Ex DoorDash head of talent on how to do a layoff humanely

The world is on the brink of a recession. Inflation is sky-high across the world – it has now exceeded 10% in the UK – and individuals are struggling with a cost of living crisis.

Unfortunately, businesses are also facing issues with making ends meet and are starting to implement hiring freezes and layoffs.

While no industry is immune from global economic shocks, one sector that is being affected particularly badly is technology; this is proved by the fact that an aggregator called layoffs.fyi has cropped up purely to track tech job cuts. There have been 71,000 jobs lost globally in tech in 2022 and the latest examples of companies doing layoffs are Peloton, Calm, Apple, Wix and Soundcloud.

There are few reasons for tech’s challenges. The main reason is that many tech companies have been overvalued in the past, and investors are starting to change their expectations.

“The goalposts have moved. For all of 2021, and even going back to probably mid-2020, all investors cared about was that a company was growing at all costs,” Nolan Church, co-founder and CEO of HR tech company Continuum, tells UNLEASH.

Church, who was previously CPO at Carta and head of talent at DoorDash, continues: “Now…investors have pulled back on that sentiment and they care more about profit, especially in the market downturn.

But “when you’re an early stage tech company, profitability is entirely different” from growth. And they are struggling to attract funding because they aren’t profitable, and their “valuation was really high last year”.

A looming recession and high inflation is causing problems because growing tech companies are “valued based on expected future earnings. When interest rates go up, future earnings are worth less to investors”.

Ultimately, Church comments, this “macroeconomic environment shift” where startups struggle to access the cash they need to grow, pushes them to “cut costs and run leaner” – and the most effective way to do this is with layoffs.

Church leans into his HR experience and adds that up to “80% of a company’s operating expenses are talent”, so “that’s the biggest leverageable”. “You can try anything else, but if just isn’t going to matter”.

Tips for doing a layoff

In this context of a recession and layoffs, UNLEASH was keen to get Church to share his experiences, and the lessons he learnt when he had to oversee Carta’s decision to cut 160 jobs (16%) in 2020.

While it is always unfortunate when companies in any sector (not just tech) have to resort to layoffs, there are ways to do it that are fairer and more humane.

Church shares that the first thing to do is to “plan for the worst case scenario”. “I am a big believer in planning for the worst, and hoping for the best”.

And then leadership needs to transparently communicate that job cuts are under consideration.

Church shares that working with a good CEO is essential here; “what Henry [Ward] at Carta did was he told the company about six to eight weeks before the layoffs happened [that] all options were on the table, and the reasons why”.

Of course, this can create panic in an organization – “but there are only two ways to go about it: surprise everybody, or tell people in advance and treat them like adults. And I think [the second] is the best way”.

Ultimately, it is about ensuring you, as leaders, “treat others how you would like to be treated” – that’s the “golden rule”, according to Church.

In this respect, the main lesson is, frankly, just not to do what Better.com did.

“A mass firing is not the way to go about things. It is really important that the CEO takes full responsibility for what’s happening”, notes Church.

Instead, every employee impacted by the layoff should have a private meeting with their manager, and a HR representative. “A mass firing shows you don’t care [about your employees], you’re just treating them as cattle, putting them in a herd and getting them out of the building”.

Nolan Church with his Continuum co-founder Greg White.

Church adds that “it’s critical to be as generous as possible with the severance package”.

We’re seeing some companies being really awful on packages and only giving one or two weeks” – for instance, Apple just offered two weeks of pay and benefits for the 100 contract recruiters it laid off last week. This means they only have two weeks of pay “to figure out what their next move is”.

“At Carta,…[we were lucky to be in] the position to give people three months of severance. I know not every company can do that, but I do think the bare minimum should be four to six weeks”, continues Church.

Ask for expert help

One common oversight when employers are cutting jobs, according to Church, is forgetting to loop in legal and HR. “Oftentimes I see companies moving really fast, so they forget to loop in legal – and they forget to loop in the experienced HR professional who has done this before”.

But if companies that lack experience from legal and HR, “you will make mistakes, which will have lasting ramifications [for] the company”.

One issue, however, is that sometimes companies have no-one in house who have overseen a layoff before. In this instance, leaders often rely on their network.

“They might call a couple of friends, and do a free 30 minute call, but, I can tell you right out, 30 minutes is not enough time to get a crash course on how to do a layoff”.

This is why Church leveraged his experience (particularly the challenges) as a HR leader to create Continuum, an online marketplace of executives.

“Every company, by definition, has local knowledge. Whether you’re Amazon with three million employees, or Continuum with 15 employees, by definition, we don’t know everything in the world” – and, particularly in times of strife, like a layoff, it is crucial to tap into external expertise.

So when companies need help, they come to Continuum “and we match them to executive that have solved these problems before…within 48 hours”.

“You can see it as an on-demand executive who can roll up their sleeves to help you get things done”.

The employer doing the layoff gets a free hour call with the experienced executive, “who tells them best practices, and they build a relationship”.

Then the company can decide if they want to pay for additional support from that executive to help them manage the whole layoff – including how to communicate with workers.

Continuum’s platform can also help companies ensure their layoff doesn’t impact diversity, equity and inclusion at the company.

“Companies typically move really fast, [so] oftentimes when they are designing layoffs, biases can be applied, so it is critical to look at where the numbers are today, and what they will be post layoff, and make sure those biases get checked during the process”.

Investing in tech during a layoff

Given that layoffs are essentially a cost cutting exercise, UNLEASH was keen to hear from Church about how employers can justify spending money on tech like Continuum to do it.

Church is very clear that Continuum is “not trying to profiteer off those layoffs. What we’re trying to do is to get companies the help they need so they can treat people humanely”.

Ultimately, by using tech like Continuum’s, employees may have a better layoff experience, including receiving a better package, than if their company had gone ahead without seeking external help.

“If you are running layoff events, and you have no experience [in-house], then you will make mistakes. The reputational impact of making a mistake during an event like this can be drastic, as we’ve seen with Better.com.”

Church continues that it is important to remember that Continuum’s service costs $10-20,000 (depending on the size of the company), “but if you think what you’re going to save by laying off [say] 20% of the workforce, it is a fraction of the cost, probably less than 0.25% of what you’re going to save”.

Of course, Continuum’s tech is not only about helping companies better manage layoffs, it wants to be “the opportunity marketplace for executives”, and solve the problems Church sees in executive recruitment.

Church’s ambition for Continuum is to “remote executive recruiters and their biases from the process”, thereby democratizing access to opportunities for all executives.

To help, Continuum has recently closed a $12 million Series A from Pelion Ventures, as well as angel investors like Superhuman founder Vivek Sodera and Divvy CEO Blake Murray. This comes just a year after its seed round in March 2021.

Church concludes that it is “bizarre in 2022, when we live in a world of software, that as it relates to executives finding roles, it is [an] entirely manual and human driven process”.

It’s time for that to change, not just for the good of executives, but also companies who need to find the right senior talent to thrive.

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