let them go and explain why. I don’t know if there’s a right way or a wrong way; you just have to be very straight with people.”
This meeting is an opportunity for management to offer assistance. This can come in the form of a letter of support, a promise to rehire when possible, and severance pay, if feasible. Firms are surely pinching pennies by the time they lay off valued workers, but many offer at least token severance payments. Cooper reports that her firm gives varying amounts based on the employee’s tenure and position in the firm. Kehrt bases the amount on an employee’s vacation time. He explains: “If someone has been around long enough that they get three to four weeks of vacation, they get three to four weeks of severance pay.” The worst thing, Cooper believes, is to put people on unpaid leave instead of cleanly laying them off. On leave, they are ineligible for unemployment compensation.
A federal law, known as COBRA, requires firms over 20 in size to provide access to health insurance to laid-off employees. The American Recovery and Reinvestment Act of 2009 provides a 65 percent subsidy for premiums for up to nine months. Whether the employer pays any portion of the remaining 35 percent is optional, but some employers subsidize these premiums to help their former employees.
A low-cost but much appreciated parting gift an employer can give a laid-off employee is information about what to do next. This is especially important for young people who have never experienced the bureaucracy of unemployment. Schaffer recalls: ”I didn’t know what to do. How do you file for unemployment compensation? What exactly does it mean? I didn’t understand what COBRA was. There’s a lot of paperwork, but I felt like I left uninformed.” She did appreciate being given a few days to tie off loose ends, remove her belongings from the office, and say good-bye.
Different firms do things differently, but Hochberg says he’s observed one common mistake: firms waiting too long before beginning the painful process of laying off staff. “They risk losing the firm as well as the employees,” he says. Cooper agrees. “We lagged in making any layoffs as we tried every measure to avoid doing so. If we had made the layoffs sooner, perhaps we wouldn’t have had to cut as deeply and could have saved a position or two. And those being laid off could have gotten into the market sooner and perhaps had a better chance of reemployment.” Unfortunately, there’s always a next recession to try and get things right.