As we learned from the stock market during the past three years, all bubbles eventually burst.
As we learned from the stock market during the past three years, all bubbles eventually burst. And while a strong housing market has steamrolled across America, it has been driven at least partially by lower mortgage rates. When those rates rise, as they ultimately must, causing demand for new housing to drop, as it will, you might have to reduce staff to cut costs. When that day comes, you can fulfill a memorable role for the furloughed employees.
Aside from the sledgehammer effect employees suffer when told they are terminated (and we're not talking termination for cause; we're talking termination because of outside forces such as the economy), they also can feel anger and betrayal. These feelings will be even stronger if they saw no warning signs and their termination comes as a complete surprise.
Thus, the first step in helping employees get over termination is to keep them informed of business developments. Even if the meetings entail "lunch bucket" conversation, share what you know about the company's immediate future: how many homes are under contract, how traffic is at the sales center, whether contacts with Realtors are slowing, etc. Even if employees do not have degrees in economics, they can understand sales numbers, traffic counts and the attitude conveyed by their boss. And they can read the tea leaves long before you have to reduce staff.
Have a written plan long before you have to terminate an employee because of the economy. Address the questions an employee is most likely to ask upon termination. Consider all the things that would be on your mind if you lost your job. How much unemployment insurance can I get and for how long? Where do I go, and how do I collect it? What happens to my pension plan? What happens to my sick days? My vacation days? When do I have to turn in the company truck? Can I use you as a reference for another job? Do you know anyone I can call for work? What about medical benefits?
Any checklist or information sheet you prepare also can include other critical information an employee might need to consider once the initial shock of losing a job passes: tips on writing a resume; whom to call for assistance in renegotiating credit card or consumer debt; how to refinance a house.
Other than merely providing information when you terminate an employee, consider other steps that will leave former employees indebted to you. After all, you might want them back later when the economy turns back up. For example, contact other builders in your builders association or community who might be looking to hire good people. Setting up an interview for an employee even before termination can ensure that the employee's income stream stays intact.
Depending on the number of employees affected, you can even call in a financial planner to assist in their personal financial matters. The planner can speak to the group as a whole or work with each employee based on a fee prearranged with you. You also can include unemployment insurance forms in the packet you should prepare, as well as business cards from the loan officer at a local bank.
Standing up for your employees when they’re down is the best thing you can do. They helped you succeed, so you should help ensure that they don’t fail.