I’ve Led Companies Through Two Recessions. Here’s How to Lay Off Humanely.
Advice from someone who, unfortunately, has some battle scars on this topic
The second week of October in 2008 was one of the most painful and emotional times of my career. We ushered 50 Zillow employees into an off-site conference room. I was COO then, and we were about to lay them off — one-quarter of our staff. The Great Recession had hit, and the management team was following our gut and also the advice of our investors at Benchmark Capital and TCV: cut early and cut deep. Extend the runway. Conserve cash. Survive. I knew we had to make a hard decision to ensure Zillow would continue to thrive.
It’s a scenario CEOs around the world dread but one that is becoming more real as the economic toll from coronavirus spreads. Venture capital firms are again warning their companies to prepare for an extended recessionary period. Leadership teams at companies large and small across the globe are meeting to determine their next moves.
No matter the cause of the recession, the fundamentals of preparing a business for an extended economic downturn are the same — as are the fundamentals of compassionately handling layoffs.
I’ve led companies through two major recessions. The first was Hotwire after 9/11 in 2001. The second was Zillow in 2008 after the Global Financial Crisis. No matter the cause of the recession, the fundamentals of preparing a business for an extended economic downturn are the same — as are the fundamentals of compassionately handling layoffs.
I expect many companies will lay off between 10–20% of their staff in the coming weeks or months. Some furloughs have already been announced, but the real layoffs are still coming. Companies have been on hiring binges for the past 10 years, and many companies can manage to lay off 10% of employees without a significant impact. But that doesn’t mean these companies should lose sight of the very human toll reductions take, and handle layoffs sensitively and with care.
Here is some advice from someone who, unfortunately, has some battle scars on this topic: