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Tag: How to manage layoffs

  • Read Wayfair CEO Niraj Shah's Email to Staff About Layoffs | Entrepreneur

    Read Wayfair CEO Niraj Shah's Email to Staff About Layoffs | Entrepreneur

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    This article originally appeared on Business Insider.

    Wayfair said on Friday that it was cutting 13% of its global workforce or about 1,650 workers.

    This came only weeks after CEO Niraj Shah sent a companywide email saying Wayfair was “back to winning” but also warning that staff should be careful with its money.

    In an email that announced the layoffs to staff on Friday morning, Shah said the action was needed for the company to have a “clean organizational model,” which he said would aid it over the long term.

    “I truly regret the impact this will have on you,” Shah told staff.

    North American staff would receive an email shortly letting them know whether their roles had been affected, while laid-off staff in Europe had already begun discussions with human resources about the next steps, Shah said.

    He added that affected workers were being given severance pay, though details of this weren’t included in the companywide email.

    Read the full email Shah sent to Wayfair staff below.

    Fellow Wayfairians,

    Today, I wanted to give you an update on Wayfair, where we sit, and the difficult steps we’re taking this morning to make us stronger. First, I want to be clear that there are many things at the company that are going well. We are consistently profitable; we have made meaningful progress to operate more efficiently and effectively; our suppliers see us winning; and most importantly our customers are leaning in and picking us over their other options, which means we’re gaining market share at a fast pace.

    All very good news but as leaders our job is to position the company both now and over the long term. Although we’ve taken important steps to get ourselves optimized to win and fit for the future, the reality is they have not gotten us to where we need to be, which is to have a clean organizational model that provides a healthy foundation to grow from. That’s why I pushed forward with an org design effort driven by some core organizational principles. As a result of this effort, I have made the difficult decision to further reduce our headcount today.

    In North America, all employees will receive an email shortly on whether or not your role is impacted. If it is, you’ll also receive details on next steps, including opportunities to connect live with your Talent partners. Teams in Europe have already begun these conversations.

    I want to say thank you to the 1,650 team members who will be leaving us today. You are all valued and talented individuals, and you have each made incredible contributions to Wayfair and our customers. We know you will land in great roles given your strong skills and expansive experience, but this is still sad for everyone. You have so much to be proud of, and I truly regret the impact this will have on you.

    Please know that we are offering severance to those who are impacted, and we will support them throughout this transition. We will also be providing access to employee assistance program resources and Wayfair Alumni networking support, as well as other benefits and resources.

    The natural question is to ask ‘Why?’ I think the reality is that we went overboard in hiring during a strong economic period and veered away from our core principles, and while we have come quite far back to them, we are not quite there. The best way to make sure everyone in the company can thrive and that we can do the most for our customers is to make sure that we make the right decision in terms of what our go-forward organization should look like. While our focus today is on our people, I want to spend some time explaining how we got here and the thinking we used to make these decisions.

    Looking back

    From 2002 – 2011 we did not have much money. That sometimes seemed limiting as our primary direct competitors in the US and UK spent significant amounts of money raised from top tier investors. But by being lean and focused we were forced to prioritize relentlessly. By 2014 we were publicly traded in the US, and a new tech boom was just starting.

    By 2016 we were growing fast and the allure of spending more to build infrastructure for growth became appealing. We (along with most tech companies) took advantage of easy access to money. One of the things I am proud that we did during this time was build our industry-leading logistics infrastructure. This was expensive, but it has given us a durable moat. From 2017-2019 we opened up hiring significantly, going after many things that looked like good opportunities. As a result, by late 2019, we were suffering from lack of focus. Too many good ideas led to too few getting done. We made the decision to fix this and reduced our team in Feb 2020 with the intent of getting back to our roots.

    Then, Covid hit us square on. Covid caused a dramatic surge in our business, and suddenly the newly leaned down team felt like a disadvantage. With annualized sales going from $9 billion to $18 billion almost overnight our desire to grow our team was rekindled.

    By mid 2022 it was clear we were in a bust period. It was also clear that we had gone overboard with corporate hiring during Covid. As everyone here knows, we’ve had two significant corporate restructurings since 2022 to try to right-size this. Each time we used our best judgment, identified the cost target we needed to hit, and believed we were resizing to the right point. These changes were difficult emotionally and have felt challenging for the business. What we found, however, was that after each reduction we have gotten more of our goals done faster.

    I believe we need to stay focused as a company on what committed small teams can accomplish. In many ways, having too many great people is worse than having too few. With too few, you get a lot done quickly, but you may not get everything done that you want. But having too many causes inefficiency, coordination costs, and investments in lower-return activities. That is what we have been experiencing and what we need to end.

