There is no way to sugarcoat it: For many founders, 2022 was a tough year to be a boss, and 2023 is not shaping up to be any easier. The tech industry layoffs may have slowed, but they haven’t abated and there will certainly be more to come. Staff reductions have become commonplace, but that doesn’t make cutting jobs any easier; especially if you’re the founder of a startup. Of course, all job cuts are difficult, but at a startup, they can feel personal. Founders are laying off people who have helped them build the company from scratch; the people who assembled IKEA furniture in the first office and who pulled late nights and long weekends. Layoffs at a startup can fracture the motivation and trust of those who remain. Over the past 15 years, I’ve had to preside over layoffs at previous jobs, and I’ve also worked with some founders in the past year who’ve had to let team members go. There is no perfect way to handle such situations, but I have learned a few things that might be helpful for founders facing potential layoffs. Letting people go will never feel good, but with some thought and planning, founders can manage the process well and come out the other side stronger.
Before the layoffs
When layoffs are necessary, it is important to manage the situation with compassion and clarity. You must treat each job loss with the empathy it deserves. Here are four strategies to consider:
Don’t delegate fully
Yes, your head of people will be your key wing person, but you should never dump the layoff process on others. You’re the founder, so you own the process and the outcome. Care about the details, work closely with your team, and if the company is small enough, have the tough conversations yourself. This may feel like one of the worst moments in your company’s trajectory, but your team will respect you when you take responsibility for overhiring or any missteps that led to this point. When employees hear they’ve lost their jobs from a CEO or another respected leader, they leave feeling valued. Also, remember to make one deep round of layoffs instead of several over many months. A slow, repeated process saps morale and makes everyone feel unsafe.
Don’t do mass layoffs on Zoom
This idea always sounds nice on paper. It’s efficient! It’s also one of the worst ways to announce bad news. No one wants to learn they’ve been laid off in front of their co-workers and be forced to react to the news in real time. That said, sometimes group notifications are required given the size of the team impacted. Consider if you have the capacity to handle the layoffs with one-to-one conversations — it is your best option. If that isn’t feasible, you can use Zoom or send an email first. But you should still follow up one-to-one if you can. You need to do what’s right for your business, but don’t lose sight of the power of a personal conversation for showing the people you’re letting go that you respect them. They’re going to walk out the door and tell their friends what working at your company is like. Make that last impression the best it can possibly be.