There are few tasks business owners dread more than laying off employees. Well, at least those who don’t have a Donald Trump Complex. Small business owners often hire, train and groom each employee. Some are squash partners, back-yard-barbecue attendees or even best friends. But during a recession, when revenue dips or growth slows, layoffs are the only way for some businesses to remain above water.

While there still might be some debate about whether the nation, and Richmond is in a recession, the local figures aren’t encouraging. Qimonda, Wachovia Securities, SunTrust and Procter & Gamble all recently announced local cuts, and local stores for national retailers such as Sharper Image, CompUSA and Wilson Leather have all closed stores.

The times they are a-tightening.

Payroll is often the biggest expense at most small businesses, but layoffs need not be inevitable. Companies can try to cut other costs first. And even when payroll must be cut, businesses can try temporary pay reductions, job sharing, shortened work weeks, or small furloughs. These techniques can spread the cuts across the workforce, which may reduce the pressure to layoff individual employees. Often small businesses are surprised at the number of their employees who are willing to take a week off without pay, or a Friday here or there, if it helps the company and can save their skin.

But if cuts are unavoidable, there are several principals to keep in mind. First, all employees must be treated with dignity. This is an end in itself, i.e. we should do it for its own sake, and one that protects the company from vindictive action by a disgruntled worker, i.e. stealing clients or something even more sinister. Long-time employees often know loads about the company, and they could harm the business if they really wanted to. A departing employee can gain quick employment elsewhere by going to a competitor and announcing that they can get the competitor a bunch of the clients from a previous employer.

And sometimes laid-off workers are willing to come back when economic conditions improve. That wouldn’t be the case if they’re kicked to the curb or escorted out by security.

Perhaps just as important is managing morale before and after any cuts. If employees sense trouble – and many will be able to see trouble on the books and on the faces of various managers – they’re going to be nervous and possibly less productive. Consider: some might start searching for new jobs online even if the business has no intention of letting them go, gossip can run rampant, and small businesses don’t have HR departments to deal with all that stuff. That means it’s often best to acknowledge to employees that times are tough and that, if there was a layoff, it is imperative for the sake of the company.

Such meetings are best conducted with the entire workforce present. That helps make employees feel that “we’re all in this together and we will make it through together.” And if future cuts might be on the horizon, it’s best not to give false hopes or make promises – which could open the company up to a lawsuit and/or be construed as a contract of guaranteed employment. Instead businesses should show their employees that management is doing all it can to protect the business and the current employees.

And then there is the toll on the manager him or herself. Some business owners forsake their own salary in hopes that business picks up and an employee can be saved. But sometimes layoffs are unavoidable. If a business has made appropriate decisions based upon solid business calculations, then layoffs are a temporary pain that must be enacted for the sake of the company. And a surviving company is better than no company at all.

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