This week, Andela announced that it is to layoff 135 employees, literally 10% of the company’s staff. The employees affected are in 5 countries: Nigeria, Kenya, Uganda, Egypt and USA. In an email from the CEO, Jeremy Johnson, it was stated that no engineers are impacted by this reduction, but rather other departments that make up the firm.
He pointed out the fact that much as a significant growth was projected for 2020, a failure to match quick growth to spend cannot attract any investment. The layoff is a typical move in the direction of cutting costs incurred.
“Like any venture backed startup, our ability to attract future investment is determined by the ratio of how quickly we grow in comparison to how much we spend to achieve that growth. If you aren’t growing, you can’t count on raising more money, so you have to adjust expenses so you don’t spend more than you bring in.”
With majority of business globally heavily impacted by the coronavirus pandemic, Jeremy believes the company is going to see ‘churn spike’ this year as well as a decline in new customers due to the economic uncertainty.
“Now that we know that growth is going to be much slower than anticipated, we need to cut costs to ensure that we make it to the other side.”
How Andela approached the staff layoff
According to the CEO, the company had approached this process in three phases.
- By looking at everything cut-table that was non-headcount related, including pausing future hiring, rescinding offers, and meaningfully reducing consulting and software spend.
- Looking at salary reductions. All directors and above who are remaining with the company have agreed to take a salary cut ranging from 10% to 30% depending on seniority. However, it was determined that the savings did not warrant the disruption to the lives of our entire employee base.
- Looking at headcount reductions. This was done in two ways: which roles require fewer positions as a result of slower growth, and which roles have less direct impact on revenue.
Key to note is that the headcount reduction is not uniform across the company. The CEO states that certain teams like Technology were impacted less because they represent strategic investments we are making for the future.
“Please know that our goal is to treat our colleagues who are impacted with fairness, dignity and respect. We are providing comprehensive severance packages as well as four months of health coverage in every country.”
Read About: Andela Uganda developer report 2019