    Returning to core organizational principles

    That is why we are committed to taking a different approach. We decided that we needed to start with a few basic principles of good organizational design, of how to build a high-performance company, one with the ability to get a lot done, and to flex over time – rather than a cost target – and take a bottoms-up approach. What is the right number of people a lean organization should allocate to each of the high-value things we want to do? At what level? We need senior leaders, but importantly we built the company by betting on junior people who are very bright but have less expertise. We need to get back to this. Likewise, we should only do high-value things because doing more past that creates drag that slows us down. This time the goal was to err on carrying a risk of too few over the risk of too many. And so we approached it with a strong bias to firmly put the last five years behind us.

    To do this we used a few basic principles:

    1. question/rightsize the quantum of work effort per activity area — decide what work we want to do and eliminate any work effort that is then deemed secondary or tertiary, after all we can always reexamine as the business evolves

    2. get efficient on levels & spans — what level/seniority is appropriate for what role, what span should each manager have in terms of breadth of activity and number of reports, etc.

    3. eliminate excess upleveling for ‘stakeholder management’ — senior people in one area with too much time then cause the next area to need senior people to meet with them, and this is circular

    4. Rightsize the ratio of engineering partner function teams to engineers — since any excess of partner roles (business, product, design, research, analytics) will not create better technology outcomes and rather will do the opposite

    By starting with these principles, as opposed to a cost target, we will get back to focused, fit and lean. And we will do this while remaining committed to our growth drivers, leaning into the handful of key things that truly matter for each. While the investment community will focus on the cost savings numbers today, the key thing for us to focus on is that a company cannot win over time unless it gets more done per dollar spent than its competitors. These steps position us to keep winning. And winning is what ultimately creates the most opportunity for everyone at Wayfair, and everyone who believes in Wayfair.

    To our team, I can only say thank you. We are learning as fast as we can, and we are working hard to make the right decision at each juncture, even when they are hard decisions.

    We are gaining forward momentum due to everyone’s dedicated efforts. Our toughest stretch is now behind us. And I think our best year is right in front of us. We will get together next week as a team to talk more about these changes and the road ahead.

    Thanks for your investment in Wayfair, and thank you to all of my past, current and future colleagues for joining in the journey.

    — Niraj

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    Grace Dean

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  • Why Unaddressed Grief is Hurting Your Company’s Bottom Line | Entrepreneur

    Why Unaddressed Grief is Hurting Your Company’s Bottom Line | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    It’s no mystery that continued major waves of layoffs in the tech industry are causing suffering for those who are being laid off. But a major elephant in the room is overlooked among remaining employees: grief. Ignoring the grief that the remaining workers are experiencing threatens to impact the remaining workers’ well-being and companies’ bottom lines negatively.

    More than 234,000 tech workers have been laid off this year. Major companies like Amazon, Spotify and Meta have cut tens of thousands of workers’ jobs this year, including Google’s recent round of layoffs this September. Obvious to most business analysts is that these large-scale layoffs create instability and inefficiencies within teams. What is less obvious, however, is that many remaining employees are dealing with grief around the loss of coworkers, work rhythms and stability amidst continued layoffs.

    Research demonstrates and experts have long warned that layoffs cause detrimental effects on both individual employee performance and corporate performance. Additionally, major layoffs can cause issues for companies in future employability because future candidates remember how companies handled economic uncertainty through massive layoffs.

    What is notably missing from the conversation around the current tech layoffs, however, is that many major companies are now facing a grief problem amidst their remaining workers. Failing to address this issue may make workers suffer and cost companies a lot of money through the loss of worker productivity, efficiency, and satisfaction.

    Related: What the Future Looks Like for Fresh Graduates in the Tech Industry

    The remaining employees at these companies are currently experiencing two major types of grief. The first is the actual grief of losing colleagues, work friends, team structure and dynamics, and often work schedule and range of responsibilities. Unfortunately, most companies and managers fail to acknowledge the psychological stress and grief their remaining employees might be experiencing after losing valuable team members.

    The second form of grief is anticipatory grief, which refers to grief around the potential of losing someone or something. Most remaining employees remain under constant stress of worrying about losing their jobs, another member of their team, and stability within their role.

    Because most of these layoffs are happening remotely, there is often an added layer of loneliness and isolation experienced by remaining employees. Remaining employees often lose meaningful social connections by being suddenly unable to reach their coworkers, many of whom they only had means of connecting via workplace channels. All this is happening against the backdrop of a loneliness epidemic in the U.S., as declared by the U.S. Surgeon General.

