A Large (But Disconnected) Team Won't Survive Tough Times — But a Close-Knit Team Will. Here's Why. Close-knit teams are the foundation we have to fall back on when times get tough.

By Daniel Todd

Opinions expressed by Entrepreneur contributors are their own.

Five months into the year, 2023 has proven to be just as tumultuous as years past. An uncertain economy has rocked businesses while employees have faced widespread layoffs.

In such times, some workers may feel as if they are waiting with bated breath for their job to be cut next. And while one may assume they are safe at a large, well-established company, layoffs at organizations like Meta have shown that might not be true. One survey of 1,000 business leaders found that 74% of leaders of companies with over 500 employees said they would have to do layoffs this year (as compared to only 51% of leaders of companies with fewer than 500 employees).

Larger companies often allow culture to fall to the wayside, creating a large, disconnected group of interchangeable employees. In these times of uncertainty, ensuring our companies are close-knit and ready to get through the storm is more important than ever.

What does a "close-knit" company mean?

When I talk about a "close-knit" company, I don't mean all employees are best friends (although friendships at work certainly don't hurt). A close-knit company means there is a foundation of trust and respect between employers and employees.

Close-knit is not analogous to small — there are plenty of highly dysfunctional companies with 30 employees who hate each other. And while it is easier to get to know your employees when there are only 30 of them, it is not impossible for companies of 100 or more to do so.

At large companies, leadership should focus on cultivating close-knit groups throughout the organization. As the CEO of a company that employs nearly 100 people, I do my best to connect with all our employees through retreats, social events and everyday interactions, but I still don't have the time to get to know everyone. Instead, I aim to model the closeness I hope to see throughout the company by creating close relationships with my direct reports and our company leaders and fostering peer relationships via mentorship programs.

As leaders, we must care enough to know our employees and recognize their unique contributions. If we view them as interchangeable pawns on a chess board, they will view our company in the same light — interchangeable with the next offer that comes their way.

Related: The How-To: Choosing Between A Job At A Startup Or A Corporate

Focus on quality over quantity

Companies can (and should) grow, but leaders often view the number of employees they have as analogous to their success. However, this often leads to over-hiring that managers cannot keep up with; productivity and profits fall, employees feel disengaged and layoffs loom.

A lean, close-knit team is much more powerful than a large, disconnected one. Investing in the employees you have before hiring new ones allows you to ensure you are not overhiring, only to have to minimize positions if the company encounters financial hurdles.

Before hiring new employees, focus on retaining and supporting the employees you have. Do you need a new employee, or do you need to set up new structures so that your team can be more productive and engaged?

Focusing on creating close-knit teams and productive employees is a win-win for all involved. Employees become more valuable with each year they stay and are rewarded with professional development opportunities, performance bonuses and other incentives. With greater productivity, businesses can see improved results and higher profits, and with greater retention rates, employers can build a stable workforce with years of expertise under their belts. Boasting a 500-person workforce may feel nice on Linkedin, but the close-knit company focusing on quality over quantity will be better equipped to weather economic uncertainty.

Related: Tim Cook: Mass Layoffs Are a 'Last Resort' for Apple

Layoffs still happen

While a close-knit company may have a better chance of avoiding layoffs, they are sometimes unavoidable. During these times, we must rely on the trust, respect and camaraderie established to build a bridge to repair.

Seven years ago, due to an unexpected change with a major partner, I had to lead my company through layoffs. I was forced to let go of many excellent employees and friends I deeply respected. As I considered how to go about the process, I imagined how I would feel if I was the one being laid off. So we helped find new jobs by bringing in experts to assist with resumes and Linkedin profiles and gave as long a severance as we could afford to help soften the blow.

Furthermore, we were transparent with our remaining employees about what was happening and why. Secrecy degrades morale, and leaders must communicate openly and honestly, no matter how scary the truth may be. I communicated with every employee about our situation's reality and the plan to rebuild. Because of this, my employees had faith that we would get through this period as a team, and as we recovered in the following months, we only lost one employee who left for a new opportunity.

Layoffs will never be easy, but doing them with compassion and transparency shows employees that we will always treat them fairly and helps us move forward together to build a better business.

Related: Promoting a Close-Knit Company Culture Can Lead to Profitability

Gather the troops

The trust one builds at a close-knit company is the foundation we have to fall back on when times get tough, and if I've learned anything throughout my career, it's that times will get tough. The economy will tank, a major partner will pull out or we'll face a global pandemic that shuts the world down. When a crisis strikes, if we do not have a united front, our employees will scatter in opposite directions at the first sign of smoke.

When the bottom falls out, all we have is our people. Do not be the leader who cowers behind a screen, afraid to share the truth. Gather the troops, outline the battle you face ahead and lay out your plan to overcome it. With your team behind you, you can get through the woods, no matter how covered in mud you may be when you finally get out.

Daniel Todd

Entrepreneur Leadership Network Contributor

Founder and CEO of Influence Mobile

Daniel Todd is the founder and CEO of Influence Mobile. He is credited with creating a corporate culture that repeatedly won Washington CEO’s and the Puget Sound Business Journal’s “Best Places to Work” awards.

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