Episode Transcript
Speaker 1 00:00:07 Well, as much as I hate to say it, I think we're entering a season of layoffs and all of the press about the layoffs at Twitter were so interesting. This week I wanted to make some comments about the process, the best practices, and what's been happening lately. So first of all, when a company lays off a large number of people, it's a capitulation by leadership that some mistakes have been made. And what happened for the last 12 to 14 years is most companies grew like crazy. Their investors and venture capitalists told them, Grow faster, grow faster, grow faster, hire more people, here's more money and leadership. Took the money, took the bait, hired the people, and suddenly we have a slowdown and they look around and they can't afford it. And so the first thing that I would say about a well run layoff strategy is for leadership to admit that this is not the employee's fault.
Speaker 1 00:01:05 I was laid off by a tech company around the 2000 recession. I was at IBM when Lou Gerner came in and John Aker left and subsequently laid off 60 to 70,000 people. I was at Sybase when we laid off 25% of the workforce. And I'll tell you a story about that in a minute. And I've had to let a couple people go in our company 10 years ago when we had too many people too. And it was my mistake, and I admitted it and I remember feeling horrible about it and actually crying in the conference room when it actually happened. So I think unfortunately, the way this is being played in the case of Twitter is everybody's demonizing employees, but really it's management that made a mistake. And it's clear from many of the stories that are coming out on podcasts, on LinkedIn and other places, it's pretty easy to figure out what's going on Twitter, there wasn't very good management at Twitter before Elon Musk came along.
Speaker 1 00:02:00 One of the people that worked at Twitter told me that Jack Dorsey used to come into town every couple of months. There was a line of people in his office to talk to him and then he would leave. So after Dick Costello left, it's not clear to me who was running Twitter, and there probably was a lot of chaos creating a lot of mid-level managers and too many people. My own personal experience with Twitter is it's an interesting service, but not a well run company at all. I tried to buy advertising on Twitter and I couldn't, There just, it just wasn't possible. The system didn't work. So I think there's a lot of things about Twitter that just haven't worked for a long time. But anyway, first is leadership helps to take responsibility. If you read the letter that came out from the CEO of Stripe this week and many other of the companies that have done small layoffs, it's really healthy for the leadership to take responsibility and talk about what happened, not only for you know, themselves, but for the people that are leaving.
Speaker 1 00:02:54 So they understand that in some sense it's not personal, even though it is personal. And that leads me to the second topic of layoffs is for those of you that have been laid off, it is personal. It's always personal. It's very personal because the person being laid off, first of all feels like hell because they're suddenly forced to change their entire life. They now have to spend months looking for a new job, or they have financial issues to worry about. They worry about why it was them and not somebody else. And they feel, of course, unjustly treated. They want benefits, they want pay, they want some form of support. And whatever the company does, it's never quite enough. And I think companies have good companies, what I call irresistible companies have bent over backwards to help people who are let go find new jobs, to connect them to an alumni network and to keep in touch with them because sometimes the company wants to hire them back later.
Speaker 1 00:03:51 There's a funny story that I heard from the c h O of a large defense contractor many years ago, and she said, You know, in the defense industry used to be very common to let all the people go, who worked on a big program when it ended. So if you worked on the F 15 or whatever it was, and the government canceled the contract, the whole organization was just gone. And she said to me, one of the problems that they were running into in Southern California is there was no one left to hire because so many people had been laid off from this particular company that they had all said, We are never working for you again, ever. So if you start up another big program, we're not gonna join it. And she said they were finding it very, very hard to get these engineers to come back.
Speaker 1 00:04:30 And in many of these businesses, especially social media or tech consumers are employees, employees or consumers. So if you're Walmart or maybe Wells Fargo or whoever it may be, and you lay off a massive number of people in a very inhuman way, those people aren't gonna be your customers ever again. I mean, ever, most people who've been laid off, never forget the day, they never forget the week, They never forget their boss, They never forget the management. And they, they hold a grudge against the company if you're not careful. So there's a very personal part to this too. The third thing I wanna mention about layoffs is that even though they're difficult, painful, frowned upon, they're so oftentimes healthy. And here's what tends to happen in the companies that I work with, and this is a lot of the work I've been uncovering during the production of my book.
