Planning, Startups, Stories


Tim Berry on business planning, starting and growing your business, and having a life in the meantime.

It Was Easier to Lay Off 5 People than Fire One 0

DuringĀ in the recession of 2001, I let 5 people go in a single day. Our sales were down, but we held on, for too long, hoping things would turn up in time to save the jobs. They didn’t.

Letting people go is the hardest thing a small business owner does.

But from that hard time I discovered something surprising. It was easier to let 5 people go, all on the same day, than to fire one person separately.

When it’s 5 at once, they don’t feel like they’ve failed. They don’t suffer that personal failure that comes when it’s one person at a time. They know it’s the economy.

When it’s one person, there’s no way around the sense of failure. No matter what the circumstances, or what the words, it hurts.

The hardest thing I’ve had to do was fire somebody who was honest and hard working but had to go anyhow, for good reasons. That was way harder than letting 5 people go on the same day.

We went from 36 people before the 2001 recession to 24 at the worst of it. Most of that decline was through attrition, but there was that one hard day.

I’m glad to say that Palo Alto Software seems to be weathering the current recession without laying off any employees, this time around. We’ve actually taken a couple of new people on. That’s a credit to the new management team, not to me.

What reminded me of this was Bob Sutton’s Layoffs: One Deep Cut Versus Lots of Little Cuts, on his blog. He refers there to a fascinating discussion, in video, of his recent Harvard Business Review article on Good Bosses in Bad Times.