A Decent Layoff Announcement

Recently, I have seen many companies conducting layoffs. The process of layoffs is unpleasant and even inhumane. Previously, we were comrades, a company that proudly proclaimed its humanity. But now, due to circumstances, mismanagement by top-level decision-makers, and other reasons, the company finds itself in dire straits and kicks its employees to the curb without a second thought.

What was once touted as a humane company has now become anything but humane.

I recall an article I read in 2020 when the world was facing a severe pandemic, with companies closing down and unemployment rates skyrocketing. A company called Carta was also conducting layoffs, but its CEO showed me what a truly "humane company" looks like. They presented the facts, acknowledged the predicament, understood the perspectives of shareholders and employees, publicly disclosed the decision-making process, apologized, took responsibility, and provided dignified and comprehensive compensation to the departing employees...

Original article: Carta’s covid-19 layoff

Carta's Covid-19 Layoff#

Today, we announce a layoff of 161 employees at Carta. Below is what I shared with the company during our all-hands meeting this morning. I am sharing it here in the hope that it may help other CEOs consider their own layoff plans. If you are a CEO planning layoffs and need assistance, please feel free to reach out to me.

In the past few weeks, I have discussed the work we have been doing to plan for an economic downturn. I have also mentioned that layoffs were a possibility, but I have been delaying any decisions surrounding it as much as possible. Today, I can no longer postpone it.

Firstly, if my words sound emotionless or robotic, I apologize. This is how I cope. I have written a script and I am sticking to it. I have a lot to say, and I don't want to forget anything. And I am afraid that without something to rely on, I may not be able to get through it all.

The Facts#

Let me start with the details. Today, we will be laying off 161 Carta employees, which accounts for 16% of our company. This layoff is not uniform across the entire company, and different teams will be affected differently.

If you are one of the affected individuals, you will receive an invitation to meet with your manager or Trifecta leadership after this meeting. If you do not receive a meeting invitation by 10:30 AM Pacific Time, you will not be affected. If you are contacted, you will meet with your notifier who will guide you through the offboarding process.

Moral Dilemma#

A few weeks ago, I spoke at City Hall about the two perspectives when making layoff decisions. The first is from the shareholder's perspective, where reducing costs and preserving cash are paramount during an economic downturn. The second is from the employee's perspective, where nothing is more important than saving jobs and helping employees during an unprecedented unemployment rate since the Great Depression.

Both the shareholder and employee perspectives have clear and morally right visions, but they are diametrically opposed. This is the CEO's dilemma. CEOs sit between shareholders and employees, hoping to satisfy both.

Every CEO planning layoffs must grapple with this moral conflict. I chose to decide who (and how many) should leave from the shareholder's perspective and how to help those who leave from the employee's perspective to manage my conflict.

How We Decided How Many and Who to Lay Off#

Let me start with the shareholder's perspective. Once we simulated a slower growth rate for 2020, our focus shifted to reducing non-personnel-related expenses such as unnecessary software, AWS, travel, real estate costs, and so on. After deducting all expenses that can be cut from non-personnel costs, we turned our attention to personnel costs.

Based on the impact of the economic slowdown on different parts of the business, different teams were affected differently. If we anticipated having fewer customers than previously thought, many customer-facing functions such as sales, marketing, onboarding, and support needed to be reduced. As these departments scaled down, many teams supporting these departments, such as recruiting, HR, operations, and some parts of the development team, also had to be downsized. While the analysis started with customers, it quickly affected all parts of the organization. This reasoning holds up. We exist because our customers exist and allow us to serve them. And when our customers suffer, we suffer as well.

Once we calculated the headcount for each department that the business could support, we had to create a list of who should be part of the layoffs within these departments. The decision framework I provided to department leaders was as follows:

  1. First, include those whose roles or job functions will be eliminated in the new growth forecast.
  2. Second, include those who are part of performance improvement plans or likely to be included in performance improvement plans in the near future.
  3. Third, if the above two groups do not reduce the headcount enough for our budget, conduct an exercise of "if we had to let go of one more person, who would it be?" until the desired headcount is reached.

Most people fell into the first group. There were a few in the second group, and even fewer in the third group.

