Layoffs at a startup in this economy are a reality - here’s how to do it right. | Summary and Q&A

TL;DR

Learn how data analytics can help companies navigate layoffs and make informed decisions during difficult times.

Key Insights

• 😈 Layoffs are a necessary evil during economic downturns, requiring companies to reduce salary and workforce.
• ⚖️ Data analytics can provide valuable insights into overhiring, pay scales, and resource allocation.
• 🍧 Resetting pay scales and having honest conversations about reducing pay can help avoid layoffs.
• 🦺 Conducting layoffs all at once, rather than piecemeal, is crucial for maintaining psychological safety and avoiding uncertainty.
• 👋 Joseph Ifiyegboo's ebook, "Data Driven Layoffs," offers practical tips and best practices for managing layoffs with data analytics.
• 💆 Companies should avoid sudden, mass layoffs as they can have a detrimental impact on employee morale and psychological safety.
• 😤 Proper measurement and evaluation criteria should be established to determine which teams or individuals are affected by layoffs.

Transcript

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Questions & Answers

Q: How did the sudden change in growth at WeWork lead to layoffs?

When the IPO plans failed, WeWork had to restructure and trim its employee base. This sudden change was challenging and required breaking down what was built over three years in just six months to a year.

Q: Why is data analytics important during layoffs?

Data analytics can provide insights into overhiring, pay scales, and other factors that can help companies make informed decisions during layoffs. It ensures that the process is fair and avoids piecemeal layoff plans.

Q: How can companies avoid layoffs by using data analytics?

By resetting the pay scale and reallocating resources, companies can avoid layoffs. Identifying areas of overpayment and having honest conversations about reducing pay can help navigate through difficult times without losing valuable team members.

Q: What is the key mistake to avoid during a reduction in force?

Avoid doing layoffs in a piecemeal manner. Instead, be thoughtful, intentional, and communicate the decision-making process clearly to maintain psychological safety and avoid creating a culture of uncertainty.

Q: How did the sudden change in growth at WeWork lead to layoffs?

When the IPO plans failed, WeWork had to restructure and trim its employee base. This sudden change was challenging and required breaking down what was built over three years in just six months to a year.

More Insights

• Layoffs are a necessary evil during economic downturns, requiring companies to reduce salary and workforce.

• Data analytics can provide valuable insights into overhiring, pay scales, and resource allocation.

• Resetting pay scales and having honest conversations about reducing pay can help avoid layoffs.

• Conducting layoffs all at once, rather than piecemeal, is crucial for maintaining psychological safety and avoiding uncertainty.

• Joseph Ifiyegboo's ebook, "Data Driven Layoffs," offers practical tips and best practices for managing layoffs with data analytics.

• Companies should avoid sudden, mass layoffs as they can have a detrimental impact on employee morale and psychological safety.

• Proper measurement and evaluation criteria should be established to determine which teams or individuals are affected by layoffs.

• Utilizing data analytics can help companies build a stronger structure during growth and trim down effectively during downturns.

Summary

In this video, Joseph Ifiyegboo, CEO of the portfolio company Equitable, shares his expertise in people analytics and discusses the importance of using data when making hiring and firing decisions. He draws from his experience at WeWork, where he witnessed the company go through rapid growth and subsequent restructuring. Joseph emphasizes the value of data in preparing for the next stage of a company's development and suggests ways to avoid layoffs, such as resetting the pay scale. He also highlights the significance of HR analytics in making difficult decisions and offers insights on how to handle reductions in force effectively.

Questions & Answers

Q: How does the state of the economy or the need for additional funding impact layoffs?

When the economy takes a downturn or when a company is faced with a more challenging path to securing funding, layoffs become inevitable. There is no easy way to handle this situation, and reductions in force are happening across all industries. In some cases, companies may have grown too fast and need to reduce their workforce and salaries to sustain their operations.

Q: What is the role of data in making hiring and firing decisions?

Data plays a crucial role in both hiring and firing. At WeWork, Joseph witnessed firsthand how data was invaluable during the company's rise and subsequent restructuring. When it comes to building a team or reducing it, data helps companies make informed decisions and create a sustainable structure for the future. It allows leaders to identify areas of overhiring or overpayment and make necessary adjustments.

