It’s been a rough ride for many previously high-flying and fast-growing tech companies in 2022. In the last month alone, the tech sector has sadly laid off thousands of workers. If you’re an employer having to make the excruciating decision to let go a portion of your team, you’ve got a lot of considerations in front of you: how to handle the process with compassion, empathy, fairness and humanity; how to take care of the team members you can no longer keep; and how to keep your existing workforce morale up. Not the least of this is the looming question: What next?
While in the past many well-funded companies could hire their way out of any problem, that’s clearly no longer the case here. Companies still need to execute, and that means continuing to invest in their talent. And perhaps somewhat counter-intuitively, when headcount decreases, the smartest thing companies can do is increase their investment in those who remain. But the realities of a tightening market are likely to leave many leaders wondering how to continue developing and engaging their team during leaner times.
Adjust your expectations
The classic cliché is, of course, “do more with less.” But that’s rarely feasible and often not helpful. Do not make the mistake of simply expecting to get the same output from a smaller team. Many employers assume that they can keep everything the same and the remaining employees will just do more work. This overlooks an important element: People are already working hard, especially if you are managing your talent properly. It’s not about doing more with less—it’s about how to get things done better with fewer people. The future you’re building for is different than the one you designed for in the past. It’s time to take a good, hard look at the organization and consider how to prioritize differently and, when the time comes, hire more purposefully.
Recalibrate company-wide goals and OKRs
Now is the time to revisit the roadmap and get very specific about how goals will be tackled based on the new business environment and leaner organizational structure. The survivors of a layoff need to be re-centered behind the company goals and, critically, to understand their individual role in achieving the company roadmap. Executives need to recalibrate their objectives and key results (OKRs) so they can be realistically and enthusiastically achieved by a new, smaller workforce. It’s time to re-imagine the business. With a lower headcount overall, leaders must be ruthless with company priorities. There are things you must say no to. It’s also time to be passionate about helping employees see their place in the bigger picture as you rebuild. Instead of trying to do everything you wanted to under the old rules, prioritize what’s important, and do it better under the new rules.
Pour resources into developing the talent you have
Your team is smaller, which means you have a bigger stake than ever into professional development. If you are expecting your employees to take on new and expanded roles and responsibilities, invest time and effort into helping them do it successfully. Studies show that while employees who survive layoffs report declines in productivity and feelings of guilt and anger, they also show that visible, approachable, open managers cut the likelihood of dropped productivity by 70% and reduce the likelihood of a drop in quality by 65%.
The top priority for your management team should be to invest in the engagement and development of existing staff. The upside for ambitious staff is that, with more to be done, there’s an opportunity for individuals who take on additional responsibilities to upskill themselves and step up to new challenges. These are prime opportunities for talent to grow their skill sets and careers. Employers should intentionally foster that drive. Now is the time to invest more per person in support, mentoring, and coaching. There are resources available to help; for example, at M13, we are investing heavily into companies tackling the future of work, like Mento, an app providing career coaching, and Bunch, which uses AI to give daily coaching advice to anyone looking to level-up their skills. I believe these resources will become vital to employers looking to maximize the potential and productivity of their workforce in the coming year.
Keep your people by keeping them engaged
Now is also the time to double down on engagement and retention. Your employees are likely feeling more anxious and stressed. How can you help them focus on what’s most important and do their best work? Studies show that, during tough times, compassionate leadership can be the key to engagement and retention. Check in on employees individually and give them resources to process the emotional impact of a layoff and an uncertain future.
Perks like kombucha and cold brew on tap don’t have a meaningful impact, and never did. A 2021 workplace wellness survey found that almost 70% of employees consider their employers responsible for helping them remain mentally, physically, and financially well. Post-layoff is the time to cut down on extraneous perks and instead offer meaningful services that move the needle on performance and engagement. Consider companies like Northstar, which offers financial wellness resources (incredibly important for employees who are seeing the value of their stock option compensation waver daily), and Allvoices, which leverages the power of employee feedback to help maintain a healthy and ethical workplace.
Rethink your organizational design to hire smarter and better
Although it seems counter-intuitive, a layoff doesn’t mean a company doesn’t still need to hire. Roles will need to be back-filled. And as management teams evaluate the changing market conditions and opportunities, they may need to hire more in different specific areas. As you re-prioritize, you’ll also now want to get laser-focused on quality rather than velocity. Take the time to really understand what you are looking for in the role, what success looks like, and get your entire interview team on the same page. And cast a wide net for talent, using the extra time to ensure you have a diverse slate of talented candidates in your interview pool. Talent has always been a critical differentiator between good companies and great ones. And lean teams mean that every person counts more than ever now, and will have a greater impact on the entire organization.
Letting people go from companies is always hard, even when you treat the departing employees kindly and respectfully. But remember, the layoff process doesn’t stop after the day it is done. In many ways, it is only the beginning of the opportunity to focus on your current team, keeping them engaged and centered on doing their best work to support an ever changing business.
Matt Hoffman is partner and head of Talent at M13.