- When the economy goes bad,
or when you're looking at a much longer,
harder slog to get to the next round of funding,
layoffs are inevitable.
There's no easy way to rip off the bandaid.
And unfortunately,
reductions in force are happening
across every industry right now.
- We're a little too fast in some areas.
And so it requires reduction in the salaried workforce.
- So certainly I think we will hear about some layoffs.
- This is around a 5% reduction in headcount.
- Today I'm sitting down with Joseph Ifiegbu,
CEO of our portfolio company, Equitable.
Joseph happens to be one of the foremost experts
we know about people analytics
since he built the people analytics team at WeWork,
where they grew from 2,000 to 15,000 employees,
and then had to shrink back down to 5,000 again.
He's seen all the ups and downs,
and today we're going to learn his secrets.
If you're staring down a rift,
this video is for you.
Let's get started.
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Whether you're hiring or firing,
one of the things founders
and leaders underestimate is the role data plays
in doing it right.
At WeWork,
Joseph saw both the crazy rise and the crazy restructure.
It didn't stay up forever.
And that's where data was so valuable.
- We reported that the co-CEOs,
Artie Minson and Sebastian Gunningham,
have secured themselves multimillion
dollar severance packages at a time when the company
doesn't even have enough cash to pay severance
to its thousands of rank and file employees
that it plans to lay off.
- Joseph was that WeWork
when all of this started to come crashing down.
- So one day we are growing and everything is great
and we want an IPO and all of that stuff.
And almost overnight seemingly,
everything just changed, right?
There was a lot of shock
and a lot of just confusion in terms of, okay, well,
where do we go now as an organization?
And that's really where, at that point,
things decide to change, right?
All of a sudden, now we realize, oh,
we actually have to trim the employee base.
I will tell you,
that was one of the hardest things to see
and to be in as just...
You built up for three years, and then now it takes what,
maybe six months to a year to just break it all down.
- When these moments happen,
it can literally feel like whiplash.
Unfortunately, we see this all the time
in hyper growth startups.
And this isn't a good thing because
when you have all you can eat Lego pieces,
whatever you want,
it doesn't always mean you build the best structure.
And when you have to get leaner, you have a problem.
How do you trim down
without having the whole thing fall down?
- You build a bunch of Legos and then,
maybe that's a product itself when you take that apart.
And that's fine, that doesn't really...
But you're dealing with people.
These people have lives, they have dreams,
they have families.
And so it became a thing where now we actually
realized the company, the leadership realized, hey,
we actually have overhired
in certain circumstances and we had to bring it down.
And that became like a whole journey in itself.
And that became a place where analytics,
people analytics was actually very important to help assist.
- After talking to Joseph, this much is obvious to me.
It takes data, whether you're building the structure
or trimming it down, to prepare for the next stage.
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So you've got to cut burn.
And I know we started this with the idea of layoffs,
but what if you didn't have to do it?
If you have the right data in front of you,
you can actually get your outcome without
even laying anyone off.
Consider resetting the pay scale first.
- It's pay.
That was one of the first things.
So during the hiring process,
when we're hiring and growing, we wanted to be competitive.
A lot of times companies are saying hey,
we will pay out of 75th percent outlook, 90th percentile.
And then all of a sudden you're in a place where,
okay, we need to lay off.
And then you're just like, oh, this person's overpaid,
this person's just like, you're just laying off people.
It's like, no.
I mean, we hear about all the lavish bonuses
that companies...
Hey, you did great this year and here's $200,000.
I say, okay, well, here's what we are as a company.
Here's where we need to go.
We need to realign.
And so those lavish bonuses
in times of surplus are fantastic.
You want to give to retain,
but in times of need like you need to reduce,
you go and have those conversations and say,
no, look, we can't give X amount.
We can't give you 20% of your salary in bonuses anymore.
- Cutting pay might be hard,
but it becomes impossible without the right HR analytics,
the right people analytics.
But if you can do it,
you might be able to get through this crunch
without losing anyone on your team.
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Joseph is such an expert, I had to ask him,
what's the number one worst thing
you could get wrong in a reduction in force?
Here's his answer.
- So in a layoff,
a lot of times people are like, hey,
let's do this piecemeal or we'll do this team this week
and we'll do this other team next week
and we'll do this other team the week after.
And that is one of the worst ways.
I mean, that is actually the worst way to do layoffs.
- So don't do it piecemeal.
You have to be much more thoughtful.
- Thoughtful and intentional, do it all at once.
The same way when you are hiring,
you have a set of points,
a set of metrics that you use to measure people
that come in, okay, well,
you have the technical interview, you have the behavior,
you have all those things.
You have a yard stick by which you measure each candidate
that comes into the door.
Once you've aligned,
and so here are the things that we're really used to,
determine what teams, what people you want to lay off.
Then make sure you're communicating that appropriately.
And then you're making a decision
immediately, like once.
Because if you don't do that,
then what that ends up happening is
you create this place,
you create this ecosystem and this culture
where there's no psychological safety.
Everyone is like, am I next?
- Measure twice, but cut once.
It sounds simple, but this mistake happens all the time.
Don't let that happen to your org.
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If you are a founder facing a difficult decision
and you want to know what stats
to look at when you're building your fortress
and how to navigate layoffs the right way,
Joseph actually has a new ebook
called "Data Driven Layoffs",
and it's available for free right now
- This stemmed from my experiences,
WeWork and just working with other companies as well.
And we go through some of the steps, the best tips,
the steps that you can take in terms of
if you're going to actually get to a point of laying off,
what to do, some of the best practices,
some of the things not to do.
We have seen things where people sit and just say hey,
it's 800 people over Zoom, you all are gone.
Don't do that.
Like those kind of things, right?
And so yeah,
we hope that companies can take this and it helps them.
- The link is in the description,
or you can go to eqtble.com right now
to get your ebook
to learn all about what you need
to have the tools to do a RIF write.
I know this isn't for everyone.
And Lord knows this is the least fun part
about trying to build something of great value.
Reductions in force are sometimes inevitable,
but you can do it right and you can do it with data.
Thanks again for watching all the way to the end,
and I'll catch you next week.
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