Q: How did WeWork handle the need for layoffs during its restructuring phase?

WeWork experienced a sudden shift in circumstances, going from a period of growth and anticipation of an IPO to a need for significant downsizing. This was a challenging and heartbreaking process for Joseph and his team. It became evident that the company had overhired, and a reduction in the employee base was necessary. The company realized the need to realign and navigate the journey carefully.

Q: Why is data analytics crucial during times of restructuring or layoffs?

Analytics, specifically people analytics, become even more critical during times of restructuring or layoffs. While it may be easier to disassemble Lego pieces without consequences, dealing with people's lives and dreams requires a more considerate approach. People analytics help companies assess their current situation, make necessary adjustments, and ensure the process is handled with sensitivity and care.

Q: Can layoffs be avoided by resetting the pay scale?

Yes, in some cases, layoffs can be avoided by resetting the pay scale. Often, during the hiring process, companies strive to be competitive and offer higher salaries or bonuses to attract top talent. However, when faced with the need to reduce costs, these inflated salaries can become unsustainable. By having the right HR analytics in place, companies can have conversations with employees about reducing pay instead of laying off staff, thereby preserving the team.

Q: What is the most common mistake companies make during a reduction in force?

One of the most common mistakes companies make during layoffs is implementing them piecemeal, where layoffs occur over an extended period for different teams. This approach creates uncertainty and a lack of psychological safety among employees. Joseph emphasizes the importance of being thoughtful, intentional, and making decisions collectively. Communicating the criteria and metrics used for layoffs and promptly executing them helps maintain trust and minimize workplace disruption.

Q: How can founders use data to navigate difficult decisions and layoffs accurately?

Founders can use data to make informed decisions and navigate challenging situations such as layoffs. Joseph recommends measuring metrics and criteria for hiring and applying the same approach when determining layoffs. This ensures that the decision-making process is fair and objective. By leveraging data and analytics, founders can build a robust foundation and effectively manage crises without resorting to layoffs.

Q: What ebook does Joseph recommend for guidance on data-driven layoffs?

Joseph has authored an ebook called "Data-Driven Layoffs," which provides practical guidance and best practices for companies going through the challenging process of layoffs. The ebook covers essential steps, pitfalls to avoid, and how to communicate and execute the layoffs with sensitivity. Interested individuals can access the ebook for free by visiting eqtble.com or finding the link in the video's description.

Q: How can companies avoid creating a culture of fear and uncertainty during layoffs?

To avoid creating a culture of fear and uncertainty during layoffs, companies must be transparent, thoughtful, and communicative. Sharing criteria and metrics that determine layoffs and making decisions collectively help foster psychological safety. This transparency helps alleviate anxiety among employees and ensures that everyone understands the reasons behind the restructuring process. Establishing trust and maintaining open lines of communication are crucial during challenging times.

Q: What is the key takeaway from this video?

The key takeaway is that data-driven decision-making is crucial for founders and leaders during times of growth, restructuring, or layoffs. By leveraging people analytics and HR analytics, companies can make informed choices, realign their teams, and make necessary adjustments without resorting to layoffs. Resetting the pay scale, communicating transparently, and being intentional in decision-making are all important aspects of managing difficult situations effectively.

Takeaways

Data plays a significant role in navigating through periods of growth, restructuring, or layoffs. Founders and leaders must make data-driven decisions to build sustainable structures and manage crises effectively. Resetting the pay scale and considering alternatives to layoffs are options worth exploring. However, if reductions in force are unavoidable, implementing them thoughtfully and all at once, while maintaining transparency and trust, is crucial to minimizing workplace disruption and creating psychological safety for employees. Joseph Ifiyegboo's ebook, "Data-Driven Layoffs," provides practical guidance on navigating layoffs with sensitivity and can be accessed for free at eqtble.com.

Summary & Key Takeaways

• Layoffs are inevitable during economic downturns, and they require a reduction in salary and workforce.

• Joseph Ifiyegboo, CEO of Equitable, discusses his experience with people analytics at WeWork and shares insights on managing layoffs.

• Data analytics can play a crucial role in both the hiring and firing processes, helping companies make better decisions and navigate through difficult times.