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August 5, 2025 How To

How to downsize as smoothly as possible

By Holly Smevog, HMS Career Coaching

I've witnessed both the aftermath of poorly handled layoffs and the remarkable resilience that emerges when companies prioritize human dignity alongside business necessity.

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Holly Smevog

With Maine's ultra-tight labor market and close-knit business community, how you handle downsizing today will determine how well you are able to attract talent tomorrow.

Start with strategic planning and legal protection

Before any conversations begin, establish objective selection criteria based on performance, skills, and business needs and document everything meticulously. Maine follows at-will employment, but wrongful termination lawsuits can still cost $50,000 to $250,000 in legal fees alone.

Ensure WARN Act compliance. For Maine businesses with 100-plus employees, you'll need 90 days' notice for closings or relocations — more stringent than the federal 60-day requirement. Even smaller companies benefit from advance planning. The goal isn't just legal compliance; it's maintaining the reputation that allows you to compete for Maine's scarce talent pool of 42 workers per 100 available jobs.

Prepare severance packages that reflect years of service. While Maine doesn't mandate severance except for plant closings, generous packages with ample support demonstrate values and significantly reduce unemployment tax exposure. When departing employees find new positions faster, your experience rating improves.

Master the termination conversation

The actual termination meeting sets the tone for everything that follows. Schedule face-to-face meetings in private spaces with an HR representative present. Prepare talking points in advance — this isn't the time for improvisation.

Lead with respect and directness: "Due to business restructuring, we're eliminating your position effective [on x date]." Avoid false hope or lengthy explanations. Instead, focus on what you're providing: severance details, continued benefits, and, ideally, professional outplacement (career transition support).

For long-term employees, acknowledge their contributions specifically. "Your 12 years building our customer service department created the foundation we still use today." This recognition costs nothing but preserves dignity and often prevents the bitterness that leads to negative Glassdoor reviews or community gossip.

Listen actively during these conversations. Allow employees to express emotions and ask questions. Your genuine response to their concerns demonstrates the character that remaining employees are watching for.

Address remaining team immediately

The employees who remain are your business's future, but 74% experience decreased productivity after layoffs without proper support. Survivor syndrome — guilt, anxiety, and fear of future cuts — can devastate team performance precisely when you need maximum efficiency.

Schedule all-hands meetings within 24 hours of terminations. Be transparent about business reasoning without violating departing employees' confidentiality. Most importantly, clearly communicate when the cuts are complete: "These are the only workforce reductions planned for 2025."

Increase managerial visibility dramatically. Have supervisors conduct weekly one-on-ones for the first month, asking specifically about workload concerns and emotional well-being. Many Maine businesses are family-owned or community-centered; leverage these relationships to rebuild trust.

Redistribute work carefully. Acknowledge that remaining employees can't simply absorb all previous responsibilities. Eliminate lower-priority projects and consider outsourcing non-essential functions rather than burning out your retained talent.

Invest in outplacement services at every level

Here's where many Maine businesses miss a crucial opportunity. Outplacement services aren't just for executives — they're strategic investments that benefit your entire operation.

Professional career transition support typically costs $1,500 to $8,000 per employee but delivers 200% to 500% ROI through reduced unemployment costs, legal protection, and enhanced reputation. When departing employees find new positions 30% faster with outplacement support, your unemployment taxes decrease substantially.

Modern outplacement includes resume optimization, interview coaching, LinkedIn development, and industry-specific job search strategies. It's not uncommon for terminated employees to land better positions than they left, becoming advocates rather than detractors.

Recognize the business case

Beyond avoiding legal costs, proper downsizing handling provides measurable business benefits. Companies known for treating departing employees well will attract higher-quality candidates — this is crucial when you're competing for Maine's limited talent pool.

Your remaining employees are watching how you treat their former colleagues. They're deciding whether to stay, whether to recommend your company to friends, and how much discretionary effort to invest. If you handle it well, your retention rates may remain stable or increase, saving thousands of dollars per avoided replacement hire.

In Maine's interconnected business community, your reputation travels fast. Former employees often become customers, vendors, or even future re-hires when business improves. Supporting a soft landing during difficult transitions preserves these valuable relationships.

Downsizing doesn't have to devastate your culture or community standing. With proper planning, genuine care, and professional support services, you can navigate workforce reductions while maintaining the trust essential for future success. Your competitors who handle layoffs poorly are handing you a competitive advantage — if you choose to take it.
 

About the author

Holly Smevog is founder of Portland-based HMS Career Coaching, helping individuals advance their careers and employers build strong teams. She is past president of the Maine Career Development Association and can be reached at holly@hmscareercoaching.com

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