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Planning and Managing Layoffs (a16z.com)
280 points by todsacerdoti 6 months ago | hide | past | favorite | 156 comments



These posts bring me to the realization that you should never go above and beyond for a company that you don’t own. Just show up, do the bare minimum to meet expectations, finish your 8 hour shift and go home and enjoy quality time with your family. This way when you get laid-off there is nothing to cry for. You can always find an occupation, but you cannot get back the time that you dedicated to fulfill someone else’s dreams.


That's true if you don't need recommendations from the people you're working with to get your next job, if you don't want to get promotions (which help you get better jobs down the road!), and if you are content to spend 40 hours a week from now until you retire just coasting through life.

I think a better way to look at it is -- don't be loyal to something that can't be loyal to you. But you can and should let yourself care about the work you're doing and the individuals you're working with. That way, if you do end up leaving when you don't want to, you have accomplishments and a network of people who know what you're capable of. And up until then, you can take pride in what you're doing and feel good about how you're treating the people you're doing it with.


"just coasting through life"

Someone could be extremely active outside of work - its not just work that counts.

Edit: Even in the software world - what about all of the people who create stuff outside of formal "work"?


That's a bit sad (an quite prevalent in some industries) viewpoint. Maybe it comes to what makes you feel satisfied with yourself and happy - if its only work, then yes above is true. But those actually having the type of work worth such a sacrifice are miniscule, I guess 1-5% of HN readers.

What about achieving happiness and self-fulfillment from other things than work? I couldn't care less about my (well paid & successful) corporate job, because after it ends, I put on harness and helmet and go climbing. Or on the weekends hiking, skiing, ski touring, paragliding, diving, and so on. Traveling around the world for vacations. I have a great wife, I have a tiny little son I love very much. Those are properly fulfilling things in life, very well worth investing one's time and energy. Plenty comes back, and even if not, its a great thing to do nevertheless.

At work, there are plenty of folks with mindset you describe. Investing themselves into corporate careers, thinking money, talking money. Most I know have pretty sad lives.


Why are their values less important than yours? Isn't it just as easy to look at what you consider this rich, fulfilling life and say "poor sucker is totally a slave to our social media culture; desperate to show us how wordly and alternative they are. Why can't they just be happy with the little things in life?"

A lot easier to find joy in your work these days vs. activities and vacations too...


I see what you mean. I think the dying moment or few years before it are a good judge whether one lived a good life that one can be proud of. I struggle to see how corporate career is something that would get one there. This is purely my viewpoint of course, I have only my mindset and values. But its clear to me personally what I want in life and care about. That traveling (long term backpacking in India and other places) also gave me pretty good knowledge of myself.

As they say, 'whatever makes you happy'. Just consider long term happiness, and not only momentary kick.


If all you want is to get ahead delegating, communicating, and politicking are what matter -- and they can be done well in 40 hours or fewer.


That's true if you live in work-obsessed culture that believes desk time is a more important metric than productivity.


being loyal to any organization which has an HR division is a recipe for depression. don't do that.


> for a company that you don’t own

I think you're missing the key part here. Most tech workers do have some ownership in the companies which muddies the calculus a little bit. But if you don't have a stake in the company you are literally trading time for money. Work more time for the same money and you're just under-pricing your labor by an equivalent amount.

Also, if you need to work overtime to get good recommendations and promotions that is not a company you want to spend your time at.

Also also, if you need to work overtime to care about the work you're doing then you should re-examine your value system.


Where did I say anything about working overtime? Here's the key quote from the post I was replying to:

"Just show up, do the bare minimum to meet expectations, finish your 8 hour shift and go home and enjoy quality time with your family."

It's possible to opt out of the bullshit conspicuous overwork that a lot of people engage in (although you should be prepared to face consequences for that!), and still do more than the bare minimum during the 40 hours you show up to work. And it may be better _for you_ to do so.


> Most tech workers do have some ownership in the companies which muddies the calculus a little bit.

Maybe nitpicking, but I don't think this is true at all. Lots of tech workers do, sure, but I doubt it's anywhere even close to half of them.


I wouldn't even consider common stock options as a form of ownership. You are basically last in line to get any sort of compensation after an exit.


You are worth more than your job title. You get paid for a job. Value yourself first and foremost.


HTTP 402. Payme.


Over time I've come to disagree with this sentiment.

If you're a software engineer you should consider yourself a craftsman. Treating your job as a "shift" means you don't care about your craft.

The reason I'm not a founder today is that I've observed that founders don't have well rounded lives. I want 5 workdays a week to consist of 8-9 hours of work I'm invested in and care about, 8-9 hours of personal life (relationships, socializing, working out, reading, personal projects, hobbies, TV and games, etc.) and the rest in sleep. I want two days a week off.

So what, I have to give up doing work I care about because of it? I don't think so. I choose work I think is important, technically deep and challenging, and if droppings hit the fan and I get laid off - I can be proud of what I did and understand that the pain is real and that it will pass.

Better to have loved and lost.


I think you can look at this from a mercenary perspective too. It costs nothing more to show up and work hard than it does to show up and do the minimum. You're giving up the same amount of time either way. But there's a lot more upside for hard workers, at least at firms that have a career track for software engineers. There are other variables, but other things being equal, folks who get things done tend to advance faster.

I definitely agree that you should not break your back and work 24/7 for someone else's vision. Or at a minimum you need to consider how factors beyond your control might zero out your investment. But that goes for anything.


Never in the history of the humanity was hard work rewarded the same as speaking and looking nicely.


Sure. Better to be beautiful and honey tongued than ugly and an asshole. But either way you're better off working hard than being lazy.


What is the risk here?

A person who pursues their here and now with the most intention and passion will learn more on the job than the same individual who is just "putting their time in." Why can't you help build someone elses dream and your own? Is it possible the details of someone elses dream provide focus for yours?

I think the former individual will better weather a layoff than the latter. Furthermore, the person who is "just putting their time in" is a less attractive hire.


You’ve never lost and loved something too much yet. This can be very bad advice for many people.


