The Nonprofit Layoff Issue 2.1.09

Do you know someone who's been laid off recently? Rarely does news from our friends connect so directly to the headlines. Everyday there is news of more big layoffs: Starbucks, IBM, Target, CBS . . . the list goes on and on. But these news stories seldom describe the experiences of nonprofit people, laid off from smaller entities in smaller numbers. And nonprofit layoffs not only wreak the same havoc on the individuals losing their jobs, they often spell hardship for the clients, members and constituents of the nonprofit as well.

In this economy it's no longer shameful toA lay people off (or to be laid off), but it's still seen as a sign of vulnerability. And some funders turn away from vulnerability: one nonprofit executive told me yesterday that two foundations have given him unexpected grants that they each said had been designated for others, but now they have concerns about the financial viability of those others.

Layoffs as a sign of strength?

Within the organization, layoffs trigger complex emotions for remaining staff. Some are likely to feel sad that some friends have left, and perhaps guilty for keeping their own jobs. Others might be delighted that a weak coworker has (finally!) been laid off, but feel they have to hide their agreement with the layoff decision. Some may feel it would have been better for everyone to take a pay cut, or for managers only to take pay cuts, or for layoffs to have been based on which employees are supporting families. A few may envy the people getting laid off. Still others will worry that the organization itself is at risk, and become fearful for their own jobs and for those the organization serves.

Because layoffs are driven by financial need, they usually do reflect financial stress in the organization's income or balance sheet. But the decision to lay people off may actually reflect strength in the organization's ability to make decisions proactively, to respond to changing conditions, and to take strong management steps when necessary. As a funder, staff member or board member, remember that thoughtful, well-executed, timely management action is a sign of a strong organization, one that is fully committed to being there for its community and constituents.

This special Layoff Issue of Blue Avocado includes a How-To on layoffs, furloughs, and shutdowns, and a Board Cafe column on a frequently problematic topic: the Board's Role in HR. We have a group of Layoff Stories from Blue Avocado readers, a First Person Nonprofit narrative about a layoff experience, and some tips on getting health insurance if you've lost your job. Be careful out there. --Jan Masaoka

Comments (8)

  • Thanks for this issue! I like the combination of concrete facts, informational resources, and first person stories. Super helpful. - @emilyjw

    Feb 01, 2009
  • Great comments. I worked with a mental health agency that unfortunately had to shut down because they "couldn't stand" to lay anyone off and eventually ran out of money. It is an admirable feeling, but I wish they had also considered more the people who relied on their services, who had nowhere to turn when the organization folded. As you said, while laying off staff is hard and horrible option, it is sometimes the best option for carrying out your mission.

    Steve Zimmerman
    Spectrum Nonprofit Services

    Feb 03, 2009
  • I had to lay people off twice when I was an Executive Director, and then was let go twice from ED jobs - sort of what goes around comes around, I guess. Both sides were very difficult.

    The first time I laid people off - well, let's call it letting them go, because there never was any intention of rehiring them as implied by the term "layoff" - it was necessary to save the organization. I took over February 28 and the spend rate was such that the organization would have been out of business in September. The remaining staff gave me a fireman's toy kit complete with hatchet at our holiday party that year. I laughed as did they, because the organization survived and went on to thrive. And I pledged that I would never lay anyone off again if I could help it.

    The second letting go was seven years later, after 9/11, when our income declined quite suddenly. I let go of 20% of our staff on one day - it was termed a "bloodbath." And it was - the cut was sudden, the people had to leave that day after clearing out desks and saying good-bye to co-workers. That was done on advice of counsel - something I regret to this day, because our pro bono corporate law firm did not seek to protect people's feelings, just the organization from any liability. I see today that I was governed by fear, and treated people badly because of that fear. To this day, I wish I had been able to live my stated values of caring for people and intending never to lay people off again.

    In fact, "reduction in force" (RIF) may not have been necessary. That situation was not as clear cut as that seven years earlier, and in retrospect, I wish I had decided on across-the-board pay cuts and possible furloughs instead of a RIF. It would have spread the pain around, although it is likely that it would have simply put off the inevitable. At that time, however, there was real resistance to this option, from senior management and Board members. Yet I had persuasive powers, and could have made a compelling case.

    I did have some courage and some compassion, and worked with a whole team of people to plan and implement the RIF. It was important for me to do it in person, to talk to the people who remained, and to provide severance pay and outplacement services. Those things were pretty meaningless in the face of job loss, however, and there was a lot of anger and sense of betrayal by those who lost their jobs. Many of them struggled afterward; I think some of the pain could have been avoided by measures short of RIF.

    Ultimately, I got to experience the pain of being let go from a job. As an Executive Director, I was subject to what I think were changes in Board priorities and personality preferences. My experience led me to see how my choices in 2002 created an environment where the Board had tacit permission to behave callously in letting me go. I now know how devastating it was for those I let go, and understand viscerally how difficult it is to recover and ultimately to forgive.

    Most of all, I learned an important lesson: non-profits are simply places where human beings work. And human beings do all sorts of terrible, wonderful, and mediocre things to each other, regardless of where we work. It's important not to have too high expectations that people will behave honorably and with compassion simply because they work with or are associated with a non-profit organization. Nonetheless, I hope people reading this wonderful set of articles will take heart from some of the stories and have courage to do what they feel is the right thing to do.

    Feb 03, 2009
  • Julie, thank you for telling us this important story. There are so many things to be gained by it, and so seldom does someone take a long view and a heartfelt view as you have. I especially appreciate your comment about the pro bono law firm not understanding that this is not just another corporation where not a shred of anything counts other than liability. In too many cases I think law firms or a corporate HR person on the board intimidate the ED and the rest of the board into bad behavior when laying people off. Thank you, Julie.  Jan

    Feb 03, 2009
  • Jan, I am glad that my experience can perhaps be of benefit to others. Thank you for your warm response. Julie

    Feb 13, 2009
  • In the agency where I am currently an Interim ED, I recently had to lay off one staff person and reduce hours for all others (similar to the first situation Julie Erickson outlines above: spend rate that would put them out of business in a handful of months).

    To control the message, and indicate that it was a sign of strength rather than demise, I put out a press release the next day explaining that this was the responsible thing to do, and that the Board of Directors and I had made these tough decisions in order to guarantee that services would be available well into the future.

    As a result, when the local papers covered it, it was with sympathetic articles tying into the general economic situation, and budget problems at the county, state, etc. Had I waited until they heard rumors that we were panicking, and then had to react to their calls, who knows what the stories would have said.

    Feb 04, 2009
  • Jan,
    Thank you so much for the work Blue Avocado has done this year to address the economy's impact on nonprofits. So useful and realistic in these tough times.

    Feb 05, 2009
  • Anonymous

    please - how do I access the issue in entirety?

    Apr 24, 2015

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