Start by not asking for sympathy, or writing blog posts encouraging people to fawn over you for your perseverance and wisdom during hard times.
Next, stop taking a salary, or recognize that you're accepting six figures while throwing people you recruited out into the worst economy in 50 years.
Finally, move your ass to find those people jobs. Carve out time to write real, personal recommendations for each of them. Introduce them to every company you have a relationship with. Sell.
God help you if you write, "it saddens me that we have to let these people go, because most of them were solid performers". If you kept dead wood in your company, likely to the detriment of the whole team, and couldn't muster up the courage to deal with them until the economy gave you an excuse, it's all on you, asshole.
Yeah, I sound like even more of a dick here than I normally do, but I don't think I'm the only one noticing the valley patting itself on the back for fucking people over.
[edit I'm not super happy with this comment, but I'm not deleting it either; might as well be honest about what I think. We have employees too. Maybe I'll be a total douche if something bad happens to us? Tell me you told me so.]
Yeah, I think the Tesla example yesterday was how not to do it.
On the other hand, I think these things are relevant right now if there are people reading them that are venture backed and things look less rosy in their outlook.
I have much more respect for an employer that plans ahead and lets their employees know what's up significantly before they can't make the next month's payroll.
"Here's the deal. It's going to be hard to raise the next round. We've got to cut back. You've got jobs for another month and severance for a month after that. Let's sit down and talk about what you'd like to find for your next job and I'll push every contact I've got to help you find that."
Stop taking a salary? In this economy? Are you crazy?
I totally agree you shouldn't be a jerk and blog about it like, oh it was so tough for me, I had to fire so many people, the emotional agony it will inflict on me for the next couple weeks will be so hard. You have to recognize that no matter how hard it is for you, it's worse for them, something this blogger didn't seem to want to take on.
In one of the many what if discussions that we've, trying to nail down how we'll respond to situations in the future in the case of them getting bad (I think a good idea for any set of startup founders) we both agreed: we're the first ones that stop getting paid. If its our salaries missing a month or someone we've hired, we're the ones that have to bite the bullet.
I think if you want to play with high-stakes, as is true in the startup game, you have to be willing to lose with dignity. Holding onto your shares, screwing your employees and still paying yourself just makes you a jackass.
Firing an entry-level developer? In this economy? Are you crazy?
Startup founders seem to love calling themselves "CEOs". Working for a one-dollar salary during rough times is something that real CEOs actually sometimes do.
Or, to be more realistic, a 30k salary. It's completely workable for anyone without kids, and is likely quite a bit below what other employees are paid.
I agree with the main point. Any "CEO" who lays off workers without first cutting his or her own salary down to the bare minimum is clearly not doing what's best for his or her company.
Heh, or here's a better option- if there absolutely must be cuts, first offer the employees that would be cut the ability to move to a cheaper country and telecommute and an equivalent salary, adjusted for cost of living.
I don't think that's a fair comparison. Those "real CEOs" generally have a high net worth to begin with, something that's not true of (I would guess) most startup founders.
Hey: they asked to be the CEO. They're the ones who walk away with a 7 figure payoff when the company sells for $5MM. They get 100x the payoff of a developer because they accepted the risk.
Is it hard to live on $1 a year? Well, it's not harder than living on $0 a year. But OK: how many of the Valley Layoff Heroes even took a pay cut down to sustenance wage? Note: normally when people do that, they tell everyone --- it's a morale boost.
How hard it is to live on $1/year clearly depends on how much money you have in the bank, or other resources you might have. In absence of that (or if your net worth is actually negative--say, you have a lot of student loans), then it's just not possible to work without a salary.
You could do some consulting on the side, I suppose, but that would defeat the point of having employees. And as an employee, you're probably better off finding a job somewhere else than working at a company where the CEO has to spend part of his time working on something else just to get by.
Almost invariably those CEOs who take $1 a year have high net worth, plus lots of stock options. However it's reasonable (and even common) for CEOs to take pay cuts in hard times. I've heard of companies that when they implement pay cuts, top managers take larger percentage cuts than lower level employees.
I agree with this and I don't know why it's getting modded down. I can understand the CEO taking a huge pay cut, but how is one supposed to live off of $1/year without any other source of income?
As someone who has been laid off from tech companies twice, I care about one and only one thing: the size of the severance package. I don't need compassion, I don't need understanding, I don't need the people who ran the company into the ground to "help" me find a new job. Just show me the money.
