If You Have to Reduce Payroll, Be Decisive
Unfortunately for tech companies like ours, cutting burn rate usually means cutting payroll. This is deeply personal and painful anytime; even more so given the current world health crisis.
Please remember that, if you must take this brutal step, you are doing it to save the company. So you must act decisively enough to make a difference. Here’s the typical scenario we want to avoid:
My team is all great. I am going to layoff the bottom 10% of performers on April 1 with 4 weeks severance.
What’s wrong with this? You still have all of the cultural and personal pain of a layoff, but with very little upside because: (a) those 10% of staff are usually only 6% of payroll and (b) we actually increased April burn with the severance.