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Downsizing: How to Reduce Staff the Right Way

Wednesday, March 1, 2017 9:00 AM

Expert Advice

Written by: Derek Preece, Maureen Waddle

Seven Ways to Make Layoffs Less Painful for All Involved

Maureen Waddle
BSM senior consultant
Derek Preece
BSM executive consultant

Terminating the employment of staff members is not a pleasant task for administrators or physicians.

If your practice ends up in a position in which downsizing makes sense, we recommend the following steps to make the process as painless as possible:

Consult with your attorney or human resources advisor before implementing layoffs. It is critical to make sure that your actions cannot be challenged for violating regulations or unfairly targeting any protected class of employee.

Ask for volunteers. If a staff reduction is necessary, it is best to first ask for volunteers. Some staff members may already be contemplating leaving the practice, and a severance package may entice them to make the move now.

Quit avoiding performance terminations. Many practices avoid releasing staff members who are chronic discipline problems, but tough times can provide the impetus for eliminating employees who are disruptive or unproductive. The impact on staff morale will be lessened if those who lose their jobs are the least productive members of your staff.

Think strategically about necessary staff reductions. Some companies have a “last in, first out” downsizing philosophy where the most recent hires are terminated first. For most practices that approach can result in losing exceptional talent or having a detrimental reduction in departments that are already thinly staffed. Rather, it is best to eliminate those positions that will have the least effect on practice operations.

If possible, soften the blow to those who lose their jobs. Do this by offering severance pay, paid-out vacation and sick leave, and/or other benefits for a period of time. Be sure to follow all the laws in your state regarding the treatment of laid-off employees.

Provide any assistance to the terminated employees that you can offer. Letters of recommendation and referrals to other employers or local employment agencies can help former personnel find new employment as quickly as possible.

Recognize that staff members who retain their jobs with the practice are also affected by layoffs. Most will have concerns about whether their jobs will be eliminated. Meanwhile, some will question the financial stability of the practice and may begin searching for other opportunities, fearing that your practice may ultimately go under. Meeting with the remaining staff members to explain honestly the need for the layoffs and the ongoing status of the practice will help resolve their concerns.

Reducing your staff is not one of the more enjoyable parts of managing a practice, but necessary layoffs can be handled in a way that has the least possible effect on the employees who lose their jobs, on the retained staff members, and on the financial health of the practice.

YOUR TURN: What other tips do you have to make layoffs less painful for all involved? Please leave your response in the comment section below. Thank you.

If you have a question regarding this topic, contact Derek Preece at or Maureen Waddle at

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