5 min read

Town hall 17th June 2020: Business update from David

David M. Brear


Earlier today 11:FS Group CEO David M. Brear shared the following update in our company-wide town hall:

Team,

We’ve talked with you over the last 3 months during lockdown about our views on what is happening in the market and how we are responding. As I said to you in the first town hall after the lockdown in March, in my opinion, the impact of COVID-19 will be two waves: first the disease and second the economic meltdown. The first wave is taking much longer than initially feared and the second looks like it will be a magnitude of which we haven't seen before. As I mentioned on Friday the UK has now seen a drop of over 20% in GDP in April alone. To put this into context we saw only a 6% drop during the entire 2008 financial crisis and it took 12 months, not 1 month, to get to that low.

During this period we’ve strived to keep you informed with our views on the impact of COVID-19. Over the last 3 months we've shared wins and challenges, but today it's going to mainly be sad news I’m afraid. After weeks of re-planning and forecasting, we are letting you know that we have made the decision to make some redundancies.

For a people-driven business with pride in our values and culture, this is a particularly hard thing for us to do, but I would like to take the opportunity to let you know how we have reluctantly come to this decision.

Our rationale:

It’s clear 2020 will be one of the most significant years of our lifetimes. In some ways, we hope that significance will lead to positive change, but there is no sugar-coating the fact that we are living through an unprecedented global social and economic disaster.

The last 4 years of success afforded us the opportunity of going into 2020 investing heavily in growth ahead of the curve, which we did at the end of 2019. Sadly, while we still have confidence that we'll be able to grow the business this year compared to 2019, the level of growth we invested in will not be possible given the impact of COVID-19. To this end, we have to adapt our strategy, increasing the focus on our core revenue-making initiatives to continue to build a strong and sustainable business.

During this period many businesses have gone out of business, but for those still going every one of them has spent the last couple of months assessing their revenues while taking a more cautious approach to spend. With our customers and potential customers doing the same we are facing incredible uncertainty in the market.

My team and I need to make sure we are taking care of our people, our clients, and our business for the long-term. We are a small business - no big VC cheque to fall back on. We spend what we make and our costs need to be in line with our revenues.

To this end over the last couple months, we have reduced operating costs where we could, including putting a number of our staff on furlough, temporarily reducing the costs for our office and asking everyone to make a short-term salary sacrifice with myself and Jason Bates, our deputy CEO, giving up 75% of our salaries.

While all these measures have allowed us time to assess the market and plan for the next 6 months, more permanent measures are now needed against a more realistic view on revenue for the rest of the year.

Who is impacted?:

I know while all of you are listening to the rationale the thing that will be going through your head is just “am I impacted?”, which is totally understandable.

At this stage, I can tell you that out of our c.183 people, roughly 22 will be leaving which is 12% of the group. Since we are expecting a slow down in our growth the reality is that the things we’re investing in will also have to slow down with these changes. Teams most impacted will be those indirectly supporting revenue-generating efforts, as opposed to client-facing or product delivery teams. We will, however, ensure the right level of controls and processes remain in place to support the business.

I want to add that these decisions are in no way a reflection of the work from people in these teams. You are all great people and great at what you do. I will also say that does not mean everyone in a support function will be leaving us. Many teams will be reduced in size based on how their roles map to our re-focussed plan for the rest of 2020.

We did a comprehensive review of roles and made decisions based on critical skills and how well those skills matched our future business needs. The result is that we will have to part with teammates who we love and value. We will have great people leaving 11:FS and other companies will be truly lucky to have them.

How did we decide the focus of reductions?:

To determine who will be impacted we looked at the size and shape of the business we need in order to be competitive and sustainable in this new market reality. We had to have tough conversations about what is most important for us to focus on and then mapped our teams and resources against that. We have some fantastic existing clients we are supporting, and they will always be a big priority for us as a business. So even in a leaner business, client support and product development sit at our core.

We’ve always been people first. It shows in our values, our culture, our brand, and our work. We will continue to be people-first in how we manage this process. We will take care of the few leaving and support the many who will stay and help us continue to build. Everyone impacted has helped us build 11:FS and get us to where we are today, and we are incredibly grateful for their contributions.

