Leading through redundancies/reductions in force (RIFs)
It’s been clear for months now that the market has shifted and times are tougher for tech firms and for startups. We've heard stories of horrible and frankly foolish people practices, but also of layoffs being done in a way that gives staff information and dignity. As someone who coaches start-up CEOs and founders, I’m seeing the possibility of redundancies come up a lot, even for companies who look relatively healthy in terms of runway.
For the founders I work with, layoffs (or RIFs - Reductions in Force) are a million miles from what they want to do and who they want to be. They care about what they have built, and feel a strong sense of responsibility to their teams. They’ve brought people in based on a vision, and letting them go seems to be a betrayal of that. They worry about the impact on those who will leave, and on the effect that redundancies will have on the culture of the company that remains. They are right to worry about these things.
A disclaimer: I am not an employment lawyer or employment law expert in any jurisdiction. I have been on the business end of redundancies: I acted as employee representative for my function (HR) when Clifford Chance made redundancies following the financial crisis in the late noughties. However, here are some suggestions for how founders might approach redundancies from a leadership perspective (rather than focusing on legal issues or the process). These are the result of discussions with clients, and with the rest of Atypic team. This piece also presumes that redundancies are a tool of last resort - that you are taking steps to reduce the chances of redundancies, and to minimise their impact.
Think about it early - if layoffs are on the cards in the not too distant future, now is the right time to think about how you would want to approach it. What would you want to offer those leaving? How would you select them? How would you help them find new jobs? How would you want to communicate? If you are like the founders I coach, you will want to have a process for layoffs that means you can look at yourself in the mirror and say that you managed a difficult process in line with who you want to be as a person and as a leader.
Do it properly and get expert help - you’ll need help to make a plan that works. Don’t take my advice, find an employment lawyer or expert who understands how these things work across all your jurisdictions. This is particularly important if you have a remote or distributed workforce. In the UK, ACAS is a great source of info.
Don't delay your decision - We’ve seen founders take longer than they should deciding whether to lay people off because they don't want it to be true. A month spent deliberating is a month - or more - of runway lost so the speed of your decision has real consequences.
Use your values - if you have taken the time to create a set of company values, you should explicitly use these in how you lead through layoffs. If they are not how you approach layoffs, they are not your values.
Let your employees hear your side of the story - no leader wants to make redundancies, especially when they have taken care and attention in building their team. It can help your team - those staying and those going - to hear your side of the story. We’d advise stopping short of posting a video of yourself crying on LinkedIn, but there are questions that you can helpfully answer. What does this mean to you? What have you learned from the experience? What are your commitments to the team members who are leaving, and staying? Patrick Collison’s email to Stripe employees is an example of this.
Think about those who are staying. Redundancy is undoubtedly challenging for those who are leaving, but it can also take a toll on the team members who are staying. This can play out in at least two ways. 1) They will be watching how you treat people leaving - e.g. do you give outplacement support and time to find a new job, or do you force them to work their notice. 2) How you galvanise and energise the team and make sure they believe in the vision and future of the business.
Look after yourself - redundancies are tough on the folks who are being let go, but they are also tough on the leaders who have to make the difficult calls, and on the staff who have to do the difficult work of helping colleagues to leave. Think about the support and structure you need to be at your best, whether that be family, friendships, coaching, exercise or time with your therapist, and make sure you have access to it when you need it.