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We didn’t start the fire, but: A guide to handling layoffs

Round B

We didn’t start the fire, but: A guide to handling layoffs

With the frequent news of layoffs hitting the Israeli high-tech sector, here are some helpful tips for startup leaders who are forced to cut staff

Shaul Olmert | 13:08  27.06.2022

Earlier today I posted a thread on Twitter regarding the wave of layoffs in high-tech companies and I was happy to see that the content I tweeted resonated widely. Here is that text, plus a few more examples and clarifications:

We in high tech don’t really like to talk very much about the difficulties we face. We prefer to deal with parties, fun days, changing the name on our LinkedIn profile to "we're hiring" and talking about our problems, when they exist, from a place of self-glorification ("there are crises. but how lucky I am to be such a great CEO and manage them like the leader I am"). And yet - the current crisis climate and the growing news of layoffs took me back exactly four years, to the day we fired (at the previous company I ran, Playbuzz) several dozen employees, because there was no choice. This move was well planned, but still very traumatic. I hope not to experience this struggle again, but for the benefit of those who are going through it these days, here are some tips on how to make it as easy as possible.

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A sharp change in Facebook's policy cut off a significant portion of our revenue overnight in 2018. I do not remember the exact amount, but it was tens of millions of dollars on an annual basis. Very suddenly it became clear that expenses had to be dramatically reduced, or that within a few months the company would close. We started planning the move. It included mapping the needs of the company and its workforce to decide whom to fire and whom to keep, preparing for a scenario where employees we kept might feel as if they were left aboard a sinking ship and might decide to therefore leave on their own initiative, planning how to communicate this news externally, and dealing with the painful headlines in the newspaper, and of course preparing to help the new layoffs find new employment opportunities elsewhere. On a larger scale, we had to attempt to think about how to get out of this difficult period both in life and with a horizon for future growth. Above all we had to learn how to help fired employees succeed getting through this painful experience with a minimum of financial, emotional, self-image and professional damage.

Now imagine the level of mental stress and anxiety of the boss. They must summon dozens of people to their office, one after the other, and in one fell swoop, they destroy their whole world. True, those fired are talented and will find other jobs, but all of a sudden you’ve sentenced them to a fate they were not ready for. And even though I personally tried to soften the message, to help, to explain, to embrace, this moment where someone determines the end of your employment for you is a very hurtful moment. Some of those who were let go showed understanding and empathy, but there were tears, some were angry and reacted angrily, and there were heartbreaking pleas to be kept on. Recruiters from other companies started calling the remaining employees and telling them that another wave of layoffs was planned just around the corner and the company was on its way to closing down (thank God, it is profitable and growing and has more employees today than before the wave of layoffs) and I found myself struggling with false rumors. Many workers were indeed frightened and left, some immediately and some a little later. Some clients and partners began to hesitate regarding continuing to work with us and anonymous people posting nasty posts and talkbacks online did not hide their joy in our struggles and continued to spread terrible and fictional rumors.

Let's pause for a second - you wanted to be a CEO, didn’t you? Well, now you’ve got it. This is your time to take it all on your shoulders. That's what I did, but I will not deny that I paid a difficult emotional and mental price.

So here are some brief tips on how to manage layoffs and how to move forward:

1. Make all the cuts in one go. Take a few more days to plan, but make sure there is no second wave afterwards, because an additional round of layoffs kills off what remains of the trust of the employees who are kept on.

2. Get help from an external consultant (preferably one of the investors) - you are not able to detach emotional components from making this decision because you have a good heart. You need someone to look at things from the outside and neutralize politics, history and anxieties. One of the recommended techniques (but very difficult to apply, certainly without a professional consultant) is called "Manchester United planning". My favorite soccer team suffered a fatal blow in the 1950s when almost all of the team’s players were killed in a horrific plane crash, and the surviving coach began a rebuilding process. Instead of thinking about who to let go, assume for a moment that everyone has been laid off, and now you decide not who to fire, but who to hire and for what role. Rebuild detached from the existing situation and so the decision is positive (rent, or frankly keep) as opposed to fire. This will allow you to properly assess your needs and think creatively.

3. Be sure to be 100% transparent with employees. Be honest with them, we are a company that has difficulties and let's admit that we are not perfect. Every company has its ups and downs, and the fact that it is now difficult for us does not eliminate all the assets we have accumulated. The road to glory is full of obstacles and here is one. It will take a ton of weight off your shoulders.

4. Be transparent with the media as well - give all the numbers, without mumbling and without making up stories. There is no difference when it comes to image between firing forty or fifty or sixty employees, but journalists will not forgive you if you mislead them and you want to build a relationship of trust with them as well.

5. Before the dismissals themselves - call your “anchors” in for a conversation - the staff members that you intend to keep and lead the company with after the big change. Make sure they are with you, give them a few days to figure out if they are staying or not, and if they decide to stay, ensure they are committed and lead the change with you. The severe loneliness of decision makers becomes less difficult when there is a team around you helping to carry the load.

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6. Immediately after the move - gather the employees. Tell them what you are going through emotionally. It is important that they see that it is difficult for you on the one hand, and that there is an operational plan on the other.

7. Make sure you have a shoulder to cry on. A spouse, friend, sibling, psychologist - do not be a superhero. It is difficult for you because you are human beings and human beings need someone to lean on.

8. Once employees who have left have found new jobs, share the news with other employees. Show them that you care and that you will always take care of them even if they stop working for you.

9. Remember that adversity creates opportunities - a time to promote someone young, a time to give people more challenges and responsibility. Make sure the remaining workers get a broad career horizon.

10. So you returned home after this difficult experience. First thing - have a drink, smoke a joint (only with a legal medical prescription of course!), watch a movie on Netflix, read some Walt Whitman poems, have some of your mom’s home cooking (comfort food). You deserve to pamper yourself, you have faced a big and important challenge - so, take care of yourself.

And beyond all this - we must not forget for a moment that although it is a very shaky and difficult experience for the entrepreneur/CEO, it is even more difficult for the person who was fired. Keep in touch, remember to provide help and support, and do not forget that even though you are also in trauma - they are the ones who suffered the hardest blow and you are first and foremost committed to them and their wellbeing.

Shaul Olmert is a serial entrepreneur and the co-founder and CEO of mobile app developer Piggy. He formerly founded interactive content company Playbuzz Ltd. You can find his previous columns here.

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