How Preemptive Layoffs and Rescinded Job Offers Destroy a Company From the Inside
It’s not just the loss of trust, it’s the fact that the damage festers in the shadows
Times of economic crisis call for drastic measures. Any good leader knows this, and any good leader knows that those measures will be painful and will inevitably impact the long-term future of the company.
But there’s a limit. Preemptively right-sizing a workforce and rescinding job offers goes over that limit.
I get it. Millions of dollars in pandemic-recovery overspend. Overly optimistic projections. Short runways. Angry investors. Inflation. Supply chain. I get all of it.
I’m not here to judge. I’ve been on both sides of this issue, over two decades of leading and advising startups and tech companies. So I’m just here to tell you what’s likely to happen in the long run, based on my experience.
Reducing Workforce Is (Mostly) an Accepted Corrective Measure
The truth about layoffs — and it’s a truth that employers count on — is that the employees will usually understand and accept why they’re being let go. In fact, they almost always come to grips with it as a necessary broken rung on the career-ladder.
One step back. Two steps forward.
But in my experience, this is only true when the company is facing a do-or-die crossroads — in other words, when the layoffs are about tossing a few employees overboard to save the rest. It’s an unfortunate scenario. No one wants it. But people understand it.
However, if those employees get any sense that layoffs were preemptive, preventative, or unnecessary in any way, that understanding immediately shifts 180 degrees to a feeling of betrayal.
The Right Communication Is Critical In Tough Times
Good leaders communicate transparently in a crisis: “Things are great! Things are good. Things are worsening. We’re letting people go.”
In some cases, they put an overly optimistic spin on that communication: “Things are great! Things are still great! Things are awful. We’re…