To take care of those who are leaving, we have looked across everything we can do to treat everyone in a compassionate and thoughtful way, and most importantly get them back into roles.

How are we helping those leaving?:

There’s nothing we can do that can make up for anyone who is losing their job, but we want to do what we can to support them through any gap in employment and help them find a new role as quickly as possible.

Anyone who will be leaving us will receive the following support:

  • Severance - Everyone leaving will receive their notice pay, which will be topped up to £5k for anyone who’s on a month or less, including those still on probation.
  • Laptop - We know that for many that your 11:FS MacBooks are their only device so we are letting all leavers keep their device as we think it will help them land a new role faster. We hope the stickers stay on.
  • Alumni Career Support - For everyone who is impacted by this process we will give you the option to utilise the following:
    • Alumni Placement Support - We are focusing our internal talent team, and have brought in external support, to help people in finding their next role.
    • Alumni Talent Directory - We will, where people opt-in, publicly share and advertise their availability as well as a personal recommendation from me.
    • Alumni Programme - We will open an Alumni programme for those who wish to keep in touch with what 11:FS are doing.

What are the next steps?:

We have tried to be thoughtful in planning for every employee who will be impacted by this process and want to give clarity and create stability for everyone as quickly as we can.

Within half an hour of this communication, you will receive 1 of 2 emails: either stating your role will potentially be impacted and you will need to take part in the pooling process, or not. For those of you who will not, the email will include details as to how we plan to taper salary sacrifice also.

For context, my executive team has agreed to continue their salary sacrifice through to the end of the year with myself as Group CEO, and Jason Bates as Deputy CEO sticking to our earlier sacrifice of 75% of our salaries. This is an important measure and message from my team.

For those of you impacted, we are going through the consultation process this week with an aim of finalising the way forwards within a week. The majority of those who are impacted will be told much sooner than this. While something like this is never a good experience, it can certainly be made worse by lack of information, so it’s our absolute priority to ensure proactive communication and listen to your feedback. Our People team will be on hand for support.

Where do we go from here?:

This is by far the hardest note I’ve had to write. Everyone is here because they are good people and great at what they do. I wish more than anything that we didn't need to take these steps.

I’m so proud of everything that we have accomplished over the last 4 years and while the last 3 months haven’t been easy these changes will bring about stability in the business.

So I leave you with 3 things;

Firstly, I want to make you aware that once this meeting is over this communication will immediately be shared on our internal Slack group but also externally. We believe in transparency. Being open and being honest is always better when you’re trying to do the right thing for the right reasons. Values only matter if you follow them even if it’s hard to do so. I feel that our people and our community deserve to know the truth directly from me. No subtle tweets, no skewed media headlines, no half-truths.

Secondly, for the people staying, I know you, our team, and our community will rally around us and this challenge with the same passion and resilience we’ve always had. As a start-up, small business, and challenger in a massive industry we are looking to shake up, we know adversity and we know how to push through it. Although COVID-19 is significantly impacting the market it has also confirmed for many that our core messages at 11:FS are exactly what the industry needs, especially now. These changes are hard but they bring about stability for future growth.

Lastly, to those of you who leave us as part of this process, I am truly sorry. On top of an already personally unsettling time, I am sorry to give you even more to deal with. We will do everything we can to make this period easier and support you to find somewhere to apply your skills. I know you haven’t stopped believing in our vision at 11:FS and we haven’t stopped believing in you.

I'm truly sorry to have to deliver this news to you all. My belief in our mission and vision is unwavering and I’m more determined to ensure our success than ever before.

My thoughts and focus in the next period are on ensuring that the fantastic people who are sadly leaving as part of this process are given all the support we can offer to move on and continue to do great things.

David

 David M. Brear
About the author

David M. Brear

David is the CEO of 11:FS and since his dream of being a sportsperson was crushed (along with the ligaments in his knee!) and he had to get a proper job, he has worked in pretty much every angle of financial services industry but never lost that competitive desire to win.

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