Heh, both times in fact those who got the chop counted themselves - and were viewed by former cow-orkers - as the lucky ones.
As someone who's watched this happen a couple times I definitely agree. Furthermore, the earlier the cycle you're in the better your packages tend to be. The first round got great severance. The second round got a small package IIRC, and they missed payroll on round three, which is like getting -2 weeks of salary, pretty sleazy, IMO.
Both times for me were when the company decided to stop doing what I did. The first time, the company got out of technology altogether to concentrate on its strategy consulting business, all the engineers except a skeleton crew for maintenance were laid off in one go. Sucked to be one of the engineers they kept!
The second time was the company shifting from products to services. They said you can have X months money and leave now, or X/2 months paid to find a job somewhere else in the company (and then nothing). I didn't look back. In both cases, senior managers know they're in trouble but think they can get themselves out, there's still plenty of cash in the kitty and they need to preserve the appearance of confidence, so they'll pay fair severances. When it gets desperate - then it's everyone for themselves.
It's great advice but may as well have been written in hieroglyphics, personally I've never seen it taken (three rounds across two companies + missed payroll during bankruptcy once).
I posit that the reason for this, in tech anyway, is that employees are generally in one of two categories: 1) Sales people with customer connections or 2) Developer/admin types who may have a lot of access to systems. In either of these cases the employer could be concerned that the possibly-terminated employee is going to damage the assets (contacts or code) that the company has.
If I could contribute a pattern from my limited experience it would be this: Companies tend to hire a hatchet-man a few months before layoffs start. It often looks like an incompetent manager "decided to spend more time with his family", or the creation of a new, often highly paid, middle manager position. After the new guy is in his place he lays off the people that he's {decided, been instructed} to, and then moves on, often because he's burnt out from doing all of the dirt work that the managers above him are too weak to do.
In both companies the person who was hired as a hatchet man would have been a far better manager than the one who sailed the ship into the iceberg in the first place. If as an employer you don't see your manager as capable of doing this hard job (layoffs), how do you expect them to do the hard day to day job of managing performance? Just keeping the house clean can save that first round of layoffs that often consists of the low performers, and without the horrible morale crush of pink slips.
When people talk about how starting a company will bring you to the best and worst times of your life, this would be in the 'worst' category.
Spend time working your contacts to help them find another job. Your the one that screwed up, not them.
Totally unrelated, and I'm not really criticizing the article (it's pretty good) but I was reminded of a recent doonesbury, which also had 4 points: smoke, fire, hose, shovel.
Hey by the way, that was a quote from "Office Space". It was meant tongue-in-cheek. Personally, I think lay-offs suck, and if you have a good business plan (focus on being cash-flow positive) than you lessen your chances of needing lay-offs. I have seen the "hire too many people in good times", "lay them all off in bad times" approach with no regard to wanting to be cash-flow positive. That is certainly not how I would want to do business!
I hope you're kidding! Keeping a bunch of pissed off soon-to-be-ex-employees around the workplace isn't good for anyone. The best you can do is to lay people off on Friday morning so at least they can be with your friends and family over the weekend for support.
I think early in the week is the best way - at least when firing people. If you let someone go on Monday or Tuesday they can immediately start looking for a new job the next morning. With any luck maybe they can start getting callbacks or a phone interview before the end of the week. That goes a long way toward boosting morale. The weekend makes it a little more difficult. Sure, they can update their resumes, apply online, etc., but that kind of ruins the weekend and leaves a lot of time to start feeling hopeless or really pissed off.
Plus, some people might not mind so much if you tell them first thing Monday morning that they have to go home. :)
Next, stop taking a salary, or recognize that you're accepting six figures while throwing people you recruited out into the worst economy in 50 years.
Finally, move your ass to find those people jobs. Carve out time to write real, personal recommendations for each of them. Introduce them to every company you have a relationship with. Sell.
God help you if you write, "it saddens me that we have to let these people go, because most of them were solid performers". If you kept dead wood in your company, likely to the detriment of the whole team, and couldn't muster up the courage to deal with them until the economy gave you an excuse, it's all on you, asshole.
Yeah, I sound like even more of a dick here than I normally do, but I don't think I'm the only one noticing the valley patting itself on the back for fucking people over.
[edit I'm not super happy with this comment, but I'm not deleting it either; might as well be honest about what I think. We have employees too. Maybe I'll be a total douche if something bad happens to us? Tell me you told me so.]