sealPurdue News

June 2001

How to be a good boss in bad times:
laying off employees

WEST LAFAYETTE, Ind. – Push comes to shove for good managers when orders drop 50 percent or the economy slides into a recession, and downsizing becomes unavoidable, says a Purdue University professor.

John E. Lillich

"There's a difference between being a good boss and being popular," says John E. Lillich, professor emeritus of organizational leadership and supervision. "In fact, managers who do things to be popular are likely to find reduced efficiency, and it doesn't make them popular, either."

Instead, the key to being a good boss in bad times starts early.

"You always want to hire doers and starters, the best people you can – even if they're so good that they're probably not going to stay for a long period," he says. "The best people will have a beneficial effect in the company or organization, even in a short time on the job, by raising the level of performance of those around them."

A good boss also builds a foundation of trust in the good times that will stand the organization in good stead when bad times inevitably come, says Lillich.

"Understand that management's primary job is to establish standards for individual jobs, measure performance against those standards and take corrective action," he says. "Good managers train their subordinates, retrain them, if necessary, transfer people who aren't performing well, and, as a last resort, dismiss those who can't or don't measure up.

This is not cutthroat, and Lillich emphasizes "the good manager should, in his daily interchanges, be considerate, cheerful and optimistic, provide positive support and make it a point to know and get along well with the support staff."

A good manager also keeps his or her employees informed about the big picture: the company's place in its industry and about both opportunities and potential problems ahead.

The major don't for managers: Don't put down or lay blame on upper-level management, even with your friends in the organization. Doing this undermines the credibility of the whole management structure.

How does all this translate into managerial action when the wolf is at the door?

If a boss has built an environment of openness and trust, his or her employees are much more willing to accept the measures necessary to get the company through bad times, Lillich says. The acid test is when a manager must reduce the size of the work force. Lillich's advice is for the manager to be completely forthcoming.

"Some companies, including Cummins Engine here in Indiana, have offered their employees the opportunity to take unpaid time off," Lillich says. This can take some of the pressure off tough numbers decisions that affect not only those furloughed but also inevitably takes a toll on the morale of those who remain.

The bottom line for layoffs is that management undertake them in a predictable, logical and humane way. One way, says Lillich, is using seniority as a basis, but with an important caveat:

"The idea is to have a good organization, but a smaller one. Seniority implies you've kept the organization in order in the good times. A layoff is no time to clean house."

But whichever way management chooses to proceed in an organizational crisis necessitating work force reduction, Lillich emphasizes that the process is too often subjective or is perceived that way.

Management, for example, can choose to retain the most versatile employees because they are the ones who can keep the enterprise afloat. But this selection process is not as transparent as seniority to employees and can be misinterpreted as management's keeping favored employees and dismissing challenging ones.

The stakes for the organization's future could not be higher, Lillich says.

"The employees' perception of the level of fairness and honesty will affect the organization, positively or negatively, long after the company has weathered the storm at hand."

Source: John E. Lillich, (765) 463-7417,

Writer: J. Michael Lillich, (765) 494-2077,

Purdue News Service: (765) 494-2096;

NOTE TO JOURNALISTS:  A publication-quality photograph of John E. Lillich is available at It is called Lillich.j.jpeg.

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