Luminary's founder offered employees 3 options when her company was in financial ruin. Here's why they all chose to take a pay cut.
Luminary
- Cate Luzio is the founder and CEO of Luminary, a women's coworking space and professional network.
- When the COVID-19 pandemic hit, Luzio gave workers the choice of layoffs, furloughs, or pay cuts.
- Her leadership provides founders an example of making tough decisions during a financial crisis.
- This article is part of Talent Insider, a series containing expert advice to help small business owners tackle a range of hiring challenges.
In April 2020, Cate Luzio logged on to her company's Monday Zoom meeting with a heavy heart and a tough proposition for her employees.
As quickly as COVID-19 spread across the US, Luminary members had called to pause or cancel their memberships to the women's coworking space and network.
Between March and April, the company lost about 80% of its revenue, Luzio told Insider. Her landlord deferred her rent, and within weeks her team shifted its in-person community events to digital programming. But with a staff of 11 on payroll, the business was still at risk.
During the Zoom meeting in April, the founder told her full-time staff members that she had to make some cuts. She gave employees three options: They could be laid off and apply for unemployment, they could be furloughed and return to their jobs once the company recovered, or they could take a 20% pay cut.
Luzio told her team to take time to think, but the workers decided unanimously within minutes: Everyone chose the pay cut and told their boss they weren't going anywhere. It was a galvanizing moment.
"That showed me how much they cared about the company and the community," she said. "Despite the financial challenges, they wanted to continue moving forward."
By September 2020, all employees — many of whom are still on the team — returned to their regular salaries, and the company has added 11 positions since, Luzio said.
Today, a different set of challenging circumstances could force founders to make the difficult decisions to cut salaries or staff: Inflation, hiked interest rates, and layoffs are early indications that another recession is on the horizon, according to experts.
Luzio and her team spoke with Insider about the pivotal moment in Luminary's business. Here's how she planned ahead and used her leadership strengths to reassure employees, despite uncertainty.
Employees value transparency and solidarity
Luminary
As founders head into another time of economic uncertainty, Luzio advises them to make the tough decisions as early as possible. And knowing the financial status of your business is crucial to making those quick choices.
"You have to understand your numbers, and your expenses are the biggest part," she said. "That's what saved Luminary."
But the pandemic also showed that leaders wouldn't always have all the answers, something Lerner had to get comfortable with. "Finally embracing that uncertainty and admitting, 'I just don't know,' was a real challenge," she said.
Kelsey Gonsalves was one of the employees on the April 2020 call, and seeing that level of transparency from leadership gave her a sense of security during so much instability.
"At the time, the number didn't really matter," said Gonsalves, referring to her pay cut. "I was just so grateful to be a part of that team and to continue to have a job during the pandemic."
Gonsalves said that throughout her three years at the company, Luzio's bravery and ability to show weakness had fostered a work environment in which employees feel supported by one another.
"Through that, all of us get a sense of bravery as well," she said. "I've never been hesitant to step forward and be like, I'm really struggling and I need assistance on this. And you will get it from the team."
Investing in a pipeline
Luminary
Ultimately, Luzio wants her employees to feel that she has invested in them. While many of the workers who were on the call have stayed with the company, some have moved on to roles at Fidelity, Deloitte, and Estée Lauder.
"For me, that's all about investing in the pipeline," she said, adding that she wanted employees to gain skills they could take anywhere. "I want them to equally determine what that definition of success is and that doesn't mean staying at Luminary forever."
In return, Luminary's team has been invested in and committed to their jobs, Lerner added. She said she wasn't surprised by the team's decision to stay through the pandemic because she had confidence in its camaraderie.
"Even though we were run down by the realities of the world and uncertainty, we were still a team and believed in the company making it through this unknown stretch of time," she said.
from Business Insider https://ift.tt/mDz3Kfc
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