Why would you assume that?


better to have loved something that's not making someone else more money than what they think your work is worth.


I was intern in 2008 and working very hard. Doing not only mandatory things, but also taking care of lab equipment and helping neighbor labs. Very loyal, no distractions, sitting in the lab until late and working probably 1,5x or even 2x more hours I was paid for.

And then boom! My manager came and told, they must throw away all the interns to save the costs. Throw away me and the other intern who worked in kitchen with coffee mug and was never in the lab. I felt really stupid. Since then I do my 40 hours what I get paid for. No more, no loyalty, no team spirit for the rest of my life. I was doing 200% in last 12 years only for startups as a co-founder, not that ability work hard disappeared completely.


I can understand you working 100% and no more. And I can live with it if I was your manage.r But no loyalty, no team spirit? No way. For me it is a two way road. I give you flexibility to work remote some days, to arrive at 10 some days, to leave earlier others, but in exchange I expect that you some days will work more hours, arrive earlier or leave latter, and maybe work some weekends. It should be a balance.


>It should be a balance.

the situation you describe is not a "balance". it's whatever the employer desires. you've all but guaranteed low morale. when you demand loyalty and team spirit on top of that, it justifies cynicism.

in such a situation, you should expect people to do the bare minimum.


What have you points to do with what OP said?

Homeoffice, flex time? That's all things that benefit the company just as much.

No relations to working only the hours they are getting paid for.

But that's the trick. You are presenting unrelated things as if they had to do more than agreed upon just to get those. Pretty cheap attempt to guild tripping.


No remote before pandemic offered, 8:30-15:00 must sit in the office. Constant micromanagement. How to save €200k with cheaper hardware proposition rejected, integration test design forbidden, IDE migration middle in the project despite my protest started. My current place does not offer any balance. Edit: if I can solve my own errors on weekend I’ll do it for sure! But I am not liable for management fails.


Why would you fix errors on weekends? (except for critical stuff, and then take off a weekday instead, of course).

Errors are a normal thing for human work, especially software developer. Nothing you are "guilty of" and have to make right with your own money/time (same thing).


I was twice on weekend in the office in last 3 years: one time due to legendary IDE migration in the middle of project. It wasted 7 months in total. Any the other time I wanted to finish my release on time. Of course, it was postponed on Monday. Both times it was wasted personal time, zero gain.


Because of managers like you I get all of these things nicely into the contract so no one can say to me that they 'give me something like flexibility'.

What you wrote doesn't have even 0.1% of balance you speak of.


“Team spirit or no way!” is how you end up with layoffs.

A team/company’s culture is WAY more than your own personal work ethic. Some people won’t think how you do. And that’s fine and should be encouraged!


Then good luck identifying that in your interview. :) OP probably won't brag about it and instead try to come off as a normal employee.


It’s just business. You’re selling time and effort for money. No need to make employment more than the simple transaction it is. Approaching it this way also makes it relatively straightforward to set and enforce work/life boundaries as an employee.

Enjoy your time with your family. :)


Except developers who are intelligent, creative, optimistic and want to get better will not accept those who just do the "bare minimum" with the mentality of "just do you shift then go home". They will build a culture that demands more and effectively pushes these voluntary baseline performers out, or more likely leave the organization and go somewhere better.

I don't want to be part of things that are average and marginally accepable, and I have a profound dislike of the status quo. It doesn't matter if it's work or shooting hoops with my kids or seeing how long I can stand on one foot - a desire to do a job well and have fun doing it are not mutually exclusive. I'm confident my attitude and approach are not unique to only me.


You can do both: Do you job well, take pride in your work, and go home at the end of the day.

So much of your employment relies on things that are outside of your control. Even when you have a great job that you love, it won't last forever. Your job isn't a marriage, or a parent-child relationship. At the end of the day, it's just a job.


Absolutely, in times like this, you could expect some solidarity to the people, sector, and society this VC is working with. A rich successful VC would better allocate a fund to support employees for a few months until easier landing is possible. This is much more helpful and fair - instead of blogging how they feel empathy but pushing for layoffs nevertheless


Financial capital isn't the only thing you can accumulate at a job. Building your social capital by being the person everyone wants to work with again and building intellectual capital by developing expertise are both things you can and should also invest in.


This is the wrong conclusion. I for one love working for my employer. I made peace with the idea that I may be subject to a layoff at some point in my career. The flip side of the coin is that I feel free to look for opportunities any time I want. My employer treats me well, I return the favor. When it's uneconomical for them to keep paying me, they'll do that, when I find a better option, I'll go too, and there's no hard feelings. For as long as the employment continues, I feel proud to do my best, and not just do the absolute minimum.


This becomes a self-fullfilling prophesy. A manager can easy see which employees don't really care about the quality of their work.

It should be no surprise that they are the first to be laid off when times get tough.


At the end of the week, you get paid, and you and the company are even.


That sounds logical until you actually tried it. Jobs that you don't care about are getting an order of magnitude more consuming that all these extra hours or attention you put in in jobs you care.

My approach is to demand being properly compensated and appreciated for all the extra attention I put on. Unfortunately, that's also not easy.


If you are only doing a job for the financial payoff, then I guess. If you are interested in the work and want to develop yourself, the Wally mindset is a horrible way to spend your time.


> If you are only doing a job for the financial payoff, then I guess.

That's why it is a job, not a hobby.


You spend way too much time at your job not to enjoy it.


You would find that the more money you make, the more you are going to enjoy your job.


Not everyone is like that, but to each their own.


You can lose everything as an owner too. It'll be on you though and not your boss — up to to you to decide what's better.


As someone who was lucky enough to graduate right into the last recession, I highly empathize with the class of 2020, it is going to be rough for everyone, but especially them. Over a decade later, and only recently have I felt like I was finding my footing career-wise. And now we're all in for another ride.