Once the list was created, it was sent to me for approval. It is important for all of you to know that I personally reviewed every list and every individual. If you are one of the affected individuals, it is because I made the decision. Your manager did not make that decision. For most of you, it is the opposite. Your managers fought to keep you, and I overruled their decisions. They are blameless. If today is your last day, there is only one person to blame, and that is me.

What Will Happen to the Affected Individuals#

For those who will be leaving Carta today, we have modified our Next Chapter plan. Here, we approach it from the employee's perspective.

Firstly, we will provide all departing employees with 3 months of the highest Next Chapter salary, regardless of their tenure. Finding a job in normal economic conditions is different from finding a job in this environment. People will need more time.

Secondly, we will cover your COBRA health insurance costs until the end of this year. We are still in the early stages of a global health crisis. Everyone needs healthcare. If you can join your spouse's health insurance, please do so. But if you do not have that option or if our health insurance is better than your other options, please continue with COBRA, and we will cover your premiums until December 31.

Thirdly, if you have been with us for less than a year, we will exclude you from the layoff list and extend your PTE to 1 year starting today. You joined Carta to build it and be a part of it. Every person affected today will become an owner of Carta.

Voluntary Departures#

This one-time modification to Next Chapter is more generous than our standard version. One of the core principles of Next Chapter is that departure compensation is the same and equitable, whether the departure is initiated by the company or the employee.

For this reason, we will be implementing the modified Next Chapter plan for cases of voluntary departures by employees until tomorrow. This means that if you wish to leave Carta and notify us by tomorrow morning, we will offer you the same package as the affected employees received today. After tomorrow, the standard Next Chapter plan will resume.

This has been a difficult decision for me. My instinct was not to offer it. A more generous package should only be offered to those who lose their jobs in a global crisis, to give them the job they want. But in the end, we decided that fulfilling our commitment to fairness and symmetry among employees was the right thing to do.

Today, we need to focus on handling all the involuntary departures. If you do not leave today but wish to leave tomorrow, please inform your HRBP by 9 AM Pacific Time tomorrow, and we will process your departure tomorrow.

Losing so many people today is heartbreaking. I hope we do not lose any more tomorrow.

Carta Alumni#

One of my biggest regrets is not building a Carta alumni network. My first job after graduating from college was at a company called Trilogy, which had a strong culture and an even stronger alumni program. In fact, after Trilogy, I found my next three jobs through the Trilogy alumni network. I wanted to create the same network for Carta, where Carta alumni could find each other and collaborate once again.

I have created a Slack channel, and you will all receive an invitation today. In this channel, we will post open positions at Carta for Carta alumni to apply to. I hope that as our business recovers, we will have the opportunity to rehire many of you. I also hope that former Carta employees at other companies will post job openings where they work. I hope the alumni can connect and start companies together that I can invest in. And I hope everyone stays in touch.

I will be active in this channel, just like our People team, to help all of you continue to do great things. For those who remember eShares 101, the greatest thing Carta will produce is all of you. That has never been truer than it is now.

What Comes Next#

After we end this Zoom call, if you are affected, you will receive your offboarding meeting invitation this morning. After your meeting, we will begin closing access to various systems, but we will keep your Slack account active until the end of today. It is important for you to be able to say goodbye to your friends and colleagues. And it is important for them to be able to say goodbye to you. For this purpose, we have created the #goodbye channel, where affected individuals can leave their contact information and anything else they would like to share.

For many of you, this will be my last time speaking to you in an all-hands meeting at the company level. I have thought a lot about what my final words should be and how all of you might feel. How you will remember today weeks, months, or even years from now. I have wondered if there is something I can say to make today easier for you. And if I have any parting wisdom or advice to offer.

After many restless nights, I realized that I just want to say two things to all of you.

Firstly, I am deeply sorry. I am sorry that we, as a company, are going through this. As Carta employees, as Americans, and as human beings, I am sorry for what everyone is experiencing. It is a fearful and sad moment. I remember how fearful people felt in 2000 and 2008. This is worse. I hope all of you reach out to your friends, family, and support networks. This is not a time for isolation; it is a time to seek help from others.

Secondly, I want to say thank you. It has been an honor to work with all of you. Thank you for being a part of our company. Thank you for being a part of our lives. Thank you for coming to Carta. We are all better for it.

See you on the Carta alumni network.

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