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Founders spend so much energy on hiring. They read about it. They practice. They build rituals. They do retros. They even train the rest of the company on best practices. It makes sense: Great hires are prerequisites for great teams, and great teams build great companies.
But … I would argue that learning how to fire well is damn important as well. And this is where I see founders falter. They don’t read about it. They don’t practice. They don’t build rituals. They rarely do retros.
So instead, terminations are awkward at best and illegal at worst. The impacted employees feel betrayed; the survivors feel unsafe. The culture is negatively affected, and the digital airways are full of anti-references.
If only someone could teach a founder a better way to let someone (or a lot of people) go.
The layoff, aka Reduction in Force (RIF), is a must-have tool you need in your toolkit. Here’s a blueprint for its implementation.
1. Communicate with the board
2. Get organized for termination
Founders often get lost here. They worry about too much disclosure. Then they worry about too little. They try to be so gentle that they end up not saying anything useful at all. Here is the suggestion — write down your unadulterated truth. And then ask someone you trust who you know has intimate knowledge of your company culture to help find a balance between heart and candor. Here is a generic example:
“In our zeal to make our product available to as many people as possible over the last several years, we’ve tried to meet, convince, and win as many customers as we possibly could.
But as a result, we were not terribly discriminating in which customers we pursued. That brought us a great deal of revenue, but it also brought us real challenges that we were not fully ready for.
Put simply — we not only took on customers where we could have a great impact. We also took on customers where we had little chance to succeed.
And while we tried our best to pick up the pieces, with some of our customers, it was a losing effort. The customers were unhappy, our employees were frustrated and our expenses spiraled.
We’re paying for those decisions now, trying to learn from them, and trying to do better. So we’re going to take a step backward to go forward in a healthier way. That means, we’re going to lose some customers. And that means for the time being, revenue will also go backward. But the customers that will remain will be our best — the ones for which our product delivers enormous value, and in turn, offer our company enormous value.
This adjustment will be painful for a time, and sadly will mean we’ll be letting go of some of our team so we can balance our expenses with our new revenue levels. But this is the right decision for the health of the business today, and for our collective long-term success to come.”
As a founder, you know that running a startup is an unpredictable ride, full of ups and downs. Unfortunately, 2023 is one of those downs. And that means a year less marked by hiring and more about firing. And while hiring is hard, layoffs are even harder. As CEO, your role is to run a process that is respectful to three separate entities — the departing employees, the remaining employees and overall shareholders. Do the work.
Founded in 2015, Enjoy The Work is a San Francisco-based startup advisory firm serving startup founders and CEOs worldwide.
