Leadership is not financial engineering

Dealing with motivation amidst layoffs

How do you incentivize people in the middle of a layoff or turnaround situation?

I got a call from a VP Product this morning to discuss an urgent issue that landed on his desk. A big strategic pivot, coupled with financial pressure, means that they'll need to lay off a bunch of good people. At the same time, they need those that remain to excel, and to deliver even more powerful work than they have in the past.

What to do?

No easy answers here. But a few thoughts that emerged from the discussion:

(1) People can handle the truth. Be candid with them. They already know things aren't great. This will build trust and psychological safety.

(2) Beware trying to use incentives to drive better performance. That can easily backfire and lead to *less* adaptive performance. Focus on removing incentives as a distraction or cause of other issues. If you do explore incentives, make them around team/org level outcomes. And take a hard look at the sales comp plan.

(3) Put in face time. Talk to people face to face, in-person if possible. Yes, this will take extra effort and money. It's worth it.

(4) Treat the people being let go in a first class way, all the way out. They will forget all the details leading up to this point. But they'll *always* remember how the end was. And those that stay will remember how you treated those that left.

(5) Above all, remember: leadership and management are different. Management is about numbers. Leadership is not a financial engineering exercise. It's about people.