Tale of a Reformed Corporate Executioner
The plan was foolproof: Managers would inform 400 employees that their jobs no longer existed and tell them to vacate the premises. But nothing is ever quite that simple.
OAKLAND, CALIF. — MAJOR corporate layoffs have become commonplace. Last week, for example, Fleet Financial Group Inc., the largest banking company in New England, announced it would cut 5,500 jobs even though it earned profits of $448 million in 1993. Many stories have been written about the impact of such layoffs on those fired. This article, however, tells of such an event from the other side - the experience of a personnel manager who helped orchestrate the layoff of 400 of his colleagues at one of the largest companies in the San Francisco Bay area.
The day I knew I had to get a new job, maybe even a new career, was the day we were told that our company president, John Coombes (not his real name), had resigned.
The announcement was of no real surprise, especially to those of us who had worked closely with John. He was a pleasant enough person to work for, but completely indecisive and given to making on-the-spot declarations that he regularly reversed. Under John, the company, a $4 billion West Coast subsidiary, was a true case study in hierarchical chaos. If ever there were living evidence that good, even brilliant, engineers do not necessarily make good managers, John was it. Famous for his patents, he was equally infamous for his inability to lead.
The events leading up to John's departure began at 5 a.m. one Friday six months earlier. A selected group of human resource managers, of which I was one, met to coordinate the layoff of 400 employees. We gathered privately in a secluded conference room that had been set aside (and specially locked) weeks earlier as the coordination point for the day of the layoffs. This was command central - the place where names had been bantered about and where the details of how their employment would be severed had been devised.
For a full month we had met in this room every day during lunch (a time chosen so as not to raise suspicions), planning each minute and scripting every word that would be said. Everything had to be confidential and nothing could be left to chance.
We had to plan for every possible contingency imaginable: In case of violence, we had security guards; in case of shock or temporary insanity, we had counselors; in the event of employee vindictiveness, we had all system passwords terminated the precise moment of the layoff. We even identified the closest exit to facilitate whisking the affected employee out of the building with the least disruption.
The actual layoffs would take place in individual meetings with the employees. The human resource representatives scheduled meetings every half hour in various conference rooms around the building. The language that was used in these meetings had to be absolutely clear. Both for legal reasons and because most people in shock do not comprehend much, we memorized a speech that went something like this:
``We regret to inform you that due to a recent reorganization, your job no longer exists. We made every effort to find a place for your skills in the new organization, but have been unable to do so. This decision is not a reflection on your job performance or skills, but the result of business change. It has been reviewed at the highest levels of the organization and will not be reversed.
``You will be escorted to your desk and allowed to pack your personal belongings. You are to be off the premises within one hour and are not to return. Should you have forgotten any personal belongings, they will be mailed to you. The company has provided an outplacement center at another location to which it is suggested that you report at 8 a.m. tomorrow. Your supervisor will provide you with a packet that explains your severance pay and benefits. Included in that packet is a letter of final settlement (absolving the company from any further liability) which you must sign in order to receive your severance pay. If you choose not to sign it at this time, please be aware that this offer of severance pay expires at the end of business today.''
The first task of that day - one that would become known as ``Black Friday'' - was to distribute a memo to the desk of every employee who was scheduled to be laid off. Distributed before the unsuspecting employees arrived for another day of work, the memo was noticeably brief. It told the employees that a meeting had been scheduled at a particular time and place. This meeting was ``to supersede all prior commitments'' and ``attendance was absolutely mandatory.''
The first two layoff meetings I held went well. The employees simply stared at me or the papers in front of them, signed the letters, collected their checks, and went home. The third meeting did not go so well. Once we were all seated, I gave my speech to a woman in her 30s who, like the others, stared at the floor. When I finished, she did not move for several long seconds. Then she stood up and paced the length of the room. ``What am I supposed to do?'' she asked, not waiting for the answer we couldn't give. ``I am a single mother, my parents have long passed away, and I just closed on a house two weeks ago. I need my job,'' she said as the tears started to flow.
MY first inclination was to offer some comfort or some words of encouragement, but the company attorney had warned us not to do anything of the sort. It was for the good of the company that we restrain ourselves, lest we make some promise that would end up in court.
The human resource managers met at the end of the day. The vice president of the department began the meeting by thanking all of us for our hard work. He said he had a few items of business to discuss. With that, he read the names of our co-workers who also would be losing their jobs. These were my comrades, some of the same people I had worked so closely with in our daily meetings. I scanned the room, searching the faces of those whose names had been called. Judging from their calm expressions, it was clear that the vice president had had the decency to notify them ahead of time.
Almost six months to the day from that ``Black Friday'' John resigned. Many of us suspected that it was John's mismanagement of the organization that had gotten the company into trouble and caused us to have to lay off so many of our co-workers.
The grand finale, however, came later that afternoon when the evening paper reported John's resignation, as well as the payment of a $4 million golden parachute. The $4 million - a lot of money in any case - was roughly equal to the annual savings recouped from the layoffs. All those people had lost their jobs, had their families uprooted, and had their futures compromised so that one man, someone who had seemingly added little value and probably hurt the company, could live out the rest of his life in comfort. That was the day this corporate executioner put away his hatchet.
It's not that I think layoffs are inherently bad. A layoff is the best thing that can happen to some people, forcing them to leave the protective skirts of a corporation and pursue their life's dream. Layoffs have been around for many years and have, in fact, become much more humane. My father recently reminded me that when he was laid off from a large oil company in the early 1950s, there was no such thing as early retirement, severance pay, or golden parachutes.
What forced me to rethink my involvement with layoffs was the reasoning that drives so many companies to them. Rather than being a cost-saving measure of last resort, layoffs have become the quickest and easiest way to strengthen a sagging bottom line. But at what cost?