This week nearly 1,000 people lost their jobs at Lyft. 17% of the company, with many others furloughed. Millions of people have experienced a version of this in recent weeks. And many will be impacted in the near future.
It’s a devastating blow for everyone impacted. For people with children. With mortgages. With limited emergency funds. On work visas and deadlines for exiting the country, but borders closed around the world. It’s hard on leaders forced to make decisions, and on those who remain in the companies.
These situations have many things in common. It’s an unprecedented environment for every business. Demand has dropped to zero in some industries. In most cases, the biggest fixed cost is people. So when a business needs to slash costs or die, it’s inevitable that people are impacted.
But it’s clear from just a few examples that these situations differ in big ways. Most obviously, when a company is forced to do the hardest thing and let people go, there are good ways and bad ways to do it. If you’re a founder or business leader faced with doing hard things in this hot mess, try to do them right.
Doing right in this context means two things. First, treating people with dignity and respect. Second, managing the recovery to provide the best chance of achieving your company goals going forward.
This post outlines some ways to help achieve these objectives, based on observations of this week, other public examples, and reflections on a few very hard times I was in this position as a founder.
I’m not authorised to speak on behalf of Lyft, so won’t discuss specifics beyond what is already shared publicly. But I will say I’m incredibly proud of the way our founders and the company managed a very hard situation. I’m confident the company will bounce back.
If you need a more concrete playbook, start with this post from the CEO of Carta. It’s an exceptional example of clear communication in crisis, treating people like adults, and with compassion. There’s also a chapter in The Hard Thing About Hard Things titled “the right way to lay people off”. If you’re a founder who hasn’t read this book, stop everything and devour it.
On the flip side, there’s probably a few things in this description of recent layoffs at Bird you should avoid doing.
Treating people with dignity and respect
Once you’ve decided what needs to happen, your goal should be to build and execute a plan that treats people with dignity and respect. This may be the only thing they remember about your company.
Define goals and decision-making criteria. Do you need to reduce a fixed number of roles, or achieve a dollar target? How will you decide who to keep vs layoff? Who will make these decisions, and how will they be reviewed? One legal and cultural risk is the perception (or reality) that some groups of employees are more impacted than others. Examine your plans with this lens, and your legal team, before committing anything.
Move quickly to avoid leaks and rumours. Once you have a high level plan, try to execute it as quickly as possible without adding undue risk. The more people involved in the process, the higher the risk of leaks. Rumours of layoff destroy productivity and morale.
Plan. Every. Detail. Plan and review every single thing that needs to happen on the day, down to the minute. Who communicates what to who, and in what order? How will managers be involved? Ensure employment lawyers have reviewed every step and scenario, to comply with the laws everywhere you operate. Your goal is to eliminate surprises and unforeseen risks, while being as human and empathetic as possible.
Be generous. Make your exit packages as generous as you can afford. Pull every lever available – including non-financial measures like ongoing access to certain company benefits. In the US, the biggest concern for many people is losing access to health insurance. People on working visas have a deadline to find another job or leave the country. Explore creative options for both situations, if you can. Some leaders may question this imperative, especially for a company under financial stress. But this will be the main thing many departing employees remember about your company. It also sends an important signal to everyone who remains.
Communicate broadly and openly. You need a comms plan for the entire company, not just people being laid off. Again, this post from Carta is a stellar example. Provide as much clarity and transparency into the process as possible without creating legal risks. Treat your people as adults.
Help people with their next step. This can be as simple as a LinkedIn recommendation, offers of referral or introductions. Bigger companies might consider access to recruiting support or outplacement resources.
Managing the recovery
Layoffs are terrible for people directly impacted. They are also extremely hard for leaders involved, and everyone who remains. You’ll need a strong, credible plan for supporting people through the recovery, to avoid layoffs having ongoing costs to morale, well-being, productivity and retention.
Have a plan for day 1. Day zero will be focused on exiting departing employees with as much dignity and respect as possible. Day one is about those who remain. Have a comms plan at multiple levels. Checkin with people individually. Provide support, resources and space.
Acknowledge survivor guilt. Those who remain will be impacted in different ways. Many will experience a grieving process, and a sense of guilt for surviving while others were impacted. Leaders can acknowledge this is normal and provide safe spaces for people to share and process their feelings. Doing this will be critical for the recovery.
Support your leaders. Leaders and managers will be impacted in different ways. Ensure they are supported with internal or external resources. If you’re the leader, prioritise this support for yourself. You just did a very hard thing and you’ll feel this for some time. Find ways to process these feelings, so you can focus on leading the company through the recovery.
Avoid death by a thousand cuts. The biggest concern for many people will be their own job security. The common advice to cut deep and once is to allow those who remain to rally together without a fear of self-preservation. Address these natural concerns directly. Ultimately, you need to give everyone who remains confidence in the direction and outlook for the company going forward.
Reorganise quickly. It’s likely you now have gaps in management, on some projects and/or teams. Try to quickly reorganise to plug these gaps, and provide certainty and safety to your remaining team. Equip these leaders and managers with a strategy, tactics and talking points that instil them with confidence and enable them to share that confidence with their teams.
Swarm on biggest priorities. Depending how your reductions were determined, it’s possible there’s now an imbalance between the level of type of work and the people who can do that work. To counter this risk, be explicit about priorities moving forward. Avoid sunk cost fallacy. What was important before may not be important now, or achievable on the same timelines. Ensure people at every level understand the priorities and are aligned around them.
Retain your top performers. Your top performers always have options outside your company. In the weeks after layoffs are announced they will be directly contacted by recruiters and competitors trying to win them away. Their interest in these offers may be increased if they perceive your company struggling going forward, or lacking a credible plan for recovery. Build a plan to engage and retain every employee in the recovery, but especially your MVPs.
If you’re a founder or CEO faced with doing this very hard thing, please do it as well as you can. If I can offer support or a perspective, find me on Twitter where my DMs are open.
If you’ve been impacted by a layoff, I’m sorry. I hope you have the support you need to get through this and find your next adventure. If I can help with intros or referrals, especially if we’ve worked together at Lyft, please contact me and I’ll do what I can.
Look after your people 💗