Corporate Life-The Layoff

There comes a time in any working person’s life where the company they work for, large or small, multi-national or startup, is forced to reduce cost and cut back on the workforce, for whatever reason: loss of a contract, competitive pressures, leadership preparing the company to be sold, new CEO/leadership needs to make an impression, pressure from stockholders to improve profitability, etc. The downsizing is never easy, and the aftermath is always brutal, inhumane and never easy. Who decides who should be laid off and who are spared? Usually it is the worker bees that get cut, since it is usually the managers who make the decisions as to who to lay off, so they tend to protect their own. Those locations with the accumulation of the most powerful managers will tend to be spared the axe, while those locations that do not have a champion get hit disproportionately since workers in far flung locations are usually the blank unknown faces; they are easier to cut than people you see every day because there isn’t the personal connection with the decision makers. Older employees often get the axe more often than not because of the persistent youth movement that corporate mythology promotes, regardless of the unique expertise of the people being cut, the mantra is that everyone is replaceable, indeed, the accumulated salaries of the older workers also make cutting them yield higher return on the bottom-line.  Those factors are all variables and are uncontrollable in the greater scheme of the situation.

Regardless of the reason for the layoffs or for selecting who gets laid off, there is one thing that is within the control of those who are laying off people: how they choose to break the news and how they treat those who are laid off, that is the humanity and empathy shown by the decision makers. How the layoff decisions are executed and how humane the soon to be former employees are treated during the layoff process is often a referendum on the humanity of the managers and senior leadership of a business. It is also fair predictor of how fairly the employees will be treated in the future and how the senior management views the employees: as partners in the business enterprise or as indentured chattel.

I recently observed from the outside two very different approaches.

One is from a large health system. The health system cited the decline in reimbursement from Medicare and Medicaid as the driving force for the restructuring. The announced number of layoffs is 1% or the total 45,000 employees, or 4,500 people. The move was announced via a widely circulated press releases. The release also reports that the layoffs are going to take place over a number of weeks as managers and HR people try to ease the impact of the layoffs. It was promised that the corporation will do their utmost in relieving the pain of the decision. The news was publicized, and the health system took responsibility for what they needed to do. I am sure that there will be employment placement assistance along with the requisite severance and healthcare insurance packages offered to everyone affected. The points to note are that this was a planned restructuring, and the actions are implemented in transparency to those who are still employed as well as those who are being affected. How transparent is something that we cannot see or experience, they are internal actions that we cannot observe readily. but their intent was known at the very beginning and they were not trying to hide these layoffs from their employees, their customers, their shareholders, or the broader healthcare market.

On the other hand, I have experienced a few situations where manufacturing firms are being reorganized. One is happening in a similar timeframe as the situation above with the health system but handled completely differently. The number of people affected corporate wide is pretty small, below 100 workers. There was no press announcement, for fear that this information would somehow work to the benefit of their competitors or to the detriment of their stock prices. In fact, they kept the layoffs secret even from the managers affected. One of those who was laid off was in a meeting with their managers when HR came to tell them that they were needed, and their manager had no clue until well after the fact. One fellow was running a meeting when he was told to report to HR, he told them to wait until the meeting was over before he went and found out his fate. One manager had a day off and was told that she was losing an entire section by another employee who had enough wits to call the manager at home as her co-worker was being marched out the door.

This was more along the lines of the layoffs that I had the misfortune to experience. I was working for a manufacturing firm many years ago when there was a hostile takeover of the company board, and the owner of the firm, the son of the founder of the firm, was walked out the doors without being allowed to pack up his office. We were sitting on pins and needles for weeks after the board coup until some of the people at our site, the corporate research lab, told us that they had been alerted by the head of engineering with the news that the lab was being shut down at the end of the week; but the select few, those that they had informed, are being kept on. They were of course sworn to secrecy and were told to not come to work on the day when the company security was going to show up unannounced to layoff the rest of the lab.

When the day came, about a dozen of us had all cleaned out our desks and our offices. We had diligently left the computer hard drives untouched, and we were all sitting quietly in our offices when the head of engineering arrived with a handful of security people in case we got violent, and a truck full of cardboard boxes for us to pack our personal possessions. He was shocked to see the empty labs and offices; he was even more shocked when we didn’t even acknowledge the news in a way that he expected, no one cried, no one seemed depressed, in fact everyone seemed relieved that the wait was finally over. The security guys were relieved that they didn’t have to do the ugly job of clearing out the lab of our possessions.

No such luck in this latest instance. There was no warning, very few of the managers were aware of the impending layoffs. A good number of people who were selected were getting ready to retire, a few had filed their paperwork for later in the year, yet they were included in the bloodletting. The unfairness of it all became evident when  some others in the same situation but in other locations were spared the ignominy of being swept out with the layoffs; they were rather told to retire behind the scenes so that they did not have to go through the long, public, and forlorn display of marching to the parking lot with the contents of their office desks.

Looking in from the outside, it appears that the reorganization effort was done hastily, without foresight. The main consideration was speed, expediency, the reorganization of the top level management structure, the weeding out of the bottom of the food chain as  executed through the layoffs, but the middle level management structure was left To Be Determined, probably because they figured they would have time to make it up as time went on. In the period of a single workday, many managers discovered that they did not have any direct reports nor who they were to report to, nor which business unit they would be working in. More than a week after that fateful day, they still don’t know their own fate, other than the fact that they were fortunate in still having a job.

All too often, management types are so divorced from the reality of the day to day operations that their main and persistent belief is that people will get over the pain and suffering if you gave them money for their pain; any hurt feelings can be assuaged by an adequate severance package. They conveniently neglect the fact that those who they had cut are not just head counts, but flesh and blood people who are connected to their co-workers through years of working, struggling, and toiling together for the company; that this shared bond of their employment is more than just a job, it is what pulls them closer together as a team and that bond is strong, stronger than any bonds other than familial bonds.  This I find to be the most dominant myopia afflicting the American management class: their view of the company structure as abstractions of their charts and flowcharts which completely blinds them to the real people who occupy each of the boxes that they have sketched out so carefully on their wall charts.

Alas, one last boost of energy from the management came a week later, when the leadership released a video that is mandatory viewing for all the employees. The leadership emphasized their “excitement” in this, the latest program of the month, and how this reorganization will be the magic elixir that will revive and reinvigorate the company. Additionally, the leadership admonished the employees that were left to operate with integrity.

The irony is heavy here. I am very sure that “excited” is not a good word to use. In essence, the message is that the management is “excited” to disintegrate the livelihood of the families and the decision to throw them out into the streets was easily made and inconsequential when measured against the future profitability of the company, even though it was the efforts of those who were thrown out who put the company in profitability in the past.  Even if management does not care one whit about those who were laid off, it is certainly rubbing salt into the wounds of those who saw their colleagues and friends suffer through major emotional upheavals. This strategy will certainly breed the kind of loyalty needed that the management expect and motivate the positive attitude that the work force are expected to have to give it their all for the almighty company.

The second irony. One that is a little more subtle, is that while the management pontificate on integrity, they themselves are lacking integrity by being dishonest in the way that they executed the roll outs of these layoffs. I am sure irony is on the wane in corporate America today, at least in those industries that are treading water, the senior management probably didn’t even notice their unintended hypocrisy, or maybe they did but didn't care. 

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In the end, people are resilient, they will survive upheavals, some may even thrive as they step away from the oppressive environments that these management leaders seem to foster. I survived my dealings with the American management ethos, I hope the same for those who had to come face to face with it recently. Good luck to them all. Go team, Go!!