Layoff means suspension or termination of employment (with or without notice) by the employer or management. Layoffs are not caused by any fault of the employees but by reasons such as lack of work, cash, or material. For many entrepreneurs, the thought of having to lay off employees can be nerve-wracking. And if you’re young, the act of firing an employee could be especially daunting. While there might be valid concerns, the fact is that termination of employees, while almost always painful, is a vital, rejuvenating part of business life.

There could be many reasons like Growth, scale, funding, skyrocketing valuations, GMV, and other vanity metrics for layoffs to happen. The major concern remains to understand how to handle Layoffs.

To begin with Communications on layoffs should be handled sensitively, and not through town-halls. Let’s see how various stakeholders in an organisation need to handle layoffs:

1. Investors, Shareholders and Advisers

It is very important and indispensable for Investors, Shareholders and Advisers to guide the because in all likelihood he lacks experience and expertise to handle such a situation. Be prompt if the founders asks for responses or clarifications, and don’t delay in any communication for handling the situation. Make sure that you have a good communication plan in place for the employees and the media.

2. CEO and the Top Management

There is a saying the uneasy lies the head that bears the crown and this is apt when we talk about the CEO or the Top Management who have have handle the situation concerning layoffs. It is very important that the CEO or the Top management gives clarity to the top management first. Once positions are chosen for elimination, administer layoffs in a cascading manner. Never promise job assistance or personal help if you are not in a position to provide the same to employees post layoffs. Plan what happens to stock options well in time, in order to avoid any confusions at the last moment. Follow the statutory procedures to avoid any legal hassles. Get the timings for layoffs right, avoid layoffs around weekends and festivals. If employees want to get a personal clarification, don’t hesitate in doing so as you may need to hire them back when there is sunshine again.

3. Employees

The worst hit stakeholders in a layoff are the employees, hence, it becomes important that the employees understand how to handle a situation of layoffs. Until you settle down emotionally, don’t talk to anyone outside your inner circle. Do not sign a severance document without reading through and consulting your lawyer. Negotiate how your departure will be described. Don’t burn the bridges with your manager, but keep your networks active and let everyone in your network know that you are available for being hired again.

The reason for layoffs can be various ranging from over-hiring, controlling cash, restructuring of operations, pivoting to a new model or delay in follow-on fundings and correction of startup valuations in the market, etc.  But the most important point in such a scenario will be how to tackle it. Hence, it is very important to understand and device a proper plan to see you through in such a situation.

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Shivani Pandita

Shivani is an avid reader and loves to pen down her thoughts on paper in the most creative ways. She is more on the eccentric side, but it is this obscurity and uniqueness that makes her stand out. She has a passion for photography, travel and music. She strikes a thorough balance between intelligence and creativity and has a solution oriented approach to any problem at hand.

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