In my last blog post I shared some lay-off horror stories. One company conducted a fire drill and then told its employees over a loudspeaker that half the company was being laid off. They should each try to get back in the building and if their key cards didn’t work, that meant they were no longer employed. That must be the worst fire drill on record that didn’t actually involve a fire.

Laying off people in the right way is crucial to maintaining the morale of the remaining employees and reinforcing the reputation of the company as a good place to work. Business reasons aside, it is the right thing to do for someone who has been devoting their working hours to your company.

What some executives fail to see is that layoffs are not just about the person or people who are being let go. They are about your company’s reputation and the morale of the people being left behind.

In 2008 Zappos.com had to lay off eight percent of its employees due to the downturn in the economy. Rather than keep it quiet, CEO Tony Hseih turned to social media to explain why the layoff was necessary. He tweeted and blogged about it, explaining how the company was compensating each employee with health insurance coverage and a severance package.

On November 6 he sent an email to all Zappos.com employees that explained exactly what steps the company was taking and why, how hard the decision was and that it was offering employees more than two weeks of severance pay. That email included these paragraphs:

“I know that many tears were shed today, both by laid-off and non-laid-off employees alike. Given our family culture, our layoffs are much tougher emotionally than they would be at many other companies.

I’ve been asked by some employees whether it’s okay to twitter about what’s going on. Our Twitter policy remains the same as it’s always been:  just be real, and use your best judgment.”

He was transparent, communicated honestly with his employees, demonstrated that he trusted them, and actually generated goodwill among his employees and his customers in the midst of the layoffs. That is an example of the right way to handle a company-wide layoff.

Here are four steps to laying off a person the right way. Of course, with any layoffs you must be sure to follow guidelines set by your HR department. You should also have input from the legal department and the HR department for each layoff.

• Handle the layoff in person.

Whoever is handling the layoff, usually that person’s supervisor, should meet with the person, along with a representative from HR, in private and deliver the bad news upfront. Don’t prolong the inevitable with lengthy discussions about the economy, the current market or recent losses the company has suffered. Deliver the news quickly. If your company has been upfront and communicating as it should, the employee should have known that things were not going well.

If a HR representative is not available, make sure there is a second person in the room to act as a witness.

• Treat the person with respect.

Whoever is handling the layoff should be aware of the guidelines set by HR and should deliver the news in such a way for the person maintains his dignity. Stay focused and offer a clear explanation for the layoff within guidelines set by your HR department.

• Listen with boundaries

It’s uncomfortable to lay someone off and deal with the emotional response. While you may want to usher them out of your office as soon as possible, it will help the employee leave on a better note and send the employees who are staying a positive message about how you treat people if you take the time to listen. You may not like or agree with statements the employee makes, but it’s important for the employee to felt like he was heard and you paid attention.

• Offer encouragement

If possible, offer some assistance with references or any assistance or outplacement services your company has. Share information about support groups or information centers that may help the employee with the next steps in his career.

Laying off someone is never a pleasant task. But sometimes it is the only way to save the company and employment of hundreds, if not thousands of other people. And handling it in the right way will make everyone feel better about the process.