Speaker 1 00:05:23 As companies grow, there is a natural tendency to hire more people. And each individual line manager, whatever that person's job is, sales, marketing, distribution, customer service, it, finance, hr, whatever, will go to their boss and say, We have too much work to do, We need more people. And the simplest answer is, you kick it over to the town acquisition team and they go out and they find somebody to fill the job. Unfortunately, that doesn't scale well, companies don't grow linearly with the number of people. If each person does not increase or at least maintain the level of productivity, actually the opposite will happen. The more people you hire, the slower the company will move relative to its past because there's more people to talk to. So if you haven't broken down the work into the appropriate teams, if you haven't been constantly redesigning, as we call it, the work and the jobs, hiring more people can oftentimes be a slowing down process.
Speaker 1 00:06:25 Because if the management team isn't clear on how we're gonna manage this now larger group of people, you've just created more meetings, more interconnections, more discussions, and more complexity. And so what a layoff does is it's kind of like losing weight where you know, after a while you realize, you know, I haven't been eating very healthy and it's been, I haven't been getting enough exercise, I haven't been walking around enough and whatever, I gotta stop and get myself back on track. And honestly, that's what companies need. And this is why we talk so much about the four R's in a lot of our HR strategy, recruit, retain, reskill, redesign. You have to be redesigning the organization on a pretty regular basis. Now, one of the reasons that agile organization models are becoming so popular, and there's a whole series of chapters in my book about it, is because if the company is set up in an agile way, additional staff immediately become productive because they join teams and work on projects that are clearly defined and they don't have to interconnect and interlock with a hundred other people to figure out what to do.
Speaker 1 00:07:31 I have worked in companies, believe me, or I was hired and my manager was very clear that I was needed. But as soon as I started, a lot of other people looked at me and said, Oh welcome, you're in that group. Okay, nice to meet you. And that was the end of it. And I was left to figure out how I was gonna add value when they don't really see any reason for me to be around because they've got other things to do. And so I think hiring is much, much more complicated than people realize. And when you hire quickly, you, you almost always create problems. I mean, the theory and the concept that many leaders now understand is hire slowly. Take your time, make sure you know that this person fits. Make sure you know that you have the right work design for this person.
Speaker 1 00:08:13 Make sure that their skills fit the needs of the complimentary skills of the other people on the team and the project. And make sure you know you're hiring somebody for a long time. One of the truisms or concepts that I learned many years ago and I've discussed before, is people don't become the company. The company becomes the people. There's this belief system that our company is so well described and defined, and we have such a great operating model that people will come in and they'll learn how to do things our way. Yes, of course that's true. But the opposite happens too. If you hire a whole bunch of new people quickly and they all come from different backgrounds and different cultures and they don't have time to assimilate into the culture of the company, you just changed your company. And I think companies like Twitter have probably been going through this, maybe not Twitter so much, but certainly lots of startups where they've hired a lot of people very quickly and they haven't taken the time.
Speaker 1 00:09:05 Now, the final point I'll make on this topic is hr. For those of us that are in hr, we are very conscious of these issues. You've probably been through a merger and an acquisition, you've had to lay people off. You've looked at people in duplicative jobs and you've, you know, had to make these difficult decisions. The opposite of that is when you do hire your job or our job is to make sure the organization is clear on the responsibilities of these people. And we are not reducing productivity by hiring people. I'm not saying that's easy, but you have every right to ask those questions during this scale up process of the company. So you're prepared before there needs to be a scale down process. And I also think one of the things that's been going on in the last couple of years is many of the high growth, high market cap, overpriced, overvalued companies that are now laying people off are run by people that are relatively young in their careers.
Speaker 1 00:10:02 They haven't been through a lot of this before. They're learning on the fly. And they do believe that scaling is all about hiring and they maybe haven't had the opportunity or the exposure to a situation where you have too many people and it's really, really difficult to figure out what to do. And it's a very unique skill to take a large organization that is not functioning well and figure out how to redesign it, reorganize it, and possibly downsize it to, to make it more effective. By the way, I have a feeling what's going on in Elon Musk's mind, and I have no way of knowing exactly what is going on in his mind, is that one of the things he's saying is, I don't have time to figure out everything that's going on in Twitter. So let's just start with a layoff to clean things up and get everybody focused.