I barely managed to land a job after graduating, made almost no money, got laid off, and the company collapsed shortly thereafter anyway. One thing missing from this article is that often times these layoffs don't happen in a vacuum — Even I, a fresh grad, knew my employer was in trouble — and that a layoff would be coming, which helped blunt the news when the actual layoff happened. This was only possible because my previous employer was transparent about the situation, and I was already pretty deep into my job search by the time the layoff happened. To this day I am appreciative about that, even if the end result was the same, and it took me a few months to land a great gig after that.

Graduating into a recession + getting laid off so early in my career has irreversibly changed my risk profile, and I refuse to work with a company that isn't transparent about its going concern.


Kids that Graduated in 2001-2003 feel the same.... those year sucked. I was a summer intern in 2002, and saw half of my group get laid off. As an intern I was cheap enough to keep around, until the economy improved in late 2003, when I got a full time offer....

2004-2007 were good, then bamn another recession... then this....

The way money interests/lobbyist are running the economy and country, It is almost given that every 10 years there will be a major recession. While this time it was a virus triggering it, the economy has been over-heated for a while, and the crazy thing is that the government was running crazy deficits in a hot economy, instead of saving for the long term. (i.e. the feds and the goverment, have been 'juicing up' the economy for short term re-election goals).


To the latter criticism, this has nothing to do with governments pumping up stocks.

It’s a pandemic that could put a third of workers out of jobs because everything is shutting down and the economy is coming to a halt. It’s not like 2008 when complex financial products f—ed it all up.

(Yes there are still bad policies, yes there is corruption, yes, yes etc etc etc but the point is that this isn’t “part of the boom and bust cycle.”)


We could have been like Taiwan and Japan. Seems like a mask mandate and diligent testing with quarantine of infected only is sufficient. Would have saved a lot of headache. And lives.


I heard the opposite about Japan. Are they really doing exhaustive testing?


It's hard to know which sources to believe these days.


You have valid points, but the boom and bust just exacerbates an already bad situation by compounding the natural disaster with a market primed to fall already. So it took a bad situation, and made it even worse.

As to all how this is going to play out, who knows? I'm not as optimistic as others that it's just going to be a couple months and suddenly everything is back to normal.


I graduated in 1993, and had to do some pretty demeaning work to make rent before landing a decent Temp job that got me started towards a career.

Felt like I was finally in my element and ready for the big time Internet challenges by... 2001.

I was busted by the bust and didn't get back on track really until 2007, fortunately in a niche that didn't suffer much from the 2008 meltdown.

This might be just another phase of the cycle, though I admit it feels different this time, and not just because of the economic impact.

(Also, OT but: in 1993 San Francisco was cheap, friendly, pretty mellow and full of creative people. That made being broke a lot more tolerable. I wouldn't want to be 1993-me in 2020-SF.)


Maybe this time we will finally reconsider the multigenerational push to get literally everyone into college. I think such sentiment has been increasingly brewing over the last couple years.


Seems odd... To be honest I'm from Belgium and like how layoffs are handled in my country. There is a rulebook with actual legislation behind it. I like that because it is easy to know for both parties what the expectations are. Mostly you know exactly your severance pay as there are fixed rules for that in your contract. If there are mass layoffs it will trigger other rules.

Can't understand the American Freedom thing. So the freedon to chose to be an asshole employer is actually an option there :D


From a fellow European : yes, in the US firing is much easier.

But hiring is much easier too.


In the UK (and probably many other European countries) it's usual to have an initial probationary period of 6 months - notice required from either side to terminate in that window is 1 week.

I don't think it's helpful to the argument to pretend that stronger worker rights make it harder to hire when all of the signs point to that being little more than a talking point that isn't based in reality.


> But hiring is much easier too.

Largely for that very reason, I believe. If it's hard to get rid of somebody, you will make extra extra extra sure that they are a very good fit.


In Germany at least, you have zero protection against being fired in the first 6 months, two weeks notice are enough. Same goes for employees wanting to quit.

I don't get the "hiring is difficult" part. While I cannot alk about Europe, too many countries with their own legislation, in germany all you need is a contract and proper registration for social security and so on. Let you accountant handle it and it's done in a couple of days tops.


It's not the hiring, it's the firing which is difficult - which makes the hiring difficult. Similar to a marriage, the harder/more expensive you make the divorce, the more people will want to be super sure that it's "for ever".


There are two aspects to this, first you hired the wrong person and, second, the financial situation gets bad enough that head-count needs to be cut.

Regarding the first problem, 6 months should be enough to decide whether the new hire fits or not.

The second problem is a little bit tougher. There are two solutions, so. The first one is fixed-term contract, 1 year, 2 years. These can be extended (twice, if I remember well), which can be good solution for start-ups where long-term revenue is hard to gauge. The second is simple lay-offs. For young companies not that much a problem if there is a clear economic reason. You just close a department.

If cutting long-term employees is a problem, maybe the underlying root cause is bad head-count planning, read over hiring above needs and the companies cash-flow. Employers complaining about "firing is so hard in Germany" is a little bit lazy if you ask me. Don't over hire to beginn with, also helps in situation like Corona as the cash position is much better.


> Regarding the first problem, 6 months should be enough to decide whether the new hire fits or not.

Initially, possibly, but most contracts aren't fixed term. And I've seen way too many people that essentially do nothing, they know it, their manager knows it, but there's no way to get rid of them other than promoting them or waiting for them to retire. So they sit around and wait for retirement.

It's like if your cell phone contract was a 10-year-contract. Very few people want that.

> Employers complaining about "firing is so hard in Germany" is a little bit lazy if you ask me. Don't over hire to beginn with [...]

They're just cutting one word out and follow that advise: Don't hire. Of course, it's not black and white, but if you get strong penalties (aka "I can't get rid of them") for over-hiring, you will make sure that you stay far below the over-hiring threshold.


> If it's hard to get rid of somebody, you will make extra extra extra sure that they are a very good fit.

Perhaps I'm in the (American) minority but that seems like a win/win to me. As an employer I'd much rather take a bit more time to find the right person and as an employee I'd gladly exchange a slightly slower market for additional job security/a safety net if things don't work out.


As an employee, the slower market might mean that you don't get a job, because you're more of a long-term risk.

