How to Terminate a Great Performer in a Tough Economy

Harvard Business Review

August 5, 2008

by Marshall Goldsmith

Our company has had a terrible year because one of our divisions completely tanked. Although my division had a fantastic year, corporate cutbacks mean that I have to lay off some great people. Do you have any suggestions on how to best handle this tough situation?

Your situation is, unfortunately, very common this year. I work for one financial institution where over 90% of the units had great years – yet two units lost more money than the combined profits of all of the other units. Board-dictated, corporate-wide cutbacks required many of their leaders to face exactly what you are facing.

It’s one of the toughest challenges that any leader will face – having to terminate employees who are doing a great job.

I definitely don’t have any easy answers, but I hope that my suggestions can help you make the best out of this tough situation.

  • Tell the truth. The employees who are being terminated may argue with you that “this isn’t fair.” They are right. Recognize that life is not always fair and that the “good guys” don’t always win. Don’t try to prove they are wrong – and get into a counter-productive argument. Sometimes we are punished because of external events that are outside of our control.
  • Be prepared for their anger. Even though their dismissal may not be your fault, you are still the visible representative of the company. They may verbally attack you. Don’t take it personally. Realize that this is a normal human reaction to pain. Take the high road. Forgive them for any personal negative comments about you. (I didn’t say these suggestions were easy!)
  • Don’t sell out the company or your fellow co-workers. Even though the leaders of the company may have made some mistakes, they are still your co-workers. When we are attacked, it is very easy to deflect the anger to someone else. Try not to do this. Someday you may be the person who makes a mistake. How would you like your co-workers to speak about you? Use this as a guideline in discussing your co-workers with the person who is being terminated.
  • Help them any way that you can. As Billie Holliday so wisely noted, “Money, you got lots of friends/crowding ’round your door. /When it’s gone, spending ends/they don’t come around no more.” Everyone is nice to people who are winning. But people seem to forget our names when we are not doing well. My good friend, Don Sherrit, taught me years ago to always go out of your way to be nice to people when times are tough. You never know, that person you are terminating today may end up becoming your customer, partner or even boss. Times change. People remember the way they were treated when they were hurt. Aside from the good business logic, this just shows that you have class as a human being.
  • Keep in contact with them after they leave. Try to help them with networking. Call them on the phone. Send an email. If they don’t want to hear from you, they will let you know. If they appreciate the fact that you are reaching out to them, do it; if not, just let it go.

I am not naive – I know that none of these suggestions will make your discussion a pleasant experience. But I hope that these ideas help you manage a thorny situation in the best way you can.