Laying off employees, it seems, is a particularly difficult skill for CEOs to grasp. Especially at startups. I get that they are sometimes unavoidable (layoffs, not CEOs), but there is a certain way to handle things that seems to be beyond the regular playbook for a lot of leaders.
The latest example is Klarna, the buy now, pay later company based in Sweden, which laid off 10 percent of its 7,000 employees--many of whom had been hired since the beginning of the year. CEO Sebastian Siemiatkowski gathered employees on a mandatory call on Monday, where he played them a prerecorded video letting them know there would be layoffs. Then, employees had to wait--some up to 48 hours--before getting an email letting them know whether their job was safe. Yikes.
"Colleagues and friends who are impacted will receive an invite to a conversation within the next few days," Siemiatkowski wrote in an email to staff that was published on the company's blog. "The invite will be titled 'Meeting regarding your role at Klarna.' In this meeting, you will be provided with further information about the next steps."
Maybe it's that a lot of startup CEOs haven't been laid off before, so they have no reference for what the experience is like on the receiving end? I don't know if that's true, but I have to wonder. I guess it's not something they teach you wherever it is you learn how to start a company from nothing and grow it into something people think is worth billions of dollars. It's hard.
I get it. If you're laying people off, things are not good. It usually means that the company is doing poorly financially, or you wouldn't be trying to eliminate what is often a company's largest cost--its employees.
You're also probably under a lot of stress, which makes it even harder to handle anything well. It's never easy to lay off 10 percent of your employees. Still, there's something about it that seems particularly hard for a lot of CEOs to grasp.
It's becoming an unfortunate trend. For example, you might remember--back in December--when Vishal Garg, the CEO of Better.com, fired 900 people on a Zoom call and then blamed those let go for being lazy and stealing from the company. It's as if the pressure of leading a fast-growing startup makes people forget how to interact with people, especially when they have to deliver bad news.
In Klarna's case, it gets even worse. After receiving pushback for the way he handled it, Siemiatkowski lashed out, suggesting it was "unfair and uneducated." Then he shared on LinkedIn the names of more than 500 of the employees who had been let go. To be fair, those employees had agreed to have their name added to the list, put together by a current employee at Klarna, but that doesn't mean they're super excited about having it shared publicly by their former boss.
I'm not going to pretend like I have some secret formula for letting people go that won't hurt anyone's feelings. However, I think there are a few common-sense principles that will at least let everyone walk away with their integrity.
Have a Plan
One of the biggest criticisms of Klarna is how the entire thing seemed completely chaotic. Telling your company that you're letting 700 people go, and letting that hang over them for two days is both unnecessary and unfair.
"Considering the complexity ... it disappoints and I must say I would have expected a better climate where 48 hours is an acceptable time limit to have that conversation internally," said Siemiatkowski. Except, the only disappointing thing is that a CEO thinks letting employees wonder about their job for two days is "acceptable."
There's no reason to make people wait for that long. If you're making an announcement, you should be ready to let people know immediately--preferably with an in-person conversation with their manager. That should happen within a few hours. Where it can't happen in person, we've gotten pretty good at Zoom over the past few years. That's the least you can do.
Laying off 10 percent of your company should not come as a surprise to your employees. I don't mean you have to share every detail of the business, but you owe it to the people who work for you to be honest with them. If your team is shocked that it has come to this, you've done a pretty poor job of being transparent with them about the state of the business.
One of the biggest reasons is that if you lay off 10 percent of your team, that means that 90 percent are sticking around. The last thing you want is for them to worry about their jobs. Trust is your most valuable asset, and you earn it by being honest and transparent.
Don't Be Defensive
Finally, try to remember that you're not the person getting let go. You're keeping your job, so you don't get to be defensive when people are upset with the way you handle layoffs.
And even if you are the best person to ever lay off an employee, you're still telling someone they no longer have a paycheck, which doesn't usually bring out warm and friendly reactions. There's a decent chance you're going to get some pushback.
When that happens, do them--and yourself--a favor and be gracious. It doesn't cost you anything, and it won't make them feel better, but at a minimum, you should try not to do anything more to make them feel worse.