I'm by no means arguing that hire and fire is the best approach, but it makes the market more flexible. So even if you lose your job (less job security), you'll have less trouble finding a new one (less risk).


It depends how valuable you are in the labor market. If you are valuable, then you’ll want to be able to gamble a bit and maximize earnings. If you’re not, you’ll want security.


This. My father was laid off in Belgium after working for the (US) company for 33 years and got an amazing severance package totalling almost 3 years salary. He was planning to take retirement in 3 years anyway, so it just meant he got to take it earlier, with a fully funded final salary pension.


Similar rules apply in the US for larger companies but not small ones.


Expectations are handled when you sign employment contract. You are free to negotiate anything. I live in EU country with similar laws and still employees/employers negotiate additional things which are are not written in the contract (because law forbids it). American freedom - its hard to imagine somebody complaining because the person has more individual choices


While I agree in principle and wish more freedom in Europe, actually even more freedom in the US as well, it's in practice that it fails, especially in certain countries, and always in defavor of the workers.

When the capital holders manage to unbalance the relationship with the workers, after failing to rebalance it, politics come into play and rules get voted to protect the workers from certain abuse. I wouldn't say it works well but it limits certain practices that would put the workers in serious troubles.

In certain places, we've seen workers working over 60h per week, and not getting compensated enough to meet the ends. So you may say those workers should educate themselves and negociate better, but again it doesn't always work in practice.


> educate themselves and negociate better, but again it doesn't always work in practice.

I can't believe this is even a debate topic. How do you expect an engineer to compete with a lawyer who has studied it for years and has been practicing it for a while.


You don't need to be a legal expert to negotiate with your boss if you're an undercompensated employee...


1. Lawyers are not just about legality, they are trained negotiators and thinking in contract laws.

2. The manager potentially has/can get negotiation training, you have to pay out of your own pocket for yours.

3. The power dynamic is usually not in your favor, as long as unemployment is above zero in your specific field, it can never be in your favor.


Where do you work where all of management consists of lawyers? Even HR usually only keeps lawyers on retainer.

The rest shouldn't really be that difficult if you're a competent person. I don't need training to show some combination of

1. I've been productive based on X and Y projects

2. I've saved/generated $X

3. I'm undervalued based on these x salaries or this average value from $reputable_website

People treat negotiation like some kind of black magic. If your boss isn't a total asshole it isn't hard to make a case.


Only the first point was about lawyers. The points you mentioned are coming from a place of privilege. If it was this easy everyone would have done it. I can say all this and my employer can say "ok go work for them" and then I have to uproot all my life because my visa is tied to my work. This is just one example, and I am not going to give any more because I don't think your are writing in good faith. You are not paying any attention to what life situations are or potential power dynamics.


> The points you mentioned are coming from a place of privilege

The fact that I disagree with you is not evidence of "bad faith." But since you bring up privilege, I think you're just making poor excuses. Your Visa situation does not represent the majority and dismissing every successful negotiation as "privileged" just breeds learned helplessness.

If you have authorization to work in the country you live in and you can demonstrate that you're being underpaid, the onus is on you to approach your boss and make a case. You can always start looking for another job if they politely refuse. Or start looking first and come back with offers. This doesn't require any magical privilege.

I'm also mildly offended that you believe yourself familiar with my situation. "Privilege" is turning into a racist and/or sexist slur. It's a blanket term used to excuse failure and breeds complacency when people hide behind it. There was no need to make this argument personal.


The difference is baselines and power dynamics. There are many reasons most people cannot negotiate those things in, some don't have any bargaining power (new graduates, people in industries with excess people, or migrant workers), some are not smart/experienced enough to negotiate stuff (again new graduates) and above all not everyone is a lawyer or knowledgeable about how contract language works (legalese is not certainly not English). Nobody should be devoid of basic human decency because a company with a law firm on retainer can use several tactics that a individual cannot.


That's a pure fantasy in most jobs. You either sign a full contract or bye. Unless you are an unicorn that company desperately needs, there are processes, rules, internal politics, inflexible HR and so on.

In a small startup, that's more likely but most folks in Europe don't work in startups.


The average wage for software developers in the US is roughly double Belgium. I don't know if you could convince anyone to give up 50% of their pay for I'm guessing 5% or less extra money in severance pay.

I wouldn't. Not even for 10% less.


Most of this is good advice, but I'd disagree with declaring "Today is your last day."

I've been on both sides of the layoff conversation, and usually there are some loose ends relating to work-in-progress that can be tidied up with dignity if everyone has a couple days to do it. We're talking about reworking next week's client meeting, or sorting out some team/project responsibilities that ought to be handed off cleanly, or whatever.

Assuming that there's trust in both directions, too, it's decent to give laid-off employees a couple days to retrieve or delete personal information that's relevant to their life going forward. A work emailed picture of grandma's birthday party. That sort of thing.

The person you lay off today is likely to stay in the industry, and to mingle in the future with people that might be important to your future success. Take a moment to think how you want to manage that relationship. Tossing her/him out the door that day is one approach. But it carries a price.

A favorite example from finance. The guys who founded Kohlberg Kravis Roberts were thrown out of Bear Stearns quite summarily in 1976. They built quite a mighty firm in KKR and did not do a penny of business with Bear Stearns for many years.

KKR is still around and doing fine. Bear Stearns went bust in 2008. That single example isn't cause and effect. But it's a marker.


Yep. I’m not sure you read the whole thing, as I cover the grandma birthday example. Sentiment-wise we agree, tactically it’s still not the best practice. I know it sounds like it is.

It really depends on the maturity of the workforce and leadership, as I mention. For a lot of startups, that’s in short supply and just saying today is the last day of work is easiest. It shouldn’t have the feeling tossing them out. It can be end of day, folks (not boss) can arrange a meet up at a bar nearby, etc. I’ve seen it go sideways on both sides before when it’s too ambiguous for people or drawn way out, especially for junior folks in IC roles. The right thing really is just let them go, pay them as much as you can, and let them start figuring out what’s next.

