A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

The need for a layoff can happen to any company of any age or size, but most companies and managers bumble the task and end up doing far more damage than necessary.

The damage is not just to those laid off, but also to those left behind, themselves and the company.

As most of you have read, Cheezburger Networker just laid off a third of its staff, but great credit goes to CEO Ben Huh for bending over backwards to do it with the least damage possible.

• He cut his vacation short when he realized what had to be done, as opposed to delegating it and staying away until it was over.
• He was honest, open and candid with his entire staff, thus avoiding the kind of rumors that typically circulate.
• He did everything possible to ensure those laid off found new positions, including personally reaching out to other companies and setting up his own job fair.

In short, he did everything I recommended in 2008.

I only know of one manager who got his jollies laying people off (he always tried to do it just before Thanksgiving or Christmas) and he was, without doubt, a sadist.

Most managers, like Huh, find them to be tremendously emotional and not at all fun.

“Often, when faced with a problem, you want to run in the other direction. It’s like seeing a lion in the jungle. But I have to do what is best for the company, even if it sucks emotionally.”

There’s one more required action after a layoff and that’s dealing with the empty space, which can’t be ignored, but can be done positively without spending big bucks.

Image credit: HikingArtist

As companies grow and managers build their organizations they frequently talk about “weeding out” low performing employees—Jack Welch was a ninja weeder.

If that thought has crossed your mind you might take a moment to think about James Russell Lowell’s comment, “A weed is no more than a flower in disguise.”

As with weeds, there are better ways to look at under-performing employees.

Seeing a weed as food changes everything, just as seeing people’s potential does.

95% of the time it’s management failures that create weeds and those failures run the gamut from benign neglect to malicious abuse and everything in-between.

Weeds can come from outside your company, inter-departmental transfers and even from peers in your own backyard.

What is amazing is how quickly a weed will change with a little TLC.

“Weeds can grow quickly and flower early, producing vast numbers of genetically diverse seed.”

People grow quickly, too, and often produce innovative ideas just because someone listened instead of shutting them down.

And while trust that your attitude won’t change takes longer to build, the productivity benefits happen fairly rapidly.

So before you even think about weeding look in the mirror and be sure that the person looking back is a gardener and not a weed producer.

Flickr image credit: barockschloss

Carol Bartz was hailed as a savior both inside and out when she took the reins as CEO at Yahoo.

But that was then and this is now.

Martin Berko, who writes a pithy syndicated financial advice column, describes her this way,

Big Mamma is a brutish CEO who is not liked by Wall Street. She has no experience in running an Internet information provider or generating advertising revenues and is about as subtle as a train wreck. She’s confrontational with analysts, the media and key employees.

Make that most (all?) employees.

December 14 Yahoo announced a 4% layoff and started sending pink slips to 600 people.

Yahoo management chose to do this the week before Christmas.

I say ‘chose’ because when I called the half dozen Yahoo managers I know and asked when the layoff was decided they all said they had known in October.

The folks I talked with aren’t executives, but mid-level line managers.

Granted, there is no good time or easy way to lay people off, but there are better and worse ways to handle it if one becomes necessary and ten days before Christmas doesn’t qualify.

Layoffs, like deaths, are a shock even if you know it’s coming, not to mention the intrinsic “but me” factor.

If the layoffs had been done in October people would have had some time to get over the shock, prepare and batten down the spending hatches before the holiday season started.

Then there is the long-term damage to Yahoo.

Yahoo says it is still hiring in other areas, but it’s desirability as a place to work just sank even lower.

Even if Berko is correct and Yahoo is acquired and/or Bartz is replaced the memory of “the week before Christmas layoff” will remain.

Sure, people will accept offers because of the economy, but they are unlikely so see the company as a long-term career path.

The term “taxi job” refers to stopgap employment while looking for a permanent opportunity.

The timing of this layoff will certainly raise Yahoo’s positioning in the taxi lineup.

Flickr image credit: http://www.flickr.com/photos/yodelanecdotal/497378654/

Budget woes are disrupting state and local governments and everything they fund. Cuts are being made and what better place to cut than those things that don’t show up immediately? Things that are either out of site, like infrastructure, or that can be pushed off to when times are flush(er), such as learning.

