Economic uncertainty is hovering over us all – and the entrepreneur community is already feeling the effects, whether it’s early belt tightening, slow-rolling hiring plans, or even initiating the first round of layoffs.
Most early-stage founders have had the experience of letting an employee go here and there. That’s always difficult. But a true reduction in force (RIF) – letting go of entire business units or groups of people – is on another level altogether; many founders haven’t encountered the unfortunate need to do it. Until now.
Doing this right is so important – primarily for the affected employee and for the workforce that’s retained but also for the reputation of the founder and the company itself. Here are some elements to keep in mind:
This will be traumatic for those let go – and those staying
Understand that for those experiencing being let go directly, it will be one of the worst days in memory. It hurts to be told you’re not part of the company anymore – even if it has nothing to do with performance and everything to do with cost and strategy. This is an organizational fissure and the rift is real. For those on the other side, the ones who get to stay, they’ll be wondering if this is still the right place for them and if they’re valued. It’s crucial to lean in with those who stay and make sure they feel engaged, valued, and committed.
Shore up your key talent
To that end, as part of the RIF planning process, it’s not enough to determine who needs to go. You also must pinpoint who must stay – the must-retain, can’t-get-along-without-them talent that your business absolutely needs to function. What can you do to ensure they’ll stick around? It could be a stretch assignment, a title change and pay bump, a chance to lead a cross-functional team, or the opportunity to take on a new class. Whatever the case may be, the point that your commitment to them is solid must be underscored. You’ll reach out in tandem with giving notice to the impacted employees.
RIFs should be about cost or redundancy
Too often, it’s clear that companies use layoffs as an excuse to purge the bottom ten percent, those employees who aren’t performing at the necessary level. But it begs the question: why would you keep consistently low-performing employees at all, particularly in en masse? RIFs should be laser-focused on roles or business units that don’t currently add the most value and/or don’t position the company to win (or maintain) market share in the next few years. Feel free to reduce bad apples but make it a point to look more strategically at what best positions the business to get through a difficult period. Connect the RIF with how it lets the company better achieve its goals. That’s the right lens for constructing a RIF.
The foundation must be laid in advance
Once it’s clear a RIF is unavoidable, you have to create the team that can help oversee every aspect of it. This would typically involve legal, HR, communications, hiring managers, and the executive who oversees the business unit, with some involvement of the c-suite. This team should sort through:
- The ‘why’– employees will need to understand why this is happening
- The timing – determining the notice period, evaluating if the Worker Adjustment and Retraining Notification (WARN) Act necessary, and deciding the sequence of notifications is crucial as this must happen in a highly synchronized way
- The venue – do not bring people together and lay them off en masse over Zoom or in a conference room. Notification should be given on a 1:1 basis. It’s respectful, courteous and so important to do correctly.
- Packages – what affected employees will receive, from benefits to severance
- Communication – how affected employees will hear the news, an FAQ for both the impacted employees and the remaining workforce, the follow-up communication that outlines what’s next, and even a holding statement to be used in the event of press inquiries.
Provide meaningful resources
In addition to a strong exit package, consider finding an external partner that can come in and provide your impacted employees with some useful post-RIF support. There are excellent companies that can help people refine their resumes, identify new job opportunities, suggest how to best position themselves for success during subsequent interviews, etc.
Prepare executive teams to be supportive
Once notification is given, the aftershocks are palpable. The people who are left standing feel a very understandable mix of survivors’ guilt and relief (“I made it but my friend didn’t.”). Leaders must be prepared with a narrative and messaging they can deploy right away to the teams. It’s crucial to do that personal outreach immediately; letting it go until the following week is a mistake that allows rumors to circulate and nerves to remain unsettled. A town hall or all hands can be scheduled to speak openly and honestly about what’s happened – and also set the stage for why the company is still facing a future that’s positive.
Whether it’s now or later, there’s a chance that as a founder, you’ll have to initiate a layoff during the course of your career. Doing it as well and as kindly as you can is critical – and get comfortable being deeply uncomfortable. If you remind yourself it’s not about you and stay focused on your employees’ feelings as much as your actions, you will get through it.