What the f*ck is happening with layoffs?
By Hebba Youssef
They’re scary, really confusing and sometimes poorly executed.
Companies that seemed impervious to layoffs, like Netflix, Snap, Twilio and most recently Docusign, are suddenly cutting hundreds of employees. And those that aren’t publicly cutting are quietly firing their employees.
Layoffs are a tale as old as time and happen more commonly than we’d like to admit.
So, what makes this time different?
Well, despite all the layoffs we’ve seen, unemployment is low and we’re back to pre-pandemic job levels.
Don’t mind me Googling “how does the economy work?”
What we know:
- A recession may be coming, timing tbd??
- Unemployment is decreasing
- Interest rates are at a high and will continue to rise until inflation comes down
- Cost of labor is going up
- Spending habits changed during COVID and post COVID
- 1.2M more people could lose their jobs
Some companies that saw a boom during the pandemic are now experiencing a business slowdown and the cost of labor is going up.
Prime example: Peloton. Boomed during the pandemic when we were trapped at home and needed to exercise. But now that gyms are opening back up Peloton has dropped in value. Not to mention, the Mr. Big situation.
But it’s not just Peloton – 42,000 employees in the US Tech sector have been laid off this year.
For the past few years, the startup formula has been:
- Raise a bunch of money (record amounts in 2021)
- Rapidly scale (put that money to good use)
- Reach profitability (in theory)
- Increase profits (i.e. cut headcount) until forever??? Or exit?
Now, that formula isn’t really working. Several venture capitalist firms sent memos to their portfolio companies urging them to buckle down. After all, they want to eventually see a return on their investment right? That can’t happen if a company blows all its money.
What this means:
Companies are preparing for the worst.
Startups know this is the worst time to raise and most don’t want to risk a raise at a lower valuation. So, they’re all trying to get a 2 year runway to “outlive the recession” (est. 12 – 18 months).
What are they doing?:
- Looking to cut expenses
- Hiring freezes – preserving people in-seat
- Cutting marketing & recruiting spend
- In some cases, quietly firing “low performers” en-masse (see: my last send about how nebulous that is).
Some companies have avoided layoffs by quietly asking employees to leave or by making use of the dreaded Performance Improvement Plan (PIP) — but that might not be enough to prevent layoffs.
The Do’s and Don’ts of Layoffs
People teams, if you’re preparing for layoffs, here are some do’s and don’ts.
DO: Make a plan. The worst thing you could do is try to execute a layoff without a good plan in place. Layoffs are complicated and laws vary state by state on how to pay out severance. A good plan will cover:
- What department and roles are being impacted
- Budget impacts from the layoffs
- How many total employees are impacted
- How these layoffs will be communicated, including follow-up
- Internal plan on how to absorb the work
DO: Lead with empathy and get straight to the point. Have managers meet 1:1 with the employee being laid off and deliver the news personally — but make sure you prepare them for how best to deliver the news. Inexperienced managers may drag out the conversation out of fear, but getting straight to the point is the best approach. Don’t forget to thank them for their work and leave time for questions.
DO: Offer more than severance and COBRA. There are a few unique benefits you can offer, such as mental health support, financial coaching, and outplacement support. Outplacement support can cost anywhere from $1-3k per employee and can provide them with services such as resume reviews and access to interviewing tips!
DON’T: Leave your employees guessing. Sending an email a few hours before a layoff and leaving employees waiting to learn their fate is torture. I would not recommend such a large gap between announcing layoffs and informing your employees. The sooner the better.
DON’T: Evade. Communication is crucial during a layoff. Companies should be transparent about what is happening and the tough decisions being made. That transparency will be respected by the employees and will hopefully build trust with the remaining employees. Be ready to share the facts about how many employees are being affected and what the future holds for another round of layoffs.
DON’T: Force the departing employee to sign any paperwork. They are within their rights to review the paperwork. Legally, anyone over the age of 40 has 21 days to review and return any paperwork. Not to mention, most folks need time to process what is happening. Follow up the 1:1 conversation with all the documents to review.
The bottom line: Layoffs are not easy and companies need to be thoughtful on how they execute on their plan.
How to take care of yourself as an HR professional:
The last few years in HR/People has been hell for a lot of teams. It’s why “I Hate it Here” resonates with so many of you! Since the pandemic started, teams have been tasked with more than ever before.
Working in HR/People is the most emotionally taxing job and oftentimes very stressful.
Add executing layoffs to the ever growing list of responsibilities for today’s HR/People teams and it’s no wonder that HR has the highest turnover of all job functions, not to mention 98% of HR professionals say they’re burned out.
Other than the safe space of IHIH, I want to provide you with my top 3 tips for how to take care of yourself during these times.
1. Define your stressors. Stress is terrible for your health but most of us are stressed at work!
Acknowledge what is stressing you out. Write it down! Is it that one exec who keeps saying things they shouldn’t? Or the back to back meetings that give you no break? Acknowledging it will help and you can learn when you need to step away or what you can do to preemptively resolve the stressor.
What works for me: I buffer in breaks in-between meetings. I’m a huge music fan so when I’m really stressed out I find blasting my favorite tunes has a calming effect on me. I use that time to make a list of all my tasks. From there, I give them priorities. Usually by the end of prioritizing things I’m less stressed. I’ve learned the hard way that not everything can be a top priority. It’s the Hunger Games of tasks over here.
2. Find your balance. Look, I’m guilty of struggling to turn things off. But I have to try and so should you. Do not give everything to a job that can easily fire you. Your company is not your family.
Define your boundaries and find an environment that can support those boundaries. I’ve worked at 4 different startups so I know a typical 9 to 5 is harder to balance there. Not impossible, but I know there are times I will have to work off hours. I willingly signed up for that!
What I do: I block my calendar and buffer in time for my morning workouts and any breaks I need to take during the day. I also try to be careful about my meeting cadence. Companies are wasting billions on wasted meetings so think twice before you hit accept!
ALSO, TAKE THE PTO!
3. Know when it’s time to leave. I love quitting jobs. I learned early on that not every environment will be for me. If you’re getting to that point and don’t know what to do next, I got you covered. Next week’s newsletter will cover this topic!