Cut deep so you only have to cut once. Be conservative and cut more than you need to. Remaining employees will feel their job is safe if there’s only one round, but if you don’t cut deep enough and have to do a 2nd round down the line, employees will think the worst and expect a 3rd round is inevitable. The damage multiple rounds do to morale and culture is irreparable.
Do it on a Friday after lunch. Nobody wants to go into work the next day after seeing their friends laid off. Give everyone the weekend to cool off.
Get something in return for severance. You pay a severance for two reasons: i) you’re an empathetic human being; and ii) you need a termination agreement signed that says the former employee won’t sue, steal IP, will keep everything confidential, etc. You may also need help with transitions. Companies do not legally owe employees a severance, so use it to get what you need.
Talk to everyone. For the people that you keep, don’t let them go home without talking to them and reassuring them the company is now in a stronger position. Make time to meet with remaining employees one on one, if practical. On layoff day, your entire afternoon needs to be free so you can handle any fallout.
Morale is going to be down for a few weeks, but it will eventually rebound as will the culture, especially as the remaining employees realize the company is now in a stronger position financially. It’s critical to communicate with the employees that you’re keeping. Share with them what the plan is going forward, why the company is now in a much stronger position, and how you’re going to grow. Best of luck.
Sammy is the Managing Partner and Co-Founder of Blossom Street Ventures. Visit us at blossomstreetventures.com and email directly at firstname.lastname@example.org://blossomstreetventures.com/metrics/