Three Lessons for Painful Staff Reductions

I am not talking about poor performers here. Good leaders know that poor performers drag down team results and team morale. You have to move them out or your team will fail – it’s as simple as that.  What I am talking about is the RIF – the Reduction In Force – when a company has to cut its expenses, and since the largest expense in most companies are related to people, it’s the people who get cut.

While I’ve had a number of challenging RIFs, perhaps the worst was when I had to let go 50% of our staff in a foreign office. Everyone knew why I was there, and they filed into a conference room, one after the other, where I told them if their job was being eliminated, or they were being kept on (with twice the work). It was a bad time in the technology industry, and it brings me pain to reflect upon it.

Why bring this up now? Happy times, in general, are here again in the technology sectors. Why broach this topic now?

Two reasons: First, I have lived through two particularly painful bust cycles and am cognizant that we’ll face another one, so best to be prepared; and second, I was moved by this video, which is truthful and illuminating for leaders.

Here’s what I’ve learned about RIFs:

• Never – under any circumstances – tell the employee how hard this is for you. This is not about your pain. This is not about you. It is about them.
• Unlike Kevin Ryan in the video I linked to, try to make the RIF a one-time event. If you have to do other rounds later, you create a siege mentality in the company and progress is frozen.
• If you raise a lot of capital, and expand your headcount in anticipation of a big market, you’re playing with fire. Most RIFs are preceded by inadvisable expansions.

Some leaders think they’re great leaders when the company is making its numbers and revenue is growing.

But they’re wrong.

You’re only a great leader when you hang in there during the tough times, and lead your team through heartbreak.