Layoffs Taught Me To Never Make 3 Powerful Leadership Mistakes
Leadership is like chess. Wrong moves can limit future flexibility
I once met a very passionate entrepreneur. She loved what she was doing and her business had the potential to help society. But I was not too hopeful about the venture.
It had too many employees. The organization didn’t have any substantial revenue yet. But they were constantly hiring. I am sure she meant well for the employees. She wanted to create jobs and make the work-family bigger. But I was uncomfortable with this approach.
I was right with my intuition. Within months, the company had to fire a large number of employees, send some on leave without pay, and delayed salary payment for the rest. Eventually, good employees found opportunities elsewhere. After a few months, the revenue became enough to support the organization. The remaining employees started getting their dues. Things started to look stable. And guess what, the organization started hiring again!
Jeff Bezos rightly said,
“If you can’t feed a team with two pizzas, it’s too large.”
Jason Fried, founder of 37signals also echoes that sentiment —
“There’s nothing wrong with staying small. You can do big things with a small team.”
I was once told to let go of an employee in my department. I fought with HR and managed to keep her. It was a very uncomfortable process. I am glad I could reverse the decision but it’s not always possible to do that. That experience thoroughly disturbed me.
I don’t understand why organizations hire if they can’t provide stability to their employees. Most employees will gladly dedicate their lives to a company if it values them and provides stability. Employers must be more careful with this trust. I am all for creating jobs if it means sustainable employment. Otherwise, it’s better to stay small and give existing employees a career roadmap. It often means more work for individuals but ensures a better future for all of them.
Lesson 1: Don’t hire if you can’t afford to keep them
Does that mean we shouldn’t hire? A team is almost always better than an individual. Reid Hoffman, Linkedin co-founder said —
“No matter how brilliant your mind or strategy, if you’re playing a solo game, you’ll always lose out to a team.”
I think the key reason behind the overhiring was not understanding how many people are needed to do a job effectively. I have never seen seasoned leaders, who rose from the ground up, make this mistake. From their hands-on experience, they know what kind of effort is required and can design teams accordingly. If they don’t have enough information, they are often pragmatic enough to outsource such decisions.
That’s why large companies often have Management Trainee programs that take young individuals through different functions. The trainees get a brief idea about most departments and can do their jobs better.
Lesson 2: Do the work yourself to understand what kind of effort & team is required
I don’t know if you’ll agree but I firmly believe the key to good leadership is listening. That becomes even more important when a team goes through a layoff. There’s panic, dissatisfaction, demotivation, and overall discord that affect the team. It’s important to listen to all team members together, individually, and make them feel heard.
It’s better to take their grievances to the leadership team to get concrete answers. At the time of panic, a sense of calm and assurance must be provided.
Lesson 3: Listen to your team members, make them feel heard, and provide answers
Having said all that, I hope I never have to be in a position to bid farewell to a colleague again.
Final thoughts
It’s important to plan properly so that you don’t have to do layoffs. A way to avoid that would be to have hands-on experience of the work or hire seasoned professionals to lead the teams. That’d help you maintain an optimum headcount. In case you have to do a layoff, you must take time out to talk to the team and individually have a chat with your team members.
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