About Layoffs…

“If words of command are not clear and distinct, if orders are not thoroughly understood, then the general is to blame. But, if orders are clear and the soldiers nevertheless disobey, then it is the fault of their officers” (Sun Tzu).

Before getting into this topic I need to clarify that the following lines represent my opinions based on readings and reflections about different types of publications through the years. These opinions, may not be accurate for some and so they may be a good subject for discussions. These ideas are not based on what have happened in companies where I have worked either as an employee or as a contractor and so, to the best of my knowledge, they do not represent any confidential information that may belong to any company. My main objective is that I want to get some feedback from the readers to review part of these publications.

One day a worker shows up and finds a pink slip on his/her desk. That is a typical story. It may be painted in a different canvas: One day an employee has an invitation to an odd meeting and the meeting is nothing else than a formal notification from a department head and the HR manager that he/she has been terminated. Regardless the way it happened I bet that almost immediately a lot of things cross the employee’s mind like a movie of his/her days at the company. And those days that are highlighted are when he/she provided ideas that became successful projects and those days when he/she worked late or weekends to provide better results. It may sound pathetic but in the end none of that counts.

What’s wrong then? Let’s see this from another perspective. I love graphs so let’s imagine a Cartesian system. The x represent time and the y represent revenue. There are two functions or curves plotted in this system. The first one is the expected revenue over time and the second one is the obtained revenue over time. Oops…. something went wrong. The expected revenue is above the obtained revenue and there is another curve between the first two or above them and it represents the cost of operations.  This is the typical cause of layoffs. The working capital for the next term is becoming scarce and the guys in charge of bringing revenue are unable either for unexpected market changes or simply because they are inept, or both.

The thing is, it is necessary to do something. The first measure at hand is cutting costs and this clearly means one thing: Layoffs. But, are layoffs fair? Of course they are not fair. A layoff is not fair for the employees who are being sent home just because a dummy with good luck is in a position where he or she obviously reached his/her level of incompetence. And it is not fair for the shareholders because a layoff means the company is taking a step back. It may look leaner and “financially” healthy. But operationally it reveals two simple things: First, upper management was inept and unable to move the company toward its objectives. And second, because of the first reason, there is a false sentiment that it will not happen again. And from this standpoint, the company clearly is sending a message to its shareholders and customers: the company the way it operates is not reliable. And that is why layoffs are something that needs to be avoided and it has to be clear that a layoff is not a corrective action. It is a consequence and for sure, it is a consequence of poor decisions. 

But let’s imagine that it is too late. The company needs to lay off people because otherwise it will not have working capital or the investors will be screaming (meaning the upper management needs to save their skins). If something with short term or immediate effect is not done then the company will be running on red and so it will default its liabilities and it may be at risk of disappearing. And with this in mind layoffs are inevitable. But don’t be confused here. This mess did not happen out of nothing. It did not happen because the people that is being sent home were hired. It happened because somebody in upper management did not do his/her job right. And he/she or they should be considered accountable too or the same situation will happen again resulting in eroding the competitive position of the whole company and therefor, against the shareholders’ interests.

Now, seeing it from the employee’s perspective, from the one who is being sent home, there is nothing he/she can do at the moment when he/she is notified. Just grab their stuff and leave. The decision was already made and as far as I have seen in my career, no decision is overturned once it is in motion. So what can they do? A layoff atmosphere does not appear overnight. The first thing to do is you must trust your intuition. There is always something that tells you that something is wrong. Learn to hear bad news from yourself. Don’t have wishful thinking just because your workplace is cool or the people are cool or you love your job. There are signs that you need to learn how to interpret. Trust yourself and don’t be naïve. The second thing is just that, trust yourself. If you ask your coworkers they may be in the same denial situation as you. If you ask your managers, they may be misinformed or simply they are part of that confusion or they are in denial too or simply they don’t care because they may think that they must keep the morale high and so their answer always will be “Don’t worry….” And the third thing and probably the most important one: always have your plans for your career. I read in a book during my MBA days: Your employer owns your job but you own your career. What this means is you have to have your plans for life and your current job is just one step on that plan. The company has its plans but never make the mistake thinking that those plans are your plans. You have to have your plans and if so the company, the whole company can sink and you will not be affected. And this means, as soon as you hear the drum of problems in the company start assessing your position and if you find one little cause that makes you think you will lose your job then look for another job and leave. 

But don’t wait until you suspect something. There are still things you shouldn’t stop doing. As soon as you get a job always keep looking for the next one. Either inside or outside the organization. If there is no job you can get inside the organization or if the glass ceiling is too thick then it means only one thing: you don’t fit there and don’t fool yourself, see it just as it is. Keep working according to your strategy and maintain your digital presence somehow (job boards, social networks, professional groups, etc.). Keep your skills up to date, don’t believe negative things that you hear about you and always look for your next move and make it.   That is the only thing that an employee can do. It is just business. Nothing is personal here.

To conclude, layoffs are the aftermath of defeat. And the people just being sent home are not exactly the losers, they are just casualties. It is certain that the strategy failed. But why did it failed? Among the reasons: Very optimistic forecast, unrealistic vision, false confidence, thinking that nothing is wrong, thinking that everything is OK, etc. and all of these is translated into inadequate tactics. In summary, there are many, many questions that must be answered to move the company forward after layoffs and among the important ones: Who forgot to check on the competition, who did not pay attention to innovation, who forgot tracking the product life cycle, who did not maintain adequate contact with clients, who was incapable to move the company through the business jungle. The answer will tell you who will need to commit seppuku if he/she still deserves the option to hand his resignation to leave the company without being fired. Otherwise, it will not be a matter of if the situation will happen again.  It will be more like “when”.