Introduction
We say this firsthand with great empathy, as:
- We know founders who’ve had to conduct layoffs to keep their company default alive, or even to shut-down. Having to terminate workers who are pregnant, are solo breadwinners, and how heavily this decision weighs on them.
- We’ve worked in companies where we saw colleagues laid off, or having to execute the layoff as part of management themselves, and the impact of that. The toll it takes on their mental health and even the feeling of embarrassment to tell their families.
- We’ve also experienced it personally. Cheryl, one of the co-authors of this piece, was impacted by Grab’s Reduction In Force (RIF) back in 2020.
“Upon joining Grab in Singapore after spending 10 years in Silicon Valley, my role got cut when COVID hit - an extremely anxiety inducing experience for me as a foreigner and a mom with two young kids who needed a working visa to stay in the country.”
As a founder - if you are grappling with the prospect of a layoff, consider the following guidelines to help you do it right. Elon Musk may have done a terrible job with Twitter layoffs and lived to tell the tale... But let’s face it, you are not Elon Musk. Conducting layoffs poorly is not only imprudent from a long-term business standpoint, it’s simply inhuman.
What’s Going on in the World?
Not so long ago (2020), electric scooter company Bird Global chose to handle layoffs the “Black Mirror” way [1] where 400+ employees logged on to a one-way Zoom call with a dark gray background slide that said only "COVID-19", and then heard a disembodied, robotic-sounding voice that fired them in two minutes.
Shocking - and yet more recent layoffs from big names like Google and Lazada continue to come under criticism for how poorly they were conducted.
What Can a Founder Do About It?
1. Be Super Clear and Decisive in Your Communications
Craft a message that comes directly from you, that is compassionate and firm. Your employees deserve to hear it from you. Many will feel betrayed when the announcements come. The only way to begin repairing that trust is to explain at a high level:
Stripe CEO Patrick Collison did this well in an email he sent to all employees in November 2022 when Stripe slashed 14% of their workforce.
As a side note: while being as transparent as you can is good, don’t feel the need to share a boatload of data and metrics. Such information may get leaked, and people may not be in the right frame of mind to receive such data when they are in an emotionally heightened state.
The form in which the message is delivered can be as important as the content. Ideally: in-person at a firm-wide town hall. Plan out the followup:
- What messaging channels will be used?
- Dissemination strategy: What time will messages be sent? Include clear step-by-step instructions sent via email, and same day 1:1 calls set up with HR and line managers.
- Will internal and external messaging be different? Talk to your corporate communications team if you have one or get some external advice.
- Be mindful of team members responsible for delivering the news - have they been given proper training, i.e. how to truly listen, empathize and manage emotional outbursts?
2. Get Your Key Leadership Aligned
Even if not everyone agrees with your decisions, as a founder/CEO you need to help them understand how you got there and why this is the best way forward for the company. They can disagree, but they must commit. Going through a layoff will be exponentially harder if you don’t have buy-in from your leadership team. Ultimately, they are the people you trust to personally layoff their team members, so include them as early as you can. The worst thing is resentment and distrust breeding amongst your inner circle.
A well thought out process should involve weeks (not days!) of preparation with your leadership and Talent/ HR team. Loop in your trusted advisors as sounding boards. If you have the resources, get legal and compliance on standby to tackle worst-case scenarios.
3. Be as Generous as You Can with Support
It can be tempting to spend as little time and money on the exercise as possible. But set aside a budget to offer as much support as you can, and don’t rush the process. People will remember the extra mile you took to take care of them. Some examples of doing it right:
4. Understand Local Laws and Regulations
Ignorance is not an excuse. This is tricky for many startups operating in multiple countries across SEA. Labor laws in each impacted country need to be understood and followed through.
Recently in Singapore, Lazada came under fire for terminating 30% of its workforce without notifying the Manpower Ministry nor consulting its labor union, breaching Singaporean labor laws. Retrenched employees received unsatisfactory severance markedly lower than what was offered by Grab and Shopee. They were also bound to an extensive non-compete clause dubbed as unfair by many HR practitioners, as it covered not only direct competitors but also logistics and retail players such as NinjaVan and Amazon.
5. Be Available, Be Human and Be Realistic
As much as you might feel like disappearing - this would be one of the worst times to do so. You may be feeling judged and vulnerable, but as a leader, you need to show up and put a brave face on to motivate your people. At the same time, be honest and don’t tell your employees that everything is going to be much better post-layoffs, or that it's a one and done exercise. At a smaller company (<100), offer designated office hours for anyone to come talk to you. At a larger company (>100), give employees access to decision makers. e.g., scheduling an additional town hall that includes an unfiltered Q&A session.
Most importantly, treat your employees with empathy. These are people who have dedicated a lot of effort, time and energy to support your vision. Many have families to feed and mortgages to pay. Be self-aware enough to know if you are not the best people leader - that’s okay. Make sure there are others on your team who have the emotional intelligence to support you.
Important: It is crucial that you get yourself the emotional and mental support you need. It’s the familiar adage - put your own oxygen mask on first.
6. Have a Clear Plan for Refocusing on Morale and Culture, Mission and Vision
You cannot afford to ignore the emotional well-being of remaining employees - many may feel survivors’ guilt. A Harvard Business School study reported that layoff survivors experienced a 20% decline in job performance[4].
This is one of the hardest challenges to navigate as a leader: how much space to give people time to process what has happened, while continuing to drive a high performance culture. Double down and invest in team building activities, regular 1-1s and check-ins with existing staff. Your employees need to feel safe and supported.
As a Re-cap, Here’s the Quick CHECK-LIST on What We’ve Discussed:
☐ 1. Be super clear and decisive in your communication.
☐ 2. Get your key leadership team aligned.
☐ 3. Be as generous as you can afford with support for the impacted.
☐ 4. Understand local laws to avoid negligence.
☐ 5. Make yourself available and empathetic in the aftermath.
☐ 6. Have a plan in place for rebuilding and refocusing on morale and mission.
It’s Done... Now What?
Layoffs and restructuring are a painful part of a founder’s journey that many will need to grapple with at some point, especially in the fast moving world of tech. Just remember, always treat your people with heart. In our next piece, we share some specific strategies around maintaining the mental wellness of yourself and your teams when handling tough situations.
Disclaimer: Views expressed here are our own and do not represent the views or opinions of Monk’s Hill Ventures and its affiliates. - Cheryl and Gessica
Sources:
- https://layoffs.fyi/
- Grab - Cheryl Liew
- Glints - Debby Laurentina
- Ruangguru - Kartika Akbaria
- https://www.channelnewsasia.com/singapore/lazada-employees-retrenched-non-compete-clauses-shares-clawback-4040506
- https://hbr.org/2018/05/layoffs-that-dont-break-your-company