If it were me, chances are I would not make the day of notification their last day unless they wanted it to be (most would I bet) but I also know what I’m doing. :-)


Agree with you. Saw something like this not too long ago where it was not handled crisply. There were no long-lasting consequences as far as I know and I can't get into the details but it was just sloppy and leaked all over the place.

I think your advice is well dramatized by this Moneyball scene:

https://www.youtube.com/watch?v=fTjhHrcyiQI


Thanks for the very thoughtful reply. I like your option of semi-offering a couple days grace period but also letting the departing employee say: "Nope, I'm out of here."

From the employee side, there's a primal desire to control something about this unexpected and unwelcome process. Moving the last-day slider a day or two in either direction might hit the spot.


One of the hardest things about this process for a sensitive and compassionate leader is knowing when to not try and "make it better."

This is probably the greatest video clip on the subject of all time: https://www.youtube.com/watch?v=fTjhHrcyiQI


Your suggestion also fits better with the social norm that employees should give two weeks notice if they want to leave on good terms. Neither side is required to give any notice in the US in most cases, but both employers and employees usually prefer if the other side offers a small time window to wrap up loose ends.


In many European countries, a month-long notification is a typical period. Assuming there is trust, the transition may take some time. Reworking presentations, leaving projects in the middle creates extra work. Plus for the individual, this gives time to adapt to the new situation.

However, if you go that route make it specific it is for transition and once person is done it doesn't have to do any new work and just left them to leave earlier.


One more thing to consider as you plan the layoffs: You may be eligible for one (or more) of the loans from the latest relief bill. The loans come with a near-zero interest rate and a big chunk of it may be forgiven.[1]

However, there are stipulations related to layoffs and reduced salaries, which is why you should evaluate this option before making the irreversible decision to fire people.

[1] Here's a decent summary: https://www.washingtonpost.com/business/2020/03/30/heres-how...


We were considering laying off but quickly decided on pay cuts due to (what currently seems like!) the temporary nature of this and knowing that the relief bill will come. Our projection is that the loan funds should arrive by the pay cycle after our upcoming one.

Like the article and the parent comment mentions, laying off is a very significant and irreversible decision and at least in our case seemed too extreme.


This is exactly what the relief bill is aiming to accomplish: to bridge otherwise healthy businesses to the other side of the crisis without having to dismantle their teams now and painstakingly rebuild them afterwards. Hopefully many companies like yours can make this plan work out in reality.


I agree that the forgivable loans are a good option. I was searching for a good summary the other day and here is the bill and the official summary (not sure why it was so hard to find).

https://www.sbia.org/resources-for-small-businesses-impacted...

EDIT

Looks like your article is linking to the sbia. Last week everything I found was still referring to things that should be in the bill.


Different point of view: I was a Founder and CEO during the dot com era. The company survived and became successful ($2B revenues today).

It may be unpopular, but I will give you a different view, the one from a Founder/CEO.

After the dot com crash no VC could figure out the good from the bad in their portfolio companies. I was starting to get conflicting opinions from my board (4 VC’s and me, the Founder). “Become a BtoB company, a BtoBtoC company,etc,...”.

Some VC’s offered a bridge (and declined at the last minute), others claimed they were running of money, others did not know.

A white knight came in the form of a bottom feeder. Those kinds of sharks are circling around your company right now. Vc’s are just happy to unload their portfolio companies to them, so they can save the face, some employees, and maybe the company.

Anyway, the deal came with a caveat: I had to fire 40% of the staff and I had to quit after that to make room for “professional management”.As a Founder I had hired every single engineer, every single marketing rep. This was a very difficult one to swallow, but I had no choice.

The night before I did not sleep. I was up at 5 and drove early to the office. I stopped multiple times as I was sobbing and could not drive (I wear glasses).

Mid morning I called an all hands meeting. Got up the steps to talk to everybody. There was silence, as everybody sort of knew by then that something was brewing.

As I was reading to talk, I started crying. Everybody was watching me in silence.

As I was getting myself together I explained the situation, that we had a way out but that 40% of them had to go. One engineer raised his hand and said “I’ll stay with no pay”.

Then a second one.

I started crying again. Folks would come to me and say “we’ll be all right” and I would reply “thank you”. When asked what the structure would be, I said I did not know. I knew that after the layoffs I would be silently asked to leave.

A lot of people moved on, did well, got better jobs over the years.

So, be kind to your Founders, and all the early employees who worked for months and years with no pay because they believe so much in what they were working on.

In the past 5-10 years, we have seen a lot of excesses, super expensive office spaces, unbelievable perks and salaries, $30K conference room tables and unlimited money printed by VC’s and later stage investors. Well, maybe this is it. If you get laid off don’t be angry, don’t blame others, and move on. Don’t take that personally.

As for me, I never fully recovered from the worst day of my life, and that was 19 years ago. :-(


> The night before I did not sleep. I was up at 5 and drove early to the office. I stopped multiple times as I was sobbing and could not drive (I wear glasses).

> As I was reading to talk, I started crying. Everybody was watching me in silence.

I know my comment is slightly off-topic to the article, but I just wanted to empathize with you and what was the worst day of your life. My company failed completely, but when I had to make the announcement I was sobbing uncontrollably to the point where I was having trouble breathing, in front of everyone (some were sympathetic, some were bitter, all went on to better things almost immediately - none had any interest in working for free). It's just fucking awful. I'm doing better now, but fuck just remembering how horrible that was made me feel compelled to write this comment.

> As for me, I never fully recovered from the worst day of my life, and that was 19 years ago. :-(

I hope you're also doing better today.


So you understand...Thank you. I learned plenty of lessons: make money, don't over hire, be frugal, don't bend to pressure for fancy gigs and out of control travel expenses. Plenty of lessons for sure. I have sympathy for Founders who will find themselves in that kind of situation. That miserable sense of failure to your people. Good luck to all.


I really appreciate you for sharing your story, thank you. As someone hoping to found a company in the next 5-10 years, this is my nightmare scenario as well. I'm glad it all worked out for everyone in the end, and it sounds like your employees really trusted and cared for you add much as you did them.