    Related: How to Combat the Growing Epidemic of Loneliness in the Workplace

    Following layoffs, remaining workers suffer. Prior research indicates that after a layoff, 74% of remaining employees report a decline in their productivity, 69% report the quality of their company’s product or service declines, 87% report being less likely to recommend their organization as a good organization to work for and 77% report making more errors and mistakes.

    Moreover, the most commonly reported feelings after a layoff are anger, anxiety and guilt. These are all common symptoms of grief. The post-layoff period is a fragile time within a company, one in which employers should provide adequate support and communication with their remaining workforce.

    Whether employees are experiencing grief, anticipatory grief or both, the best way for companies to support their workforce is to address the grief head-on through open, candid conversations. Grief research shows that avoiding conversations around loss only delays the healing process and worsens things.

    The translation for companies is that their employees will remain bitter, stressed and potentially angry about the situation if they do not feel seen or heard or their feelings remain unacknowledged. This, in turn, can reduce worker productivity and prevent new teams from forming positive and supportive team environments. Team dynamics are one of the biggest and best predictors of workplace efficiency, so ignoring this problem will be costly in the end, both in terms of well-being and productivity.

    Companies hold a lot of power to course correct during this unstable time. Prior research indicates that following layoffs, workers who feel their managers are visible, approachable and open are 70% less likely to report drops in productivity and 65% less likely to report a decline in their organization’s quality of work or service.

    Managers must communicate with team members through one-on-one conversations, allowing their direct reports to process their feelings. This open, candid and empathic communication can create space for a new and positive team dynamic to emerge.

    The best places for companies and managers to start are with key communication tactics that work in supporting those who are grieving and promoting resilience and growth:

    1. Acknowledge how remaining employees might be feeling
    2. Normalize experiencing feelings of guilt, anger, sadness, uncertainty, denial or regret following a major layoff
    3. Be candid about reasons for downsizing and layoffs
    4. Focus on the future and how employees can move forward with the company’s new vision
    5. Connect employees with their new teams in meaningful ways to create social cohesion

    Throughout the entire trajectory of layoffs, from announcing that they are coming to laying off individuals, companies should be mindful to keep their communications candid, consistent and transparent. Resources should be devoted to training managers and team leads in empathic communication. Designated spaces and meetings should be created for discussing the topic of layoffs. Employees should be given ample opportunities to ask questions.

    Avoidance is the enemy of good communication, whereas transparent, empathic, and person-centered communication can go a long way in creating trust, stability, and vision in an organization’s very unstable time of grief. This will, in turn, improve the company’s bottom line as well.

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    Megan Shen

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  • Layoffs Don’t Have To Be Inevitable If You Reevaluate Your Spending in These Areas | Entrepreneur

    Layoffs Don’t Have To Be Inevitable If You Reevaluate Your Spending in These Areas | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    The fact is, the global growth profile of 2023 is showing a downward trend. According to the IMF forecast, this year the economy will grow only 2.7%, compared to 3.2% in 2022.

    In fact, the projected data for advanced economies look even more discouraging, with the World Bank predicting 0.5% economic growth in the U.S. in 2023, which is almost 2% lower than the previous iterations. This leaves experts scratching their heads on whether we’re imminently running towards yet another big recession, or not just yet.

    Team cuts are imminent, aren’t they?

    Supposedly driven by the lingering downward economic spiral, thousands of businesses across various market verticals (mostly tech, media, finance and healthcare) announced huge staff cuts back in 2022, and this neverending firing streak continues.

    Here are just some of the most stunning numbers.

    In January 2023, Sundar Pichai, the CEO of Google and Alphabet, announced the company’s plans to lay off 12,000 team members. Disney is planning to cut back its workforce by at least 7,000 jobs. Amazon will be letting go of 18,000 employees. Goldman Sachs will say goodbye to over 3,000 employees, Philips will be cutting over 6,000 jobs worldwide, and news of mass layoffs just keep coming. Overall, over 125,000 people were already laid off in 2023 by the tech companies alone, per layoffs.fyi.

    However, is the global market slow-down actually the key factor, influencing the massive workforce cuts? While the need to cut spending may be the common ground, in a more nuanced context — not so much.

    Namely, a lot of the companies in the tech sector, like Peloton or Zoom are facing overstaffing challenges, fueled by their exponential growth dynamics during the Covid-19 pandemic, which has turned out virtually impossible to sustain upon its decline.

    Meanwhile, in the real sectors, like the automotive industry, some companies, like Jeep Cherokee explained their plant is idling amid rising electronic vehicle (EV) costs.

    Related: Layoffs Abound Across Industries — But These Major Companies Are Still Hiring

    But most surprisingly, some commenters presume many companies are just “following the herd” in their market niche. In plain words, their assumption is, while the widely-predicted recession forces businesses to tie their belts in one way or another, laying off employees is just their go-to solution, which is seemingly working for their competitors. As business professor Jeffrey Pfeffer told Stanford News, “They are doing it because other companies are doing it.”

