Many startups are thinking about conserving cash. Some are reducing their R&D spend by cutting headcount. That might be because those product and engineering folks were working on projects that were more aspirational, less proven out; because their companies are now focused more on top-down sales than product-led user growth; because the company’s new trajectory didn’t justify senior leadership; or because it didn’t justify the current number of people in management positions. Regardless of the reason, when you let people go, you often have to re-org. And even if you’re not cutting headcount, you might want to re-org in order to help your team run more efficiently.

Aaron Erickson, the CEO and Co-Founder at Orgspace, has studied the art of the re-org. The topic might make your stomach churn, but it’s an essential one for many companies right now, and not enough leaders re-org the right way. Poorly executed re-orgs can be disastrous for the company; thoughtful re-orgs can actually be highly motivational and become the substance of positive stories about company leadership for years to come.

In this conversation, Aaron and I discussed:

- What are the signals that indicate you have an opportunity to trim spend on your R&D team?

- What factors should influence your re-org decisions: for example, the value of different functional roles, the number of direct reports per manager, the ratio of spend on direct hires vs. contractors?

- How can you manage through a re-org well, and what mistakes should you avoid?

You can listen to the podcast or else read the lightly edited transcript of the conversation below. Let's dive in!

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