Important advice for startups: Layoff but don’t put off your talent

Over the past six months, several startups have been on laying off spree with a strong push from investors to reduce burn rates and show business results.

There is a clear demand for business models to evolve, to be more profitable, and to adapt to fast changing and ever demanding customer expectations. This, combined with the pace of technological advancements, has made it critical for companies to systematically build their organization’s capability by changing rotting codes, periodic review of market strategies, scaling hiring and ensuring right staffing.

In the eye of the storm


Often, startup founders have stressed upon the need and importance to have the right people. In the midst of fierce war for talent, startups are competing with large technology companies for literally same pool of human capital. While large corporates hire based on meritocracy and qualifications, startups are on a look out for talent, who along with merit possess qualities such as managing ambiguity, agility, spontaneity and innovation. Given the constant tussle between hiring talent that is aligned to organizational culture versus talent that is more meritorious in existing structures, the demand has surely outstripped the supply.

Even the best talent in the existing market might not prove to be the right fit for the startup culture. Therefore, the need to always know how potential employees are likely to respond in ambiguous situations will help startups get better insights on potential talent, especially at senior levels.

The Art of Pausing


To refrain from creating an identity that is synonymous with firing, startups must pause and reflect on developing a recruiting culture that enables them to hire the right talent for the right role. Startups must focus on the opportunities and work experience that it offers to create a strong employer brand. In addition, also state clearly and upfront what it takes to work in a setup. Such an approach would anchor hiring of talent that is best fit for the organization.

Establish a Cadence

The mantra for success lies in developing a cadence, where founders need to put on their thinking hats and craft innovative hiring techniques to anchor the next evolution of HR as a true business partner. A way for startup organizations to build is by providing ample learning opportunities. Founders must put extra emphasis on creating and justifying the employee promise, by not only giving the opportunity to grow vertically, but also laterally across the organization.


At the same time, startups must deploy mechanisms that reward superior contributions and capability suitably. Performance management systems must be developed to answer and equally emphasize on the question of “how” and not only “how much?”

Plan the Exit

Despite all this there will be situations when organizations need to take the tough call of asking someone to leave. There must be a defined exit strategy put into place before it is done. Lest it leads to a situation similar to the one that occurred recently at a startup office, when angry employees resorted to arm-twisting strategies against the founders for not paying their severance packages. Even if the much dreaded route needs to be taken, organizations must be sensitive enough to give a prior notice to its employees and resort to monetary compensations and any other assistance that fits the bill.


The bottom line being –startups must create a diligent recruiting culture and sustain it by innovating on all stages of the employee cycle.

(The article is authored by Nitin Sethi, Partner, Aon Hewitt and Aakriti Ahuja, Associate Consultant, Aon Hewitt)

(Image: Thinkstock)