The pandemic makes the case for more transparent layoffs

May 6, 2020, 11:00 AM UTC

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Call it layoffs, downsizing, or RIFs (reduction in force). Whatever name you put on it, cutting your workforce is never a pleasant process—and it always has a profoundly damaging effect, not only on those who have been let go but also, to a lesser extent, on those who stay on.

But could there a better way to do layoffs? If there was ever a time to innovate on how we navigate through this painful but often inevitable aspect of running a business, it would be now.

The COVID-19 outbreak has led to massive levels of workforce reductions, with the unemployment rate in the United States now estimated to be surging above 15%. Employers who are letting go of large proportions of their staff know that they are releasing them into this bleak wilderness. That’s why some managers, particularly in the tech startup sector, are trying to find new ways to lessen the blow.

“When we recognized we were going to have to restructure the company, we told people very quickly,” says Kieran Snyder, co-founder and chief executive officer of Seattle-based Textio, an artificial intelligence-powered “augmented writing” service for corporations. “We shared with the company a week before that we knew we would need to make some changes.”

Snyder challenged the conventional wisdom—or rather, practice—that layoffs should only be announced on the very day they are carried out. And while she says it was hard making any accurate business forecasts in the current state of affairs, she also says that sharing what you do know, and what you can foresee, is key. It can do a lot to prepare employees, both practically and emotionally, for what’s to come, and to provide them with better understanding of why their jobs are being eliminated.

Henry Ward, the CEO of Carta, a Palo Alto, Calif.-based equity management platform, started talking to his employees about how the pandemic could impact their business outlook about five weeks before pulling the trigger on layoffs. Two weeks before the cuts, he told his workforce that he can’t imagine not having to let some employees go. “What I tell other CEOs is that it’s not enough that they’re transparent on the day of, you have to be transparent up until that day.”

To be sure, that’s easier to do at privately-held companies like Textio and Carta, which tend to be smaller and aren’t beholden to the fluctuations of their stock price. Still, even scrappy tech startups don’t have a particularly glorious history of openness when it comes to layoffs.

“Many founders still think that productivity will be lost, and that it’s a morale drain [if they talk about layoffs too early],” says Ward, who announced definitive layoffs on a Friday and notified impacted employees five days later. “It’s true that nothing got done on that Friday,” he admits. “But in our experience, in the weeks leading up to the layoffs, productivity actually went up.”

Ward does say that, in retrospect, he would have probably shortened the time between announcing the layoffs and actually carrying them out, maybe notifying employees by Monday, not Wednesday. But in general, he thinks employees prefer having some sort of a heads up, and an understanding of why layoffs are happening in the first place. (A note: Recent media reports have speculated that Carta is in the midst of raising a new round of funding; the company declined to comment on the rumors.)

Ward tossed out other standard layoff procedures as well. “We let all of the employees [who were laid off] keep their laptops,” says the CEO. “Many of them didn’t have a laptop at home, and what are we going to do with 150 computers shipped over to our I.T. guy’s home anyways? It’s such a cheap show of good will.”

If you’re wondering how the tech department felt about Ward’s decision, yes, they freaked out. (For security reasons, let-go employees are typically asked to turn in their company-issued devices the same day they are let go.) But Ward says he believes ex-employees were actually more likely to comply with security protocols because it was all done in “good faith.”

“We just asked them to wipe their laptops clean and take a screenshot to show us,” he explains.

Letting ex-employees keep their laptops didn’t cost Ward anything. But it can mean a lot for those who are now jobless and may not have had another computer at home. The current economic climate, coupled with the shutdown status in many states—including California and Washington, where Carta and Textio are based—makes it more challenging to network and job-hunt. Creative and generous ways of thinking about providing assistance for employees once they are let go can go a long way. And it matters not only to those directly impacted, but also to those who are still a part of your workforce. “Whether they’re leaving or staying, employees really care about how their friends are being treated,” says Ward.

Both Ward and Snyder gave their employees generous severance packages—starting at three months and one month, respectively, with extended health coverage as well. But they also found other ways to help newly laid-off employees navigate through their new reality.

Snyder asked one of her human resources execs to do “reverse recruiting”—write up resumes for those employees who were asked to depart. And while many leaders wouldn’t have wanted to call attention to their company’s layoffs, she also went to Twitter to spread the word about some of the specific individuals whose jobs she cut, encouraging other employers to hire them. “Once people had shared their news, I felt responsible and committed to help them be seen,” says Snyder. “We had employees and former employees who also mobilized to help.” (Some larger companies are also thinking about this creatively: Accenture, ServiceNow, Lincoln Financial Group and Verizon recently banded together to launch a website that aims to help their laid off or furloughed employees find new jobs.)

Lisa Semerdjian, a former senior recruiter at Textio whose job was cut in the recent round of layoffs, says she was very grateful for all of help and lead generation for new jobs on the part of Snyder and other former colleagues. Still, with all of the layoffs happening at so many tech companies, she says job searching has been very difficult. “My LinkedIn feed is very sad,” says Semerdjian, who worked at Textio for one and a half years.  

In other words, there is only so much that even the most well-meaning and creative leaders can do. But a little empathy can go a long way, especially today.

After announcing the layoffs, Snyder created a Slack channel for people who wanted to say farewell to those who were leaving—and for those who were leaving to share their personal contact information, if they wished. “It’s an acutely painful thing not to get to say farewell in person,” says Snyder.

It’s also an acutely painful thing to find yourself jobless in today’s economy, as millions of Americans know all too well. With more layoffs expected in the coming weeks and months, across so many different sectors, more business leaders could and should rethink the old ways of conducting layoffs. While it may never be pleasant, there will always be room for improvement.

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