I need to preface this piece with a few notes about my intentions. My work is always to support ethical ventures: organizations that thrive economically and are a net positive for humanity. There is an inherent tension in this work between the short and the long term, and nowhere is this tension more apparent than during a global crisis.
This piece captures my thoughts on one of the most difficult decisions business leaders must ever make. These are my opinions based on first-hand experience on both sides of layoffs (multiple times) and my work helping business leaders have difficult conversations around strategy and organizational development.
I’ve seen many ups and downs through my 30-year career — and expect to see more — and I am always open to learning. My intention is to share what I’ve learned and to open a conversation that I might learn more from. What follows are strong opinions, loosely held.
One of my heroes, though I’ve never met him, is Adam Grant. He’s written books from which I’ve learned a lot and his podcast is one of my favorites. So it is with some apprehension that I publicly disagree with him here.
In a recent post on LinkedIn (I recommend reading it and the rich conversation it generated), Adam said: “Dear leaders: Do everything you can to avoid layoffs. They don’t just hurt the people you lose—they crush the morale of those you keep. Survivor guilt and fear are real costs.”
All of my clients now are facing immediate economic losses and a deeply uncertain future. My work now, as it has always been, centers on helping organizations focus and align around their core mission. This always involves, at the very least, reassigning some people, but also often means letting some people go.
While these times are certainly different, the foundation of my advice isn’t. Focusing your organization on its core mission is important, even in the best of times. But now it is essential.
During this crisis, small and medium-sized businesses need to get lean quickly and keep only essential staff. Engaging in layoffs sooner rather than later means that companies not only limit their run rate (payroll is the single largest expense for many businesses), it also means that they have more cash available for severance packages (which should be as humane and generous as possible — Airbnb did this well).
Layoffs also release people to file for unemployment — an inadequate social safety net as of now, but the federal government (which we are all shareholders in) is the proper place for aid.
Another person I admire, Scott Galloway, says it this way: “We should be protecting people, not companies.” And protecting people is a role best played by the government, which can borrow vast sums of money easily. The government, unfortunately, has attempted to protect people by protecting businesses through the Paycheck Protection Program (PPP) rather than through direct aid. This not only failed to keep unemployment from exploding, it has also been difficult to access for companies truly in need and subject to abuse.
Adam’s point is correct in one way; it is worth considering delaying layoffs for the sake of morale, but only if the people kept on the job are doing real work. Giving people nonessential work takes its own toll on morale. In the months leading up to the dot com bust, I had a job for months with nothing real to do. I was certainly grateful for the paycheck, but coming to work each day with no sense of purpose took a toll on all of us.
I’m aware that this advice can sound harsh, but my intent is to help small and medium-sized businesses to weather this storm so they can grow on the other side of it and provide even more jobs.
We desperately need a diverse economic ecosystem, and this crisis, I fear, will continue the trend toward the consolidation of power and capital among a few unregulated monopolies.
If you’re a decision-maker I want to hear from you: How are you thinking about layoffs now? What other difficult decisions do you face?