You may have heard of the fintech company Klarna, whose CEO recently played a pre-recorded video at an all-staff meeting to tell his employees that many of them would be laid off. The company then made them wait up to two days, in agonizing suspense, to find out if they were the ones who were axed. Delivering the bad news with a robot-like script, Klarna’s HR executives ended up firing around 700 workers – ten percent of its workforce – via video call. The calls lasted 2-3 minutes and no questions were allowed. Oh.
Or, how about Better.com, a tech mortgage company whose CEO fired hundreds of employees in a single Zoom call — and then decided to kick them while they were down, accusing them of “stealing ” from the company not being productive enough. . A few months later, in a second round of layoffs, the company accidentally sent severance checks to soon-to-be-terminated workers. The problem: they still hadn’t been told they were fired.
Download stories like this seem to be everywhere these days, as the tech industry grapples with strained valuations, tighter venture capital and an economic slowdown. Big names like Tesla, Microsoft, Netflix, Coinbase, Lyft and Twitter are laying off workers. Meta – or Facebook – recently signaled its readiness for layoffs. “If a direct report is weak or underperforming, they’re not what we need; they’re failing this company,” a company executive told managers in a leaked memo. Low performers at Facebook may soon find themselves on the unemployment line.
Smaller tech companies, which are struggling to raise money and attract investors, are getting hit even harder than the big dogs. According to layoffs.fyi, which tracks terminations, 387 startups laid off more than 56,000 employees in 2022.
But there is at least one startup that is thriving in the market turmoil. And it’s kind of a perfect metaphor for the current state of technology. The company is called Continuum, and it’s cashing in on layoffpalooza.
“We weren’t thinking about making a product out of work when we were starting the company,” says Nolan Church, CEO of Continuum. But now, if you’re a startup that wants to lay off workers, this new startup can help you with that. And it just convinced a group of venture capital firms to take on over $12 million in new funding, which is pretty impressive in the current market environment.
Continuation of Vacation Time
Church describes Continuum as a “job market for partial executives.” What are “partial drivers”, you ask? This is a technique for part-time consultants. The company, which Church co-founded in August 2020, aims to connect startups with seasoned executives who work a few hours here and there offering advice. His point: why spend millions recruiting and hiring full-time executives when you can only spend thousands hiring them part-time?
Continuum is basically TaskRabbit, but for high-paying executives. While with TaskRabbit, you can hire gig workers to assemble furniture or renovate your home, with Continuum, you can hire gig managers to consult on your business — including, now, how to fire workers at more calm, strategic and “human” way.
“What ended up happening was around March and April of this year, we had three or four clients who were already engaged with executives, using those executives for layoff advice,” Church explains of the company’s recent move. him to focus on layoffs. “Then we started to see companies coming in, asking for more layoff advice.”
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Continuum charges a flat fee for employment counseling services and the fee scales with the number of employees. For companies with up to 100 employees, it costs $10,000. For those with 100 to 250 employees, it costs $15,000. And for those with 250 to 500 employees, it costs $20,000. If a company has more than 500 employees, Continuum’s layoff services may cost more.
For this fee, Continuum offers ten hours of consulting from “elite executive advisors,” a plan to communicate layoffs to employees and the wider world, and an analysis to help with diversity, equity and inclusion goals. They launched their line of abbreviated products earlier this month and, Church says, they’ve already had twelve potential customers in addition to the existing six.
It may be in a company’s self-interest to handle layoffs with tact and compassion. “If the company is lucky enough to survive, people will remember how they were treated during this time,” says Church. “And if they’re treated badly, that will have an effect on your employer brand.”
Seeing how they fired or mistreated employees in the past, valuable workers may think twice about working for companies like Klarna or Better.com in the future. Additionally, the morale of a company’s remaining employees obviously matters. If some workers are treated like garbage, it can hurt overall performance and loyalty.
The Church recommends that companies be kind to the workers they let go and offer them at least four weeks of severance pay. He advises companies to cut once and cut deep to try to prevent a point, point, point of agony in the company. And he says companies need to think strategically about their remaining workers, including “acquiring” their top performers, either with cash or equity. “You want to make sure they’re there to help you get through this moment,” says Church.
With the new launch of their abbreviated product line, a cynic might accuse Continuum of shameless opportunism, profiting from the misery of others. But Church sees tremendous value in the services his company provides. He responds to this potential criticism: “I would say I have some empathy for founders and early HR people who have never done this before and want to do it the right way.”
Of course, we must also have some sensitivity for the workers themselves. Economic research finds that those who are laid off have higher mortality rates and potentially a lifetime of lower income. Church says one of its partners, a company called Dover, offers a website called “One Soft Landing” that tries to help out-of-work tech workers find new jobs. But, he admits, “there’s a gap in the market to help these people and, frankly, I wish there was more we could do.”
Being laid off tends to be more damaging to workers than losing a job due to a business closing, research finds, because a layoff serves as an ominous signal to future employers. In a world of imperfect information, employers look for cues to assess the worth of potential recruits, and a past layoff can brand workers as unproductive, lazy, or untrustworthy. Call it the red cover letter.
