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Almost every week, we’re seeing new headlines about layoffs (often called “reductions in force” or “RIF” internally). I feel for all of the employees impacted: after the stress of the pandemic, political unrest, and economic uncertainty, it’s a particularly horrible time to lose your job. I myself was laid off from one of my first startup jobs, and it was a very difficult period in my early career.
However, as difficult as it is to be on the receiving end of layoffs, my focus is on supporting the leaders who are deciding to initiate them. The internet recently ridiculed a CEO who posted on LinkedIn about how difficult it is to be the executive announcing the layoffs; fair points were made about the privilege of an executive who keeps his job relative to those he laid off. However, I don’t think this issue can be reduced to a simple binary of good guys versus bad guys. Executives are people too, and in most cases, they’re doing their very best to avoid layoffs. Sometimes, though, layoffs are simply unavoidable, based on economic conditions, changes to a company’s market and strategic plan, and other macro factors. What matters most is whether leaders are appropriately humbled by the layoffs, and committed to shepherding their team (both those who depart and those who stay) as thoughtfully as possible through the turbulence.
Here are a few things to be cognizant of if your team is facing restructuring or a reduction in force:
Manage pressure from investors. No one is more spooked about economic conditions and the future of tech than VCs right now. My clients are facing lots of pressure from their board members and investors, many of whom have never been operators. They see layoffs rippling throughout the industry, and feel compelled to recommend it. Remember that while your investors have a lot to contribute, no one knows your business like you do. You are allowed to push back, and you can give honest feedback to your investors if you feel like they’re not listening to your reasoning.
If layoffs are inevitable, cut deeper than you think you need to. What’s worse than one round of layoffs? Multiple rounds of layoffs. If you’ve made the decision to let people go, think long and hard about how much you need to reduce your costs. This is not a time to be optimistic: save everyone the heartache, be realistic about how many people need to be let go, and let them go the first time.
Don’t confuse a reduction in force with performance-based terminations. When facing the gut-wrenching decision to let people go, it’s tempting to rationalize that you’re mostly letting go of underperformers. But if you’re honest with yourself, you should know better: the key difference between performance-based terminations and reductions in force is the element of surprise. If you’re making a performance-based termination (at any time, whether related to layoffs or not), the employee should never be surprised. Your culture of feedback should ensure that employees are always clear about where they stand. If termination is coming out of nowhere, call a spade a spade and be honest about the reduction in force. It’s more compassionate for the folks you’re letting go, and for those that remain. Speaking of them…
Be prepared to heal your culture. It’s nearly impossible for culture not to take a hit after layoffs. While your remaining team members might feel relief, they might also feel anger, confusion, and even survivor’s guilt. Plus, they’re likely anxious about additional rounds of layoffs, and feeling generally much less secure in their roles than they did previously. After a round of layoffs, you’ll often see additional turnover from folks who jump ship to seek a more secure position, extending the turbulence for the rest of the team. Transparency and empathy are key during this period. Spend more time than usual in front of your team, explaining your reasoning and laying out the path forward. Conduct a listening tour so your employees can vent and feel heard. Invest in ways to strengthen your culture, from employee resource groups to feedback-giving mechanisms. If your remaining employees sense that you’re genuinely committed to retaining them and growing from this experience together, it’s possible to come out with an even stronger team culture than you had before.
If you’re laying people off, your work has just begun. The structures you set up to shepherd folks off of your team say everything about your culture. Fight hard for long-term salary and benefits coverage for your former employees and their dependents. Set up robust systems to gather your former employees’ resumes and distribute them broadly (with their consent, of course). Spend time on the phone trying to connect your former team members with people in your network. Do your very best to ensure that this layoff is the beginning of a new opportunity for as many people as possible.
Layoffs are an absolutely brutal maze to navigate as a leader. Don’t rush: take as much time as you think you need to weigh your options and steel yourself for what’s to come. Lean on your trusted confidantes, both at work and outside of work, to center yourself. In the end, everyone will get through this difficult time: you, those you let go, and those who remain.
👋 I’m a seasoned executive coach partnering with executives and people managers in tech to manage from abundance, not fear. Interested in coaching for you or your team? Learn more at iocoaching.co. You can also follow me on Twitter at @nikkilgoldman.