Leading through layoffs: negotiating through a multi-dimension conflict at a tech startup

Research methodology This case study is based on primary data collected through interviews with the company’s founder and CEO. The names of the company and the employees have been disguised. Case overview/synopsis In 2022, tech startup Wombat faced its first-ever layoffs amid post-COVID financial pressures. Founder and CEO Dan Wallace, known for his commitment to transparency, made the difficult decision to reduce the workforce in an effort to keep the company financially viable. While the leadership team quickly aligned on the layoff strategy, the implementation revealed cracks in Wombat’s internal communication and value alignment.The conflict came to a head when Monique Thomas, a loyal and respected Engineering manager, challenged Wallace on the fairness of the layoff decisions and the lack of transparency in the process. Her concerns revealed a gap between Wombat’s stated values – specifically inclusion and respect – and how the layoffs were perceived by employees. Wallace now faced the dual challenge of justifying business decisions while repairing trust and upholding the organization’s cultural identity.The case underscores the relational strain that can accompany even well-intentioned, absolutely-necessary business decisions. Drawing on Fisher and Ury’s Method of Principled Negotiation, the case invites students to practice separating people from problems, focusing on underlying interests, generating options for mutual gain and using objective criteria. Complexity academic level This case is designed for upper-level undergraduate students in a strategic leadership course that covers diagnosing conflict and leveraging negotiation frameworks to navigate through them.