I'm only a couple of years into my career, so I knew but never fully understood how bad the dot com (and 08) recessions were. Kinda scary to hear stories like this, then think of my current job at a mid-size startup. I think we have enough cash for a bit, but it seems like things can change so quickly.

It seems like you have a lot of wisdom about situations like this, for better or worse hah.. do you have any advice for a younger dev right now? I already have a lot of savings, but I'm really interested in your opinions about how to reduce the impacts of the impending recession on my career goals, and to come out ahead when it's all over.


My best advice for you today is to be super frugal. Don't buy the fancy car, don't buy the condo, don't sign a long lease. A low burn for yourself will lower your stress and will offer you a lot of options. If you like your job and the company stay put and work more if you can. Your leadership will be struggling at some point to survive. Your CEO/Founder will feel very, very lonely. Go meet with him/her, tell him how you feel and offer help. Even if the company collapses you will end up working with a lot of the same folks down the road. You will create memories and will bond with other folks in a less superficial way. As they say this is fucking hard. More than you can imagine. Ben Horowitz wrote a good book, The Hard Thing About Hard Things. In his case, it ended well, but most likely it will not end well for a lot of people.

Be sympathetic. Empathy is important. This is too late to be cynical or overly critical

Good luck.


I appreciate you sharing your experience, but if I was in the room I’d be upset that you didn’t handle it better for the sake of the remaining team AND the departing employees.

The approach detailed in the above blog post is more appropriate for any situation with more than 10 employees.


Sure, but at some point if you really care, there is nothing you can do. And I also knew (and they did not know) that to make that happen, I would have to leave myself shortly after.


As a hypothetical employee attending that all-hands I could be upset too in the moment due to the impact those news would have on me. However I could not in good conscience be angry at you, not once I calm down and can think logically again.

Turns out bosses and management are humans too, what a novel concept! Shit happens, and we are all constantly trying our best.

> I never fully recovered from the worst day of my life, and that was 19 years ago

From one stranger to another, with as much empathy as I can convey through this comment box: whether you start another project of that magnitude or not, I hope you can eventually change that sentence to "it was grueling, you kinda never forget but I did fully recover".

Thank you for sharing your story.


Thanks for sharing, have you written about any other experiences?


Not really. But the current crisis brings back memories. And a lot of similarities, unfortunately.


I remember laying people off during the GFC, and they all had a good laugh. Nobody was surprised. Nobody broke down, even though a couple of them had a pregnant wife to look after.

What's the secret? Communications. Don't say everything is fine if it isn't. Don't pretend that the potential saviour plans are more likely than they actually are.

Earlier in my career, I'd been through layoffs too. Management would say "this is the last round" several times. You could see teams vanishing from one day to the next. On a trading floor it's pretty obvious. But also in a major tech firm I'd worked at, it was the same, "this is the last time".

Fact is you don't know if it really is the last time, so don't say so. You can lay out the plan - staffers appreciate whatever detail management can give - and you can say why you think you're about to turn the corner. But don't act like it's a given.


Just ruminating here, but I didn’t fully understand the hesitance to do paycuts. Of course, I understand that in some cases the financial problem is severe enough that layoffs are the only option. But it’s conceivable that in many cases a simple, say, 20% cut to salaries across the board could be enough to tip the balance.

Some employees will immediately start looking for another job, but that seems totally fine and reasonable to me, both for the employee and the employer. They get to retain most of their income and all their benefits while doing so, and if they do leave successfully that just saves you more money too.

With all of that said, it does occur to me that with small startups there just may not be enough employees for paycuts to help much. The above is really written with 100+ person companies in mind I suppose.


Like you point out in your second paragraph, some percentage of employees are automatically going to start looking for a new job and treat their 80% salary as a severance package. Being in a competitive job market, this is going to be pretty much every above-average employee at your company. With layoffs the company gets to choose who gets impacted, and the process is immediate rather than drawn-out.

The reality is that too many VC funded companies hire too eagerly and can operate perfectly fine (in some cases better) with a smaller, more focused workforce.

There is no coming back from a major across-the-board paycut, which is why no company chooses that option.

BTW your question is answered in the last paragraph of the article.


> Being in a competitive job market

Are we in a competitive job market still? For whom?


I thought the same thing. If I'm running one of the only companies making layoffs the advice about paycuts rings true, but what about the situation we find ourselves in now where almost every company in the whole UK economy, and many beyond that, are in the same boat?

Of course, this piece has been written to provide advice in the face of the current situation, so I'm not simply dismissing it: just asking the question.


For clarity, my question was a response to the last part of the article that talks about this topic.

I think you’re right that layoffs allow you to take a more targeted approach and retain top talent to the extent that it’s possible. However, really in-demand employees aren’t generally going to want to work at a financially unstable or insecure company, and layoffs would probably be a sign for them to start looking even if they weren’t impacted.


In 2011, every developer where I was working knew that the company was on its last legs. Management was completely honest with us. We stuck around any way because we enjoyed what we were doing and knew that we would be able to get a job quickly. We were right, from looking at LinkedIn everyone had another job in less than a month.

The people that were left survived three rounds of layoffs.

I know this time it’s different than 2008-2011. But no job is stable. The only hope you have is to keep your skillset in line with the market and to have a strong network.


Obviously things are different now. But in a good job market where layoffs are due to the company's underperformance, people spared from the layoff are going to start looking anyway. Lest they're laid off in the (nearly) inevitable next round.


> There is no coming back from a major across-the-board paycut

What do you mean?


I can tell you've never run a company.

You're likely to lose your best employees because they know what they are worth and are unlikely to live with a pay cut because working with you is no more special than working for someone else. Losing great employees is not where you want to save money. It's extremely expensive to find, hire, and train people, and once you lose them you also lose their domain knowledge within your company.

If you lose the engineer that built the product that makes you money, good luck modifying or fixing any issues with it in a short amount of time.

Layoffs are about survival, doing what you suggest is a sure fire way to kill your company.


I feel like this has already been brought up elsewhere, and I don't really appreciate the tone/sentiment you opened this comment with.


