Overcoming uncertainty in downsizing times
These are exciting times for entrepreneurship in India. The startup ecosystem is witnessing an unprecedented spell of growth. In fact, India more than doubled the number of unicorns within 2021 and is now comfortably placed 3rd on the list of countries with maximum unicorns in the world (trailing only to USA and China).
However, there is also a flipside demonstrated by some of the companies that had zoomed into limelight with their mega funding rounds in the recent past. Shutting down and insensitively downsizing their workforce are steps that don’t augur well for the stakeholders. For instance,
Lido Learning, an edtech company that had raised nearly $27.3 million including a round of $10 million in September 2021 itself, shut down, leaving 150-200 employees in the lurch. Another highly promising startup, Bounce that offers on-demand two-wheeler rental services and has nearly $70 million in cash reserves, laid off half of its workforce. One of the biggest shockers came from edtech unicorn Unacademy which had raised $440 million in August 2021, and was valued at $3.4 billion. Less than a year later, it let go of 1000 employees to cut costs.
With millions in funding, companies tend to aggressively go on hiring people and expanding the network across states and territories. When due diligence and a strategic mindset are not applied and too much emphasis is given to GMV and numbers, such instances are repeated. For instance, well-funded retail chains sometimes go on rapidly opening stores or centers across the country, hiring hundreds or thousands of people. When the sales or revenue targets are not met then they have little choice, but to roll back and let go of people. To avoid such extreme measures, it is important for the investors to mentor the startups on their human resource plans.
For most leaders, laying off their teams is a difficult thing to do. After all, employees are the most valuable asset. I would like to believe that people lay off employees only as a very last resort. Even with the best of intentions, market dynamics can change rapidly and sometimes there is nothing to be done, but damage control.
- Lead by example, share the pain: C-suite executives must take pay cuts and be transparent about it
- Furloughs and pay-cuts are lesser evil alternatives to layoffs.
- Transparency and kindness are the only way to lay anyone off.
- Insensitive moves as witnessed in better.com are unacceptable, regardless of the situation.
- Severance, referrals, and help to get a new job are basics that need to be offered to employees.
For those laid off - without a warning or a plan B - this is a really hard time. What you must keep in mind at all times, is that layoffs, especially mass layoffs have little or nothing to do with individuals and are most often unfortunate business decisions.
Keep your eye on the long game - in a 40-year career, we must all experience some ups and downs and a number of setbacks. Being laid off needs to be viewed as a setback and not as the end of a career.
While you strive to get the next opportunity, do not let your confidence take a hit-making a hasty, desperate or emotional decision to take the very next opportunity you find without careful deliberation can set you up for one more setback - and a costlier one this time.
If your financial situation permits, take your time to find the right fit for you, evaluate the options on the table and then make a decision.
You can also use this as an opportunity to upskill yourself.
It is really important, in those final moments, bitter as you may feel about the organization letting you go - to maintain a professional relationship with your closest co-workers. Their network and recommendations can go a long way in helping you secure the next job.
Regardless, professional relationships when maintained well can create a ripple effect of goodwill that is helpful throughout your career - do not let momentary hurt and anger destroy your professional credibility.
Finally, be cautious of recently-rich organizations, thoughtlessly offering above market rate salaries - the hubris of growth can come crashing down at a moment’s notice. If it sounds too good to be true, it probably is!