Speaker 1 00:10:50 And there've been all sorts of hilarious stories about engineers having to print out the code they're working on and talk to Elon one-on-one about what they're doing. That may be true. I don't know that that's good or bad, but the company probably needed it. And I would be willing to bet that after the disruption that's taking place is over, we're probably gonna see some interesting new things come outta Twitter that are badly needed and long overdue. Now let me talk about the layoff issue for those of you as individuals who have been laid off or have the unfortunate opportunity of getting laid off. And I'll give you my own personal experience and the experience. I've talked to many other people. So I'm in my mid sixties entering my late sixties. I've been working since 1978. I came out of college as an engineer. I had a pretty traditional expectation for my life.
Speaker 1 00:11:41 I had no aspirations to run my own company or be an entrepreneur ever, even though my father did it and went to work for a big company. And I thought that was that. And as some of you know, I worked for Exxon for two years as an an engineer, decided I didn't like it, went back to college, was gonna get a PhD, decided I didn't like that after a master's degree, I went to work for ibm. Spent 10 wonderful years at ibm, watched IBM go through a wrenching transformation from the proprietary systems business to the open systems business. Didn't really make that transformation well and watched the company go through massive downsizing. I worked on the 21st floor of a building in San Francisco called 4 25 Market Street with a lot of other IBM people. And one day I was there in the corporate staff and there were, I don't know, 75 people on the floor.
Speaker 1 00:12:31 And I used to sit there and do my work and look out across the floor and talk to all these different people. A week later, I was the only one on the floor. I mean I, I, I can't believe this happened, but they laid off so many people. I was one of the only people left on that floor. And I used to go into the office and I was playing around with OS two at the time if anyone knows what that is. And I used to just kind of get depressed. So anyway, I eventually left along with a lot of other people, went to work for another company. It was a software company called Sybase. Very high growth company in the database market. Extremely well run at the time, very demanding company competing with Oracle, but really having a lot of fun. We grew like crazy, hired tons and tons of people.
Speaker 1 00:13:10 I met some of the smartest people I've ever met in my career there. And about seven, eight years into it, our main competitor at that time being Oracle and to some degree Microsoft taught us in the market, figured out what we were doing, replicated our technology and really made it hard to grow. And so Sybase acquired Powersoft and a couple of other companies and tried to get into a more enterprise oriented set of products. It was back in the days of client server. And uh, it was tough because we hired many, many good people, but the core strategy and fundamental belief system of the company was still based on this database technology that had become somewhat commoditized. And I don't think people could come to grips with it. And so a company that was very well run and very productive and very successful during its growth phase had a very hard time spreading its wings to become more of an end, end solution provider.
Speaker 1 00:14:03 So there were layoffs. And I remember, funny enough, same thing that happened at IBM happened to me again. I was on in a floor of an office in Emoryville, California, which is across the bay from San Francisco. It had more cubes, so it was harder to see people, but I knew there were about a hundred people on the floor on a Friday afternoon. I got an email accidentally pre announcing the layoff on Monday. I don't know why I got it. Somebody pushed the wrong button and I knew something was gonna happen. Monday morning, I came in and most of the people on my floor were packing their boxes. There were cardboard boxes, but on everybody's desk, those that were laid off with instructions. And basically you had two or three hours to pack your stuff and get out of the building. So by the afternoon of Monday of that following week, I was one of the only people on the floor again.
Speaker 1 00:14:52 So I witnessed that. And of course I knew a lot of these people and still do, and felt terrible about it. And it took a long time for Sybase to recover because so much brain power had left the company that there really wasn't the same core team. A new management team came in and the company tried to reinvent itself around the time I left, my third experience with layoffs was at digital. Think I had left Sybase. I had gone to a startup. We were working on some e-learning software. It was a very interesting little company. We sold it to a publicly traded company by the name of digital. Think some of you out there know the company Digital Think was the pioneer of online learning around 1998, believe it or not, before the internet was that big. This was around 1999, 2000. Of course we had a complete market meltdown in the middle to late 2000, followed by nine 11 and 2001.
