10 steps to respectfully handle layoffs

Nolan Church Contributor

Nolan Church is the co-founder and CEO of Continuum. He was previously Human Resources Director at Carta and Talent Manager at DoorDash.

In an economic climate like this, layoffs are a necessary evil. But what most founders don't realize is that it's about more than just maximizing efficiency: it's about treating people with respect.

Layoffs are terrible, but they don't have to destroy a company's culture or reputation. If handled correctly (like the one we organized at Carta in 2020), layoffs can improve your reputation and morale. You need to optimize for humanity, not just efficiency.

Here are 10 steps to conduct humane terminations:

Update your financial model

What is your current multiple burn? What do you think revenue should look like? Make a conservative estimate and set up a reserve in case economic conditions deteriorate over the next six to nine months.

Determine the length of track you need. The delta between where you are and what you need is the amount you will need to cut.

The more the CEO takes ownership of the situation, the faster the company will recover.

Refine your focus

Now is not the time to spin multiple plates. Focus your business on one or two things that matter most and eliminate all non-essential projects.

Reduce all non-staff expenses

Yes, about 80% of a company's budget is focused on people. But before you start downsizing, reduce your non-staff operating expenses as much as possible. What contracts can you kill? Where else do you have frivolous expenses? Every dollar saved is a dollar that could be invested in your team.

cut once

And include your best people. Another thing Better did poorly was multiple rounds of layoffs (three in five months, to be exact). A string of layoffs hurts; more than one trick devastates company morale.