How to fire right

Business guru Tom Peters on the art of the layoff.

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Tom Peters on excellence: "It's all about developing people."
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(Fortune Small Business) -- Unlike many of his management consulting peers, Tom Peters deems across-the-board staff cuts "dumb" and multiple rounds of layoffs counterproductive.

"If you really want to kill morale, have layoffs every two months for the next two years," says Peters, the author of more than 15 books - including In Search of Excellence and his latest, The New World of Wow. Recently, Fortune Small Business sat down with Peters to chat about the upside of the downturn, managing in tough times and Germany's secret.

FSB: So what's the best way to handle layoffs?

PETERS: First, be as open as you can be - and you can be wide open - with employees. Rumors are always worse than reality.

Second, show more thoughtfulness than ever before, because you are going to inflict serious mental damage on the large number of people you get rid of and stress on all the rest who may have their hours or pay cut or think that they're going to be next.

FSB: You've said the economic crisis has a silver lining. What is it?

PETERS: Obviously, tens of thousands of people are going to lose their jobs, so I'm not at all lighthearted about that, but it's my belief that we've been living in la-la land, whether it's the nation's failure to save or easy credit. I think it's good to gain a little humility.

FSB: You're a fan of the Mittelstand, or German mid-size company. How come?

PETERS: They are the reason a relatively small country like Germany is the world's leading exporter - ahead of the Chinese, Americans and Japanese. Mittelstand companies are incredibly focused and almost always family-run. The young men and women go through the apprenticeship system and learn that the goal is excellence.

FSB: What can American entrepreneurs learn from that?

PETERS: It's all about developing people.

FSB: And what's the best way to do that?

PETERS: A guy who posted on my Web site said the four most important words in the manager's lexicon are "What do you think?" It's about engaging people, for heaven's sake.  To top of page

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