This method will ensure you lose your top performers rather than your bottom performers.


Maybe they wanted to do layoff sone employees even before this pandemic. The current situation is convenient for them to do so.


The current situation is the furthest from being convenient in regards to layoffs. No company wants to be seen as heartless during a truly global tragedy.


Counter-point: no observer would consider an employer heartless for laying off people during an unprecedented economic downturn.

Do you consider restaurants heartless for laying off staff? Cruise lines? Hotels? Entertainment businesses?

It's a tough decision, but failing to make it could be the difference between laying off a few people and laying off everyone because the company goes bankrupt. The key is to do this in a respectful manner so the bridge isn't burned.


I know of a company that did this, except it was a 1/3 salary cut. It was a cash flow problem where the company didn't want to take out of a loan for payroll. I bet top employees would not leave right away, employees would quietly start planning for the escape, then you might see a mass exodus six months down the road.


Even a 2% pay cut is basically a big “the company doesn’t value you anymore, best move along.” signal. They can say it’s about cutting costs all they want but you’re the one being asked to take the hit not the company worth millions or billions.


I don't agree with this at all. It's entirely possible for a company to have pay cuts because they're looking to save as many jobs as possible; because they believe that it's better for _everyone_ to make less than _some_ to make nothing.


what about when there are pay cuts, furloughs and layoffs? My org did this. Pay cuts in tiers depending on salary level, layoffs and furloughs announced in the same announcement.

I asked payroll if our final check would be affected by the pay cuts and am still waiting an answer.


A big lesson I learned from people here that survived the dotcom bust: you don’t want to be the last person laid off at any company. Don’t feel great if the lower performers are out the door first while the economy starts the circle the drain.

The reason is because there are companies that are still hiring and that will make it, but they’ll soak up their fill from all of the early lay-off talent and there will be very little left for you when you’re the last person to turn off the lights.

I guess the moral of the story is to keep your resume fresh, and if a good opportunity comes by during this time it might not hurt to consider it.


A bit of criticism - it “normalizes” an 8 week severance as a ceiling - maybe in the high flying startup world but any big company especially with long tenure 8 weeks is a pittance, especially to someone having been there for 5 years. May be worth a note.

> While it can sound jarring to say “and today is your last day,” it’s generally better for people because it makes it clear that there is a new normal and it starts right now

On what basis is this better? You’re opting into socially traumatizing people this way. When you take someone’s badge most people who remain immediately starts to shun the laid off worker. Your respect and trust of them as a person is immediately (rightly) seen as a lie. I’d really like more info on how this is better than allowing people to say their goodbyes.


Agreed that 8 weeks is not generous in any sense, especially for employees that have been at the organization for a year or more.

Layoffs are different from performance based firings. My rule of thumb for layoffs is mandatory 3 months + 1 month for each year of service. Someone at the organization for 6 years deserves 6 months of severance if laid off.

These are standards you have to build into your financial model. I'm afraid we've been in the crazy world of terribly run startups for too long. When I look at some of the standout startups from 2005-2010 and some from 2011-now, the startups coming out of this recent decade are far less efficient with their cash than their counterparts from the decade before.


You may be coming from a very diff place than most startups

In general for startups and if you can afford, max(2mo, 1mo per year). If you are in a slow industry like finance backoffice, good chance many people are 5-15yr and saved vacations, diff ballgame and HN is irrelevant ;-) Collapse is part of the choice of going for startups.

But this is all nonsense right now: super hard for many people to get new jobs right now when not an easy FANG fit. So low severance layoffs right now are pretty career impacting FUs. Can't take the COVID SBA loans and apply it to severance, so not easy. Startups are risks anyways, so maybe time to instead take advantage of the chaos and grow instead!


8 weeks sounds pretty awesome when a $100-millions company gives you 2 weeks (minimum legal here in Canada)...


It's probably a US thing. Canada has a stronger EI program so the hardship of unemployment is handled by society rather than falling solely on the hands of the employer.


Does that model still hold up when there’s company wide layoffs because of financial issues?


Agreed I've never heard of a 8 week cap either. Actually I thought it was the opposite, if you have WARN act its a 60 day notice period before the severance, its more like 8 weeks is a minimum. https://www.edd.ca.gov/Jobs_and_Training/Layoff_Services_WAR...


  When you take someone’s badge most people who remain immediately starts to shun the laid off worker.
Can you clarify what you mean here? Is this something that happens in your experience? I would personally never want to shun someone who just got laid off, especially if they were a friend.

  Your respect and trust of them as a person is immediately (rightly) seen as a lie.
Am I misunderstanding you here? You're saying that the moment someone gets laid off you are justified in losing all respect for and trust of that person if you're still on the team? I have to believe people aren't that cruel in general.


Once you're gone in a company, you're gone - it tends to be that only the closest relationships will stick around, and everyone who you were moderately close with doesn't stick around.

I've had people who I've had mutually enjoyable interactions for years suddenly just stop talking entirely upon a layoff. Its in fact pretty common, I'd have to say.

> You're saying that the moment someone gets laid off you are justified in losing all respect for and trust of that person if you're still on the team? I have to believe people aren't that cruel in general.

Not at all what I meant! I meant the relationship between employee and employer (or manager) turns on a dime, if not only are they told you're laid off, but also immediately all of your badges and access are gone. Suddenly the place you feel like you've belonged is treating you like a trespasser or criminal and not to be trusted to even have door access.


By all means, do more. Many companies thought they would raise in Q3 and have little chance of that now and need to make immediate alternative plans to have a chance to stay in business. If they can pay more — I hope they do.

And on the latter point, as I point out, depends on maturity of workforce and leadership.

Minor last point — I’m sorry to say that if I’m normalizing eight weeks, then I’m raising the norm. You can not like it, and I don’t, but that’s reality. Eight weeks is generous for a startup, or most companies.


Agreed, I thought 8 weeks was very low for a lay-off based on what I’ve heard from others.


This is a phenomenally good resource for the topic, as both someone who has had to perform layoffs and who has been let go myself.

