Employee Layoffs
When the COVID-19 lockdown began, my business saw a 70% drop. I had to make the difficult decision to hold staff salaries by 50% for two months, not drawing any salary for self till my cash flow situation improved. Six Months later, I managed to give my employees their held-up salaries. The key to surviving that long was having a lean operations team and replacing manual work processes with automated processes as far as possible. Whenever my team needed to hire someone new, they only did it if customer service levels would suffer without the new hire; otherwise, they found other ways to maintain service levels without adding new personnel.
In 2016, I was part of a management team that had to lay off around 40% of our operations team across 30+ cities. Our top leadership realized that the business potential was not as great as expected at launch (which did lead to high valuations, though). Although I wasn’t part of the hiring team during the launch, I had to tell people to leave when the funding was not coming as per expected valuation. It was emotionally difficult for me and my team to do this to people who had quit their jobs in big cities to be closer to their families. We had to assure those who remained that their jobs were not at risk to ensure that ongoing business didn’t falter due to such concerns.
Now, as I notice the same layoff trend beginning in Indian startups, I hope that future startup founders don’t make the same mistake of hiring for growth expected two years down the line rather than what is expected in the coming three to six months. You may miss growth targets for a month or two due to a slight delay in hiring, but avoid laying off excess staff hired for growth that never materialised.