How companies decide who to lay off

• Over the last few years, many workers have faced layoffs, which can come as a nasty shock.
• Teal Pennebaker, who works with companies on communications, said layoffs often aren't personal.
• Layoff rooms can get tense and your manager probably isn't in there, she said. 

Some workers know it well: The early morning email and the sudden emergency all-hands meeting added to their calendars. It's time for layoffs, and they're on the chopping block.

A layoff doesn't feel good and it can lead to a bout of situational depression — alongside scrambling to stay financially afloat. For some workers, it may come as a complete surprise and leave them wondering how they ended up on the layoff list and why their company decided to make those cuts.

As large firms slash their workforces, with potentially even more cuts to come, layoffs might be top of mind for some. So what is happening behind closed doors when a company does layoffs? No one firm is the same, but what's typically going on behind the scenes is a "pretty in-depth" conversation, said Teal Pennebaker, a managing partner at Shallot Communications, a firm that advises executives and companies on how to communicate with their employees and the outside world.

Those conversations touch on which departments it would make sense to reduce based on how much they cost and how critical they are, said Pennebaker, who's worked in communications for almost two decades and has been assisting companies over the past year on both their internal and external communications, which includes layoffs. Her firm also surveyed several dozen communications leaders on the best ways to conduct layoffs.

"Well run processes get fairly clinical in that they're looking at things, they're trying to be as sober about these decisions as possible so that they can make the right decisions in terms of what will ensure the company's viability down the road," she said.

That's usually happening at a fairly senior level, Pennebaker said, so it's usually not your manager in the room debating whether or not you should be cut. Instead, leaders several layers above are looking at which divisions are or are not worth investing in right now.

"Typically, what you're finding with these broader layoffs is that they're not at all related to performance," she said. "They're related to just the company needing to function moving forward with slimmer margins and better, just tighter books."

Layoffs likely don't have much to do with you as an individual

Pennebaker realizes that's an "unsatisfying answer." One may want to believe that these are very thoughtful decisions, and they are — in ensuring that the business doesn't fold.

"They're not looking at individuals and saying, well, so-and-so has three kids," Pennebaker said. "They don't go to that level because if you were to do that, that's really painful — and it's also against the law."

What's hard is that for workers, there's nothing they really can do to tip the scales, according to Pennebaker. While job performance is sometimes considered in who's laid off, it depends on the company and how targeted the cuts are — and that reasoning will most likely never be given to someone getting the chop.

For the most part, "the vast majority of layoffs are completely agnostic to the individual and are made without any individual person in mind, and are just about how to ensure that the company can survive," Pennebaker said. There might be more granularity in who, exactly, should stay and go at a smaller company, but that's usually an outlier.

The rooms where these decisions are made can get really tense, Pennebaker said. The decision-makers are "hyper-aware" of what their choices will mean for different teams, and they want to get it right.

"These are not fun rooms to be in, I'll say that. It's not a warm and fuzzy conversation. There isn't a lot of levity," she said. "There tends to just be this hyperfocus on what do we need to do to get to the right solution? And sometimes there is tension."

The best way to do layoffs

While it may not make workers losing their jobs feel better, the companies Pennebaker has worked with have felt terrible about letting workers go. It's an "awful feeling," she said.

"If you're the person working behind the scenes on layoffs, it is a really miserable experience just because you're doing this basically in secret from the rest of your team, you're having to make really tough decisions, and you know that it's going to be painful for others," Pennebaker said.

While there's no real ideal scenario for conducting layoffs, there are best practices. The best case is a humane and fast process with a generous severance and a CEO who's clear on the reasoning for the cuts and compassionate towards those leaving. For the workers left behind, it's also important that leaders are clear in the weeks after cuts what the future will look like — and why they're optimistic about the new path ahead.

"It's a really traumatic experience if all of your colleagues leave and then you never hear from your CEO about what happened," Pennebaker said.

But, at the end of the day, no matter how they're conducted, layoffs "suck."