Highly recommend reading in its entirety, and saving for the unpleasant day you need it (which, unfortunately, might be soon).


This is a how-to article on a difficult administrative procedure --laying off employees. What stands out for me is the emphasis on employee dignity. As a manager, the layoff might feel like its about you, but it's really about them. Accommodate, but don't indulge their emotions.

What's missing is that a layoff conversation is also the beginning of a breakup. The economic truth may be transactional, but the lived experiences is emotional. Highly invested professional relationships are changing irrevocably. maybe it was great, maybe it wasn't. These employees have served the mission of your company. If they showed up to work, they were trying. As an employee, one can feel discarded. In this setting, the one emotion a manager should not suppress is gratitude: don't forget to say thank you.


>You can say “I know this is a lot to take in, but you will get through this.”

>Do not tell them they will be fine.

In general, a very good article, but these two lines really seem contradictory. It might intend to mean something else, but in practice it's pretty much doing what is outlined as a "do-not-do-this".

Edit: typos.


I hear what you're saying, but I think the difference is pretty important.

you will get through this acknowledges that a significant hardship is being imposed on them.

you will be fine trivializes the hardship; the subtext is "this is no big deal, you worry too much".


The point I'm making is that you might see that distinction, but the person hearing those words in that moment will not.

It's a moment in life where you just keep your mouth shut.


I know. I edited that a few times. Didn’t quite get it right. Subtle nuance to “you will get through this” and “you will be fine” I guess.

Not perfect.


> I say what roles, not who, because that’s how you should be thinking about this. It’s not a person by person decision, it’s a role by role decision.

Careful: If you've ever worked on a team where one person clearly needed to go, that person needs to go in the layoff. Otherwise, keeping the poor performer when you lay off other people who did their jobs well will severely hurt morale.

If you don't understand what I mean, well you should consider yourself lucky that you've always worked with excellent people who knew how to do their jobs and had great attitudes.


Here's a don't: don't bring some BS document for the fired person to sign. They have no reason to do so and shouldn't feel pressured to execute something like a non-disparagement agreement, unless it comes with a big checks stapled to it.


I could have and maybe should have added that. Totally agree. They can take it home and review and you should send it digitally anyways so they have a copy.


This is extremely useful and well done, easily the best resource for layoffs I've ever seen. I really like that it doesn't hold back.

> Maybe they will return to a home country with alternative healthcare options

Wow, that's calling it what it is.


Thanks and yep.


Why pretend and cloud the idea, that the main reason a person has a "job" today is to accumulate capital for capital.

As long as this notion persists (which will be for many more decades I fear) power inequalities will just mean that some will suffer more (those who do not have resources in the first place).

Hey, you know, I am really sorry, but thanks for all the capital you helped us to accumulate - which we own and not you. Bye!

I imagine the most profound societal change will come from getting rid of this notion and the resulting reduction in power asymmetries.


In return for helping the company build capital you were paid a monetary value in return. A quick solution to the problem you are presenting is to invest the money you were paid into other companies or start your own company so you too can have 'capital'.


I understand that it's a very broad spectrum.

However, what I am observing is that 'capital' gets its hand in any aspect of life, the formerly family owned coffee machine maker, lingerie producer and the outdoor specialist went through couple of private equity hands - for what? For injecting capital to trim down ops, expand, then get out of a position?

After watching hundreds of hours of investing conference videos and interviews there is one thing, that really got me: why is this field so sad? I believe it's because all they ever talk about what they "own". The cannot make, invent, heal, fight, cook, write, harvest or any other human activity - all they do is "own" something that is valuable to others.

Imagine kids playing in the playground and all the talk about is what each of them owns. They cannot read, write, play an instrument, tell jokes, do tricks, etc. - no, but they control those who can and are productive.

I am not sure why, but I'd rather have a kid with talents than one with lots of "assets" (even though in this world talent does not matter, if you've got the assets).

----

Warren Buffet was once asked by the audience, what you should do, if you have artistic talents and want to live them out, but you do not want to starve? He did not really care, understandably.


Excellent and humane in all aspects. Definitely a bookmark


Sounds like compassionate and practical advice, but nothing particularly insightful.

Having seen the shit-storms of the early naughts, yes, I can say there are worse ways of doing layoffs. Hint: deactivating key cards at lunch time isn't a best practice, nor is dribbling out lay-offs in waves like a year-long "last man standing" game show particularly helpful. Nor is calling an all-hands meeting and having the CEO cry on a theater-sized video projection. But these things are fairly obvious to non-sociopath leaders and companies with a professional HR department.

This is the second essay from a VC concern that I've seen discussing this. It makes me wonder why are VC's giving out this advice in such open-letter forums?


Because the economy is tanking and layoffs will follow, even in Silicon Valley?

Also, this is intended as a practical manual from someone who's been there and done it repeatedly, not a random blogger attempting to dazzle with their "insight".


Agreed its not insightful but doesn’t need to be. It's not an area where insight helps. Just good, professional process. Many people are emotional at such a juncture and having some guiderails is helpful so they can check their plan.


> Offering less than two weeks severance pay is outside the norm, as is offering more than eight weeks.

Is this a norm for startups?

The norm for BigCorp is to have your tenure-based severance actually map directly to tenure, so if someone worked for you for 10 years she gets 5x what someone who worked for two years gets.

(Granted there might be a baseline, like $M + $N * $YEARS.)

And that's just talking about the US, but the article definitely implied they're talking about the US and in particular California. If your startup is domiciled in, say, France, you probably don't have a choice.


Incorrectly states anything above 8 weeks isn't normal. 8 weeks is the min for Cal WARN. When i got laid off during the great recession, i received 11 weeks paid. 8 weeks for WARN and one week for every year employed. Then another one month of pay to give up my rights to sue the employer.


shit. It seems that this recession will last for quite some time - so a good number of people will have to take up work as contractors. That sucks.


Man that was very, very useful advice.


Voluntary severance is another option. Give people six weeks pay if they take it, two weeks if they don’t. Coach people in or out.




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