My startup made difficult layoffs. Here’s how I kept morale up and our culture intact

As CEO and cofounder at a tech startup, I was confronted with how the pandemic would affect my own company and the people that make it work. And like so many other businesses, ours was not untouched. The decision to lay off staff to survive the first wave of the pandemic was the most difficult of my tenure at StreamSets. It came just days after celebrating news of a hard-earned accolade—a prestigious best workplaces award. To win an award that celebrates our business for putting culture first and to closely follow that with a reduction in force was jarring, but in coming to terms with the sudden new reality, I realized that to preserve the trajectory of the business over a multiyear time horizon, we needed to take decisive action.

Normally, when there are macroeconomic challenges, there is a historical precedent to use as a point of comparison to make educated predictions about the future. This pandemic has not allowed for the same perspective. The volatile supply chain also complicates informed decision-making, as does the human element—a workforce suddenly faced with varying challenges at home and the genuine fear of an uncontrolled virus.

Taking action while preserving the workplace requires a delicate balance between business viability and company morale. So, we took a keen eye to evolving our DNA in a way that would let us keep serving our customers, stay profitable, and preserve our core values that helped win that best workplaces nod.

Here were three guiding principles that got us through what still may be a first wave of the pandemic

Acknowledge limitations in what you know

For me, integrity means trust and disclosure: presenting the truth, but also acknowledging our limitations. This mindset came into play as I thought through the need to reduce our headcount.

We looked at every expense. We took every measure to reduce wherever possible. But in response to the COVID-19 macroeconomic crisis, I ultimately decided to conduct a reduction in force, so we could better control our own destiny. When faced with difficult decisions like this, the temptation is to wait and monitor, but avoiding tough decisions leads to inertia, and inertia in uncertain times leads to decline and could mean the ultimate failure of the business. 

Even though we analyzed many ‘what-ifs,’ as a leader, you can’t present that uncertainty to the company. There is an important line to walk between transparency and disclosure, and in moments like this, it is tempting to confuse the two. As a leader, you must present the truth to maintain people’s confidence and trust; however, what you choose to disclose requires acknowledging your limitations. 

We elected to create a task force, which we called “Outrigger,” and its purpose was to look at what was happening externally and have participants play devil’s advocate to each possible solution, bringing in as much of that information as possible. It was important to state what we knew and act based on that to preserve the trajectory of the business over a multiyear horizon. That said, we were also open about what we didn’t know, which was an uncomfortable way to ultimately make a decision, but people appreciated the honesty. We made room for our employees to buy in on how to solve the problem we were facing rather than just mandating the solution.

Keep your business viable

The ability to cultivate a workplace in which we have the opportunity to put culture first is based upon the viability of the business. Simply put, when all is said and done, cash is king. Investments are harder to come by now given the global circumstances of COVID-19, so we needed to focus on the customer.

When you think about customers, the viability of the business is so important; without it, you cannot serve them. In fact, this element of customer-centricity is one of the most important emerging areas of focus for businesses across any industry. For many of us, the earlier priority was to value customers while putting the majority of our focus on innovation and R&D. What the pandemic has taught us is that the shifting digital experience means being more in-tune with customer needs and less focused on developing projects that, while internally satisfying, may not immediately fit the needs of customers. This is not to say that innovating, developing, and refining critical projects should disappear, but rather to point out that, without customers, even the most innovative products are irrelevant.

In the end, we decided to keep customer support and customer success engineering intact to ensure the success of our existing customers. We also decided to put some future projects on hold, while continuing to maintain focus on our most important short-term and medium-term roadmap commitments. Then we had to make the painful decisions, some of which impacted long-time employees who had been integral to the company becoming what it is today. 

Look ahead at the big picture

By stepping back, we can look forward. Customer satisfaction was crucial to our ability to move ahead. With today’s subscription economy, we have an agreement with our customers that they get to choose whether they maintain their partnership with us; as a result, customer success is essential. By reducing R&D and laying off recent hires, we are giving up inefficient growth. Innovation was important when founding our company, and, while it is one of our values, it follows integrity. Nevertheless, this was a major change to make to our mindset and within our company DNA. It’s true that onboarding new hires is inefficient, but with the pandemic, we suddenly had to think about the hiring process in terms of streamlining efficiency rather than spurring growth. In this shift, we are taking on a more organic and natural approach to hiring—bringing on new talent only when it is needed. 

Looking ahead also had another meaning. It meant supporting our workforce even after they have left our workplace. Remaining StreamSets employees, after hearing the news of the staff reduction, immediately started to help those who had lost their jobs find new placements, proactively reaching out on their behalf, even in some cases to competitors. One former employee wrote to his colleague to let him know of his new job offer: “I just wanted to thank you for your referral. It really helped at a time when I wasn’t getting any calls.” 

What makes a company a “best place to work?” It has never been clearer that the workplace is not about perks or a building. We believe it is having a common mission and a shared sense of purpose. It is treating one another with integrity and respect. On the day of our reduction, it was clear that we were not just a workplace but a workforce. 

As we look forward to the new challenges that will confront us as this unprecedented pandemic continues to unfold, it will be important to consider how we can stay nimble, and continue to evolve.  The strength of our character is measured not in what happens to us, but in how we respond. I’m proud, inspired, and humbled by how my teams responded to the hard calls that we had to make.

Girish Pancha is the CEO and cofounder of StreamSets, a data management and integration company.