Handing Out The Pink Slip: How To Do It The Right Way

When American mortgage company Better announced their layoffs, there was a huge media uproar about the way they carried out the entire debacle. Subsequently, stories from disgruntled employees also started making rounds on the internet. On the other hand, in the case of layoffs by Indian edtech giant Vedantu, there was comparatively less anguish and criticism from the press.

- Akshit Pushkarna

From last year to date, the investment and hiring scenarios across various startups globally has undergone a sea change. While last year, we saw ample funding being poured into startups and many were aggressive in their approach to hiring (including lucrative deals like keys to luxury bikes were doled out on the offer table to the new joinees), the picture today is stark opposite with companies letting go a large part of their workforce in order to survive 'funding winter'.

According to Amit Ratanpal, Founder, BLinC Invest, it's a direct result of startups being unable to follow the anticipated growth strategy that they had in place in 2021. This is a reason why the overall funding scale has changed and the number of investment deals have gone down. I saw companies raising $20-30 million at seed stage with nothing ready to back that investment up. Is this sustainable? Definitely not. This euphoria will come down now, as more investors would be looking at realistic numbers for good quality sustainable business, he said.

So far, over 10,000 employees in various startups have lost their jobs. And investors foresee more layoffs in startups in the time to come, until the funding freeze hits rock bottom and things return to normalcy.

But the big question is: Why has the reception of the layoffs been different across companies? Is there any right way to downsize? Entrepreneur India reached to people in the industry for answers. Here's a look at some ways to do it correctly.

COMMUNICATE IN ADVANCE

There is no doubt that communicating layoffs to employees is hard. But if done in an appropriate and timely manner, it can help save companies from a lot of criticism.

Amit Chincholikar, Global CHRO, Tata Consumer Products, believes what went south for startups was the lack of proper communication to the employees.