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Planning and Managing Layoffs

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Re: Planning and Managing Layoffs

#21

Post by ryanSrich »

taurath wrote: post #17

A bit of criticism - it “normalizes” an 8 week severance as a ceiling - maybe in the high flying startup world but any big company especially with long tenure 8 weeks is a pittance, especially to someone having been there for 5 years. May be worth a note. > While it can sound jarring to say “and today is your last day,” it’s generally better for people because it makes it clear that there is a new normal and it start…

Agreed that 8 weeks is not generous in any sense, especially for employees that have been at the organization for a year or more.

Layoffs are different from performance based firings. My rule of thumb for layoffs is mandatory 3 months + 1 month for each year of service. Someone at the organization for 6 years deserves 6 months of severance if laid off.

These are standards you have to build into your financial model. I'm afraid we've been in the crazy world of terribly run startups for too long. When I look at some of the standout startups from 2005-2010 and some from 2011-now, the startups coming out of this recent decade are far less efficient with their cash than their counterparts from the decade before.

Re: Planning and Managing Layoffs

#22

Post by 3fe9a03ccd14ca5 »

ryanSrich wrote: post #21
taurath wrote: post #17

A bit of criticism - it “normalizes” an 8 week severance as a ceiling - maybe in the high flying startup world but any big company especially with long tenure 8 weeks is a pittance, especially to someone having been there for 5 years. May be worth a note. > While it can sound jarring to say “and today is your last day,” it’s generally better for people because it makes it clear that there is a new normal and it start…

Agreed that 8 weeks is not generous in any sense, especially for employees that have been at the organization for a year or more. Layoffs are different from performance based firings. My rule of thumb for layoffs is mandatory 3 months + 1 month for each year of service. Someone at the organization for 6 years deserves 6 months of severance if laid off. These are standards you have to build into your financial model.…

Does that model still hold up when there’s company wide layoffs because of financial issues?

Re: Planning and Managing Layoffs

#23

Post by 3fe9a03ccd14ca5 »

A big lesson I learned from people here that survived the dotcom bust: you don’t want to be the last person laid off at any company. Don’t feel great if the lower performers are out the door first while the economy starts the circle the drain.

The reason is because there are companies that are still hiring and that will make it, but they’ll soak up their fill from all of the early lay-off talent and there will be very little left for you when you’re the last person to turn off the lights.

I guess the moral of the story is to keep your resume fresh, and if a good opportunity comes by during this time it might not hurt to consider it.

Re: Planning and Managing Layoffs

#24

Post by alacombe »

ryanSrich wrote: post #21
taurath wrote: post #17

A bit of criticism - it “normalizes” an 8 week severance as a ceiling - maybe in the high flying startup world but any big company especially with long tenure 8 weeks is a pittance, especially to someone having been there for 5 years. May be worth a note. > While it can sound jarring to say “and today is your last day,” it’s generally better for people because it makes it clear that there is a new normal and it start…

Agreed that 8 weeks is not generous in any sense, especially for employees that have been at the organization for a year or more. Layoffs are different from performance based firings. My rule of thumb for layoffs is mandatory 3 months + 1 month for each year of service. Someone at the organization for 6 years deserves 6 months of severance if laid off. These are standards you have to build into your financial model.…

8 weeks sounds pretty awesome when a $100-millions company gives you 2 weeks (minimum legal here in Canada)...

Re: Planning and Managing Layoffs

#25

Post by [deleted] »

crispyambulance wrote: post #18

Sounds like compassionate and practical advice, but nothing particularly insightful. Having seen the shit-storms of the early naughts, yes, I can say there are worse ways of doing layoffs. Hint: deactivating key cards at lunch time isn't a best practice, nor is dribbling out lay-offs in waves like a year-long "last man standing" game show particularly helpful. Nor is calling an all-hands meeting and having the CEO cr…

[deleted]

Re: Planning and Managing Layoffs

#26

Post by thedance »

Here's a don't: don't bring some BS document for the fired person to sign. They have no reason to do so and shouldn't feel pressured to execute something like a non-disparagement agreement, unless it comes with a big checks stapled to it.

Re: Planning and Managing Layoffs

#27

Post by tenpies »

abraxas wrote: post #20
arvinsim wrote: post #7

Earlier quoted context omitted.

