5 Ways to Avoid Killing Your Startup During a Reduction in Force
This was originally published on Startup Grind, the global startup community.
As a growing startup, a reduction in force (RIF) might be the furthest thing from your mind. Unfortunately, they are a reality that most companies must at least consider at some point in their growth and it’s better to be prepared than left to chance.
Looking around at today’s business landscape, we can see that even amidst mostly positive news, there are companies like Macy’s and Kmart that must constrict in order in to survive. In this context, a RIF can actually be a painful but critical part of building a more effective organization.
So no matter what you call it — layoff, rightsizing, downsizing — a RIF must be planned for and conducted properly to avoid becoming a culture killer that undermines rather than reinforces your company mission. To help, I asked renowned talent and culture expert Steve Cadigan to help me with tips for avoiding the most common culture-killing missteps that can occur in a RIF.
1. Conduct the RIF with compassion and humanity
This is rule number one in any RIF situation. These are the same employees you originally entrusted to help build your business, so extend an equal level of sincerity at their departure as you did when you hired them. After all, the employees impacted by the RIF will continue to have relationships and influence employees in your workforce; show them respect and humanity on the way out.
2. Be clear about the business reasons for the RIF
Remember that not all your employees have as much visibility into the business as you do. For some, this could be a complete surprise. Help them to understand the reason behind the RIF. While it may not soften the blow in that specific moment, it does help them to see it as a personnel rather than a personal decision in time. The key here is creating a robust communication plan so that everyone from line-employees to third-party vendors knows what to expect in the coming months.
3. Share easy-to-understand criteria for layoff selection and apply this consistently
Similarly, it’s important to communicate how you arrived at those personnel decisions. By sharing the criteria with staff, it can help them process the RIF in relation to the business more effectively. And if they see this criteria applied equitably versus arbitrarily across the organization, it reinforces the business motivations of the decision. Additionally, you should have a documented, objective comparison of employees where skills and job performance are the criteria in making layoff determinations. This documentation is critical in the event of litigation challenging some aspect of the layoff.
4. Provide meaningful, yet appropriate levels of assistance for those impacted
These will vary greatly by organization depending on your stage of growth, financial resources, and your industry. But in all instances, it’s important that departing employees feel that the company is attempting to do right by them. This can be anything from a credible severance package to employee re-training for another job. How you treat employees during a RIF will speak directly to your workplace culture, so be aware of what is at stake. The choices you make during a RIF will leave an impression with employees forever, whether they are departing or staying with your organization.
5. Pay attention to your top talent
It’s just as important to focus on those who are staying as those leaving, especially for your top team members. Clearly communicate the RIF and its reasons and criteria to these employees, along with reasonable assurances about their employment and insight into the company’s plans. In this way, you can send a message of growth that helps to retain this talent versus frightens them into a covert job search. The last thing you want during a RIF is to experience a loss of your key talent while the business is contracting and productivity is down.
Conclusion
Keep these five lessons in mind as you build an RIF crisis playbook or if you find yourself in the midst of one. Even if your startup is in a growth cycle at this very moment, these guidelines will help you better execute the tough decisions when the time arrives. For more about how to conduct a RIF without sacrificing your culture, you can download our free guide here.