    And the truth is, a massive workforce cut doesn’t actually save money in a short-term perspective (imagine the severance pay volumes), and can even flatten the business development in the case of mid-sized companies and small startups.

    How to cut spending without laying off your team

    In view of the tracked decline in economic activities, in some ways fueled by the lingering supply chain disruptions, and the sharp increase of inflation rates, cutting operational spending seems to be a reasonable idea. Not only can it remove extra pressure from business owners’ shoulders amid uncertain times, but also free up extra resources to fund the growth areas.

    And, as mentioned above, letting go of your team members is hardly the best choice (in case you’re not overstaffed, of course), so it’s crucial that you eliminate the latter risks from the equation right away.

    So, how do you determine that you’re overstaffed?

    Essentially speaking, you need to analyze the average manager’s span of control in your company, or in plain words, how many people are reporting to each of them. This number can be different depending on the type of firm or industry. Anyway, the common ground is that if it’s lower than 5-6, the organizational structure most likely has too many levels, with the average optimum management-to-employee ratio currently ranging from 1:15 to 1:20(25).

    Suppose, you don’t have apparent issues with the tall span of control, and the overstaffing risks are not your business case. Consider the following checklist for evaluating possibilities to lower the overall company’s spending without taking a toll on your business processes and cutting the team:

    SaaS spending

    Quite predictably, even small startups with limited funding usually use a bulk of paid SaaS solutions in their business routine (e.g. from a CRM and task management tools to a mere G Suite and accounting software).

    And while the importance of such tools is hardly questionable, their actual selection, as well as the pricing, sometimes is. What I’m saying is that even though the high-quality product does cost money, negotiating a discount happens to be a far more rarely utilized option than one might imagine, which is a huge miss.

    And if you’re paying for two similar management tools, with minor differences, perhaps, the use of a more advanced version of one of these instead will be actually cheaper, especially in the long run.

    Office space rent

    Even though the end of the acute period of the Covid-19 pandemic has stimulated many businesses to return to offices, chances are opting for a hybrid office may help reduce spending costs quite a lot.

    Let’s do some quick math. Imagine you had 10 people in the office on a permanent basis, and consider rearranging the office space to a commonly-used area, which can fit 5 people at a time. This will cut the desk space in half, as well as reduce the required office space for the communal areas (like kitchens, breakout rooms and meeting rooms) by at least 20%.

    Given that the average space per employee was estimated at 75 – 150 sq feet in the pre-pandemic times, as per JLL research (50% deskspace and 50% commonly used areas), the change of the office type from an offline to a hybrid one in the example herein can help to reduce the required office space by at least 200 sq feet.

    In plain money, this could potentially save you around $7,000 monthly in office rent in Seattle, for instance.

    Related: Looking for a New Office for Your Team in 2023? Here’s What to Take into Account.

    Human resources

    While keeping your optimal team as is will definitely help streamline operational processes, you might consider limiting the hiring process for new employees, potentially needed for your newly-developed business projects.

    That is, if you’re hoping to launch two new products in 2023, perhaps, a wise idea would be to select and prioritize the release of just one during a downturn, in order to spare financial resources. Another way to cut spending on human resources would be to readjust the rewards and recognition programs for employees, i.e. making them more tailored to particular business KPIs. In such a way you’ll be able to keep your team motivated, without overspending money on yearly bonuses across the board.

    Ultimately, it’s up to each business owner to make their decision on how to prioritize spending and whether to cut their staff, or not during a downturn, but navigating a company amid uncertain times usually requires a strong team, so why risk losing it, having invested time and resources into building it? That is the question.

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    Anton Liaskovskyi

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  • 5 Keys to Managing a Reshuffled Hybrid Team After Layoffs | Entrepreneur

    5 Keys to Managing a Reshuffled Hybrid Team After Layoffs | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    As a manager, leading a reshuffled hybrid team after layoffs can be a challenging task. The team dynamic has changed, and employees may be feeling uncertain, anxious or even resentful about the changes. This can affect their motivation and productivity, which can lead to decreased morale, lower job satisfaction and eventually, high turnover. It can be even more difficult when the layoffs happened in a less-than-empathetic manner, such as many prominent tech companies — Google, Twitter, Amazon, Meta, and others — recently laying off their employees by email.

    But with the right approach, managers can navigate this difficult situation and keep their teams motivated and productive. As an expert in hybrid workforce strategy, I helped team managers navigate through this stressful period, so as to minimize the natural decline of productivity, morale, and engagement that accompanies any layoff and team reshuffling.

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    Gleb Tsipursky

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