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‘Call him Voldemort, Harry. Always use the proper name for things. Fear of a name increases fear of the thing itself’…If you are a Harry Potter fan, you will vividly remember its popular character ‘Voldemort’, the evil one ‘who should not be named’.

There’s a new who should not be named in the corporate world:

One that you dread;

One that you are unsure you can escape from;

One that you cannot discuss with anyone;

The new Voldemort is the forbidden L word: LAYOFF

If you are an employer or a business leader, especially from the MSME sector – your business situation is likely to be more dire than the larger and stronger behemoths.

The most important starting point is realistically assessing your cashflow situation for the next twelve months, incorporating realistic revenues and reworked expenditure. My previous article ‘My Covid19 Toolkit for Businesses’ ( details the same, in case you missed it.

If you are at the stage, where your business has been impacted, you could be deeply conflicted on whether you may have to use the L word.

Here are some thoughts on Why, What, Who, When, How & What Next on Layoffs.


  • Unsustainable cashflows beyond 3-6 months; bleak outlook for successful fundraising / working capital enhancement
  • Inadequate financial assets that you could have liquidated to fund future cashflows
  • Significant portion of revenues seem unlikely to be generated over the next 12 months.
  • Inability to transition significant customer base online or develop new revenue segments
  • New competitors that have or plan to enter your segment with disruptive pricing & offers
  • Un-cooperative employees that are disrupting the team performance or being unproductive
  • Urgent need to redeploy resources, invest in new staff with new skills, new technology etc.


The current pandemic is a collective human challenge; assess alternate opportunities before ascertaining that layoffs is the only way out. Some implementable alternate options include:

Flat pay cut: Implement a flat pay cut across the company until finances stabilize; restricting pay to ensure that all employees are able to fulfill their essential household expenses, EMIs and insurance.

Phased pay cut: Pay cut for the leadership & management team; rest of staff on full pay.

Reshuffling pay: Reallocate the pay-pool rewarding employees that are shouldering the responsibility of reviving the business, whilst keeping those that are unable/unwilling to contribute on a pay cut.

Furlough: Leave without pay for a few; setting up a line of credit can be extended to them for personal emergencies until the furlough period is over.

Freelance: Converting employment contracts into freelance contracts; open up non-compete for them such that they can seek external work to sustain themselves.


Make an excel sheet with details of your employees and map them on:

  • Contribution to the business
  • Ability to adapt to the new need for the business by reskilling or taking on new roles
  • Loyalty/years spent in the company
  • Ability to WFH/online/as the new environment demands it
  • Employee’s financial situation
  •  Employee’s brand value for your clients
  • CTC
  • Add new employees/skills that you will need to hire to manage the changes to your business.

Finally, evaluate all the options that I have mentioned above under ‘What?’ and rework your salary payout for the next 12 months.

If you can manage without layoffs, great.

If not – you should have your list of chosen employees ready through this exercise


Final Closure: Seek an independent opinion from your advisor and/or your management team – a final closure that there are no viable options other than Layoffs.

Lockdown: Avoid the lockdown period as, (a) There is ‘more than normal’ emotional duress; news like this can potentially risk their mental and physical wellbeing (b) Exploring alternate employment opportunities for them, is possible only after the lockdown period.

Milestones: Watch for key triggers post lockdown, that will enable you to map your business projections against real-time economic/business revival. Your cashflow projections should match actual cashflows for the first few months, for you to be certain that you need to implement layoffs.


–      Find a confidant that can be your sounding board before you implement your decision so that you can lean on them if you feel drained emotionally.

–      Keep your L workings pinned on your home desk to reiterate to yourself, that you have to do this to save your business and remaining employees.

–      Practice your conversation so that you are mindful of the content, tone, manner of communication for each employee that you let go.

H O W ?

The four cardinal Cs as you implement the layoff:

Contractual Obligations: Ensure that you have read all the contractual obligations as mandated by the Central/State government, prevalent labour laws, employment contracts before you undertake this decision. Also, ensure that the requisite documentation for undertaking the layoff is also in place.

Compensation: Ensure that you are proactively processing all the compensation that is due to them, be it leave compensation or any other dues as bound by the employment contract so that they have the necessary funds in their bank accounts.

Communication: Honesty and trust are the cornerstones of employee engagement. Please reach out to each one of them individually and communicate not just the decision, but also the reasons behind such a decision. Do not delegate. It is equally important to communicate to the retained employees that there will not be any further layoffs for the next 12 months.

Career Support: Offer recommendations, referrals and career guidance. Be careful, however, to not over promise and then not be there to deliver on your promise, else these outgoing employees are likely to feel even more demoralized and hurt with your lack of response on what you promised them.


Team Morale: You will have a team that’s low on morale, engagement and more fearful. Communicating your future plans for the business and their expected role in it with a nurturing and compassionate style of leadership is extremely critical. Also, reiterate the financial stability of the company and reassure them that there will no further layoffs.

Business Focus: Communicate the vision and plans for the business articulately and transparently. If you come across as unfocused and confused, you will see your best people leave as they will have low faith in your ability to lead them out of the trying environment.

Self-Healing: Prepare to ignore the backlash/gossip on social media, industry circle around this decision. You will be targeted personally, so it’s critical to reiterate your purpose, your focus and stay resilient.

Still fearing the L word…..let me turn once again, to Harry Potter..

‘Understanding is the first step to acceptance, and only with acceptance can there be recovery’

We need to give our best.

This pandemic will need our collective best.

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