Startups That Grew Fast Learn Shrinking Can Be Just as Hard
After years of easy money, companies are downsizing and finding that there’s a right way and a wrong way to do it.
Workers at online brokerage Trade Republic Bank GmbH had good reason to think their jobs were safe when rising interest rates began putting a strain on startups last spring. As rivals cut back, the Berlin company secured fresh funding and continued advertising new positions. But in a brief video presentation on June 9, the de facto chief announced a workplace reshuffling—and then said the 700 employees should check their email to learn whether they still had jobs. About 100 had been cut, including new hires who hadn’t even made it into the office. Some who missed the presentation received the news from social media or by getting locked out of their corporate email accounts.
With central banks around the world tightening, companies that have grown up in an era of cheap credit and easy financing are finding out the hard way that shrinking can be just as complicated as growing—especially when it comes to firing people. Workers around the world have reported similar stories of awkward dismissals as managers attempt to cut costs. “We’ve seen a lot of startups try to make redundancies exceptionally quickly,” says Anouk Agussol, chief executive officer of UK staffing consultant Unleashed. “The problem is that people who leave feel like rubbish, and the people who stay lose a lot of trust.”