The following answers are provided by the Young Entrepreneur Council (YEC), an invite-only organization comprised of the world's most promising young entrepreneurs. In partnership with Citi, YEC recently launched StartupCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.
A. Performance
If cutting back staff needs to occur, the only fair method I have experienced is performance-based. Companies should continually track each employee's performance. You should communicate frequently and do regular performance evaluations, so when the time comes for staff cuts a decision framework exists. - Phil Chen, Systems Watch
A. Cost of Replacement
Figure out how each employee can be replaced, either by a freelancer or software, and cut the employee who will be most costly to replace. It's nothing personal; it's business. - Josh Weiss, Bluegala
A. Which Roles You Can Do Without
There is nothing fair about cutting back staff for the health of the business. Trying to make it fair will force some bad decisions driven by emotions. Take the people out of it and look at the roles you can combine, outsource or do without. Unfortunately those roles do have people assigned to them, but at least you can honestly say it was not personal and explain your logic. - Justin Spring, BringShare, Inc.
A. Employee Value
This is always a tough decision. If the cuts are due to lack of performance, then the decision is easy. If the decision is based on lagging company performance, it can be a bit more tricky. In this situation, it's imperative to have a clear understanding of the path forward and what it will take to get back on track. From there, objectively evaluate employees in terms of their ability to add value to that effort. It can't be personal. - Chris Cancialosi, GothamCulture
A. Fairness According to the Law
It is always difficult to terminate an employee. You need to make sure you're not inadvertently subjecting yourself to a wrongful termination suit. You cannot terminate someone for factors such as age, gender, sexual orientation, religion and whistleblowing, to name a few. Understand the laws of your state and whether or not these people are employees "at will." - Matthew Moisan, Moisan Legal, P.C.
A. Based on What Can Be Outsourced
The first roles to go should be ones that can be handled easily by another teammate. In the worst-case scenario, you may have to take on that role yourself. Obviously, you can't eliminate irreplaceable roles such as your lead developer for a web or mobile app. - Andy Karuza, Brandbuddee