In April 2020, Carta, a company specializing in equity management and compliance solutions, laid off 161 employees, accounting for 16% of its workforce. The layoffs, which affected all departments, were a result of a customer slowdown due to the COVID-19 pandemic. In this article, we'll discuss what happened, why it happened, and the potential future impact of these layoffs.
Carta's decision to lay off 161 employees was primarily driven by economic pressures caused by the recession and the need to reduce costs and protect cash. According to CEO Henry Ward, the company experienced a slower growth rate in 2020 and the impact of a slower economy on different parts of the business. This led to downsizing in departments such as recruiting, HR, operations, and R&D, as well as customer-facing functions like sales, marketing, onboarding, and support.
Ward also discussed the moral conflict faced by CEOs when making decisions about layoffs, balancing the shareholder perspective of reducing costs with the employee perspective of saving jobs. Carta modified its Next Chapter program to provide departing employees with three months of pay, regardless of tenure. The company also committed to paying COBRA health insurance premiums until the end of the year and extended the post-termination exercise period for employees with less than one year of tenure.
Carta aims to reduce expenses and achieve profitability as per investor expectations. The company could potentially focus on optimizing operations and leveraging technology to improve efficiency and customer engagement in its equity management and compliance platforms.
The layoff is a reflection of the economic impact of the COVID-19 pandemic on the Finance industry and other sectors. The situation highlights the challenges faced by companies in navigating the economic downturn and the need for cost-cutting measures to ensure survival and future growth.
Carta's layoffs of 161 employees were driven by economic pressures and the need to reduce costs amid a slower growth rate in 2020. The company provided support to departing employees and cut non-headcount expenses before resorting to layoffs. These developments reflect the challenges faced by the Finance industry due to the COVID-19 pandemic and the need for cost-cutting measures. Carta's future actions may focus on strategic shifts and positioning for success in a recovering economy.