Speaker 1 00:15:44 And sometime between the end of 2000 and the middle of 2001, the stock market had a huge crash. And I got laid off. And what happened to me, for those of you that had been through this, is the same thing that happens to everybody. It was a complete surprise. The founder of the company called me into a conference room, gave me a manila envelope and didn't say a word. I think he was too embarrassed or maybe a little afraid to say anything. And I just looked at him and I said, Are you laying me off? And he goes, Yes. And that was the end of it. I took the orange paper thing with, I didn't say a word to him. I really was too stunned. I took the envelope back to my desk, which was in an open office. So there were people all over the place.
Speaker 1 00:16:25 And I just had, you know, this terrible pit in my stomach. And I called my wife and I told her to come pick me up cuz I did not feel capable of driving home. I was just too upset. And we left my car in San Francisco and she drove me home and I came back and got my car a couple days later. So these are very, very difficult situations for individuals. They're very difficult situations for managers, but they are reality of the business world. And let me give you the positive of all this business is a wonderful creative endeavor. The reason business is so cool is that companies and individuals are constantly coming up with new ideas, new products, new services, and then new organizations around them. And everything that was a best practice 10 years ago changes. So there's all sorts of new ideas being invented all the time.
Speaker 1 00:17:15 We as individuals, if you decide to work in business, are part of that. Maybe you're an engineer, maybe you're a salesperson, maybe you're a marketing person, maybe you're a finance person, hr it, you are part of this highly dynamic, self-creating never ending process of coming up with new ideas, solving problems in new ways, addressing customer and market needs and innovating. And there will be times when bad things happen. That's just the way innovation takes place. And for you as an individual, think about a layoff as a gift, as difficult as it is, and as disruptive as it is, and as upsetting as it is, you have been given a gift that says it's time for a change. And when I left digital, think it was the greatest gift I could have been given. Of course, I didn't know that the first couple of months, but of course what happened to me is I pulled myself up by, by my bootstraps and just decided I was gonna find something to do.
Speaker 1 00:18:16 And it was a pretty tough time to find a job because the economy was kind of in a mess. But I founded Project doing consulting work for a little company by the name of Saba Software, if you know them. And that was the beginning of my embryonic growth as an industry analyst, as a product manager, as a consultant in hr. That was in the year 2001. So it was 21 years ago. In the last 21 years for me personally, have been the most enriching time in my entire career. And I would suggest to those of you that are laid off or have friends or relatives are laid off, the same thing is probably gonna happen. You know, unfortunately, we as human beings tend to get into ruts. We like our company, we like our job, we like our team, and we just keep doing it.
Speaker 1 00:19:00 And maybe we don't get promoted at the rate we should. Maybe we don't get a raise at the rate we would, we should, but we're risk averse so we deal with it. A layoff is a good jolt or shot in the arm to change that. Now let me just make this clear. I'm not trying to make light of the of the stress. It is a stressful thing. If you don't have savings, if you have a new child, if you have medical issues and need insurance, there's all sorts of complex, difficult stress creating things that happen when you're laid off. And it is hard to find a job, even if there are a lot of jobs available like there are now. You have to go through interviewing, you have to find a company that works. You may go work for a company that doesn't work out and then you have to go to another one.
Speaker 1 00:19:43 I mean, it's, it's a hassle. But ultimately think about your career as a stair step journey to self-fulfillment. Because what happens when you get laid off is you're forced to think about yourself, your needs, your interests, your skills. And you usually find something better. You're a little bit smarter about what you're looking for. You're a little bit wiser about what not to do and who not to work for. And chances are the next situation you're in is going to be better. So let me give you that as a little bit of a positive inspiration in this process. I'm not gonna try to give you a book on layoffs, there's hundreds and hundreds of them, but I just wanna give you some perspectives that in this time of reinvention and stress of the economy, and of course we have this weird inflationary, very high growth, low tolerance economy that we're living in, there's going to be a lot of disruption.
Speaker 1 00:20:37 And if you don't voluntarily leave your job to go somewhere else, you might have to do it without choice. But I think if you take a positive attitude, reach out to the people around you. You can always talk to me. I talk to dozens of people a day about their situations. I will be happy to give you any advice I can. Getting laid off is not the end of the world. And to leaders, to managers, to executives, I simply ask you to be sympathetic. I know you have to do this. I know sometimes you have no choice. I know it's difficult, but just put a dose of sympathy into the process and it will pay off in the long run. Thank you.