Maybe they wanted to do layoff sone employees even before this pandemic. The current situation is convenient for them to do so.

The current situation is the furthest from being convenient in regards to layoffs. No company wants to be seen as heartless during a truly global tragedy.

Counter-point: no observer would consider an employer heartless for laying off people during an unprecedented economic downturn.

Do you consider restaurants heartless for laying off staff? Cruise lines? Hotels? Entertainment businesses?

It's a tough decision, but failing to make it could be the difference between laying off a few people and laying off everyone because the company goes bankrupt. The key is to do this in a respectful manner so the bridge isn't burned.

Re: Planning and Managing Layoffs

#28

Post by rb808 »

taurath wrote: post #17

A bit of criticism - it “normalizes” an 8 week severance as a ceiling - maybe in the high flying startup world but any big company especially with long tenure 8 weeks is a pittance, especially to someone having been there for 5 years. May be worth a note. > While it can sound jarring to say “and today is your last day,” it’s generally better for people because it makes it clear that there is a new normal and it start…

Agreed I've never heard of a 8 week cap either. Actually I thought it was the opposite, if you have WARN act its a 60 day notice period before the severance, its more like 8 weeks is a minimum. https://www.edd.ca.gov/Jobs_and_Training/Layoff_Services_WAR...

Re: Planning and Managing Layoffs

#29

Post by AlexCoventry »

paxys wrote: post #8
nilkn wrote: post #4

Just ruminating here, but I didn’t fully understand the hesitance to do paycuts. Of course, I understand that in some cases the financial problem is severe enough that layoffs are the only option. But it’s conceivable that in many cases a simple, say, 20% cut to salaries across the board could be enough to tip the balance. Some employees will immediately start looking for another job, but that seems totally fine and…

Like you point out in your second paragraph, some percentage of employees are automatically going to start looking for a new job and treat their 80% salary as a severance package. Being in a competitive job market, this is going to be pretty much every above-average employee at your company. With layoffs the company gets to choose who gets impacted, and the process is immediate rather than drawn-out. The reality is t…

> There is no coming back from a major across-the-board paycut

What do you mean?

Re: Planning and Managing Layoffs

#30

Post by jbkiv »

Different point of view: I was a Founder and CEO during the dot com era. The company survived and became successful ($2B revenues today).

It may be unpopular, but I will give you a different view, the one from a Founder/CEO.

After the dot com crash no VC could figure out the good from the bad in their portfolio companies. I was starting to get conflicting opinions from my board (4 VC’s and me, the Founder). “Become a BtoB company, a BtoBtoC company,etc,...”.

Some VC’s offered a bridge (and declined at the last minute), others claimed they were running of money, others did not know.

A white knight came in the form of a bottom feeder. Those kinds of sharks are circling around your company right now. Vc’s are just happy to unload their portfolio companies to them, so they can save the face, some employees, and maybe the company.

Anyway, the deal came with a caveat: I had to fire 40% of the staff and I had to quit after that to make room for “professional management”.As a Founder I had hired every single engineer, every single marketing rep. This was a very difficult one to swallow, but I had no choice.

The night before I did not sleep. I was up at 5 and drove early to the office. I stopped multiple times as I was sobbing and could not drive (I wear glasses).

Mid morning I called an all hands meeting. Got up the steps to talk to everybody. There was silence, as everybody sort of knew by then that something was brewing.

As I was reading to talk, I started crying. Everybody was watching me in silence.

As I was getting myself together I explained the situation, that we had a way out but that 40% of them had to go. One engineer raised his hand and said “I’ll stay with no pay”.

Then a second one.

I started crying again. Folks would come to me and say “we’ll be all right” and I would reply “thank you”. When asked what the structure would be, I said I did not know. I knew that after the layoffs I would be silently asked to leave.

A lot of people moved on, did well, got better jobs over the years.

So, be kind to your Founders, and all the early employees who worked for months and years with no pay because they believe so much in what they were working on.

In the past 5-10 years, we have seen a lot of excesses, super expensive office spaces, unbelievable perks and salaries, $30K conference room tables and unlimited money printed by VC’s and later stage investors. Well, maybe this is it. If you get laid off don’t be angry, don’t blame others, and move on. Don’t take that personally.

As for me, I never fully recovered from the worst day of my life, and that was 19 years ago. :-(

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