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How our startup made it through 2 recessions without relying on layoffs

Entrepreneurs deploying capital often face two major challenges: operating at scale and navigating unforeseen market conditions. And often, when the market winds change and growth sputters to a crawl, startups and public companies alike resort to sweeping layoffs to avoid burning through capital.

According to Crunchbase, nearly 45,000 tech employees have been laid off so far this year. In the past few months, notable companies such as Glossier, Go Puff, Klarna and Netflix have cut staff, and many more internet-based companies have paused to “reevaluate hiring.”

At HackerEarth, we have moved successfully through two recessionary cycles without ever relying on job cuts. In 10 years, we have found that a sustainable approach to hiring and undertaking experimental projects helped us navigate the currents of uncertain market conditions.

Here is how we did it:

We approach hiring very meticulously, hire only when we need to, and maintain a lean team to give us a buffer when things go wrong.

Operated at a safe following distance

To stay lean, we maintain a set of goals and best practices that allows us to ebb and flow with the changing market and avoid acting on a dime. At any given time, our staff portfolio operates at about 90% of what we consider ideal. Think of this like the distance you have to maintain between you and the car in front of you when you’re driving on the highway. If we staff our teams to fit 100% of our needs (following too closely), then there is a domino effect when the market changes rapidly, causing internal “accidents.”

However, if we operate at a “safe following distance,” we have time to react without causing major disruptions to our employees. We maintain this by planning for our hires proactively to address current and future challenges as opposed to hiring reactively for a short-term fix.

This “safe following distance” not only allows us to react to changes quickly, it also leads to greater efficiency per employee. When you are staffed just a little below the ideal capacity, people get more opportunities to go beyond their defined goals. If done well, this tension results in greater efficiency and growth for the whole team.

Built a stronger culture to ensure we met product goals

Operating 10% below our ideal means that it is necessary to lean on culture to fill the gap. When we hire, we prioritize candidates with diverse and flexible skill sets who can adapt to changing requirements. This ensures that our team is able to work on multiple projects, which helps mitigate siloed thinking and behaviors.

How our startup made it through 2 recessions without relying on layoffs by Ram Iyer originally published on TechCrunch

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