As most CEOs will tell you how better to reduce costs than to reduce headcount? And that means firing teachers—more than 100,000 come June and that’s not all.

As a result, the 2010-11 school term is shaping up as one of the most austere in the last half century. In addition to teacher layoffs, districts are planning to close schools, cut programs, enlarge classes and shorten the school day, week or year to save money.

Politicians, especially local pols, tend to focus on supplying instant gratification to their constituency in order be reelected, so even as the economy improves you can’t count on the money being replaced and teachers rehired—assuming they are still available.

It’s far easier to use smoke and mirrors to show that kids are doing just fine in the brave new reduced budget world—smoke being standardized tests as viewed through the mirror of lowered standards.

Education offers little in the way of instant gratification to voters, rather it offers whining kids complaining about homework, tests and tough teachers who have the nerve to expect them to stop texting, pay attention and learn. (What nerve.)

Not all kids are whining, some in New Jersey are protesting the cuts approved by voters .

The mass walkouts were inspired by Michelle Ryan Lauto, an 18-year-old aspiring actress and a college freshman, and came a week after voters rejected 58 percent of school district budgets put to a vote across the state (not all districts have a direct budget vote).

The full damage of cuts now won’t be felt for years to come, but the voting public has both long and short-term memory loss and the pols who did it will be long gone—or moved to a higher level.

And America will be left wringing its hands and moaning about its loss of world leadership and the incredible difficulty of finding good talent to hire.

Image credit: 19melissa68 on flickr

The economy is improving a bit, enough that companies are doing some hiring. And, just as in the past, the same idiotic attitude is surfacing.

It starts with a reference to the need for employee engagement and that ‘experts’ say that the companies with the best long-term success rates retain and grow their human resource base from within the company to ensure it.

But when a company fulfills its human resource needs by hiring from the outside, in most cases, it’s picking up the “rejects” from other companies.

And that part sends me ballistic.

Of all the totally wrong-headed attitudes I’ve heard on the subject of hiring, there is only one that is comparable and, in fact, they go hand in hand.

During every recession I’ve seen the theme is that the only employees worth hiring are the ones who are still working.

Even now, in a recession that dwarfs the previous ones and companies have cut 50% or even more of their workforce and are still cutting, those who are laid off are tagged as “dead wood” or “difficult.”

My blood still boils when I remember the excellent people who were completely trashed by that attitude.

I do agree that growing people from within is good company policy; however, there are dozens of reasons why a company not only would, but should, hire at levels other than entry.

• No company can go through significant growth and not hire from the outside—it’s a given part of that growth. For example, most startups and high-growth companies have neither the diversification, nor the depth, of talent needed when growth kicks in, so they hire at all levels.
• Hiring strictly at entry level and promoting only from within can create a hidebound culture steeped in a not-invented-here mentality, not only for products, but for processes—as happened at both IBM and HP.

There are dozens of other reasons (think about your own experience), but the reject and the dead wood attitudes are not among them.

The dead wood/difficult premise is BS, flawed, short-sighted and plain stupid.

The common belief that “stars” are independent of their circumstances just doesn’t stand up to analysis.

Most people work to the quality of their managers and the validity of the company’s culture—if they don’t shine it’s because they aren’t engaged; give people good managers and good culture and they can all be stars.

It is beyond stupid to lay work quality issues at the door of employees with no consideration of management or culture.

Image credit: TheTruthAbout… on flickr

Now find out what stupid has to do with shame and duty

Image credit: cesarastudillo on flickr

Layoffs are so common these days that there’s little left to say about them, but what about after?

Whether you are a team leader, a CEO or something in-between, you need to deal not just with the casualties, but with the survivors—many of whom are walking wounded.

Morale and productivity go hand in hand and both usually go south when layoffs happen and all those empty desks are a constant reminder of the friends and colleagues lost in the storm.

Even if those laid off didn’t always pull their weight or weren’t that well-liked, the layoff erases all the bad leaving only positive memories uppermost in the minds of those still there.

Shortsighted as it is, many large companies are more concerned with subletting empty space than with the effect of empty offices and shifting employees to further cut costs. The more forward thinking ones bring in professionals to help with space reorganization—but the money spent on that can backfire if employees see it as money that could have gone to keeping jobs.

The problem is even more critical for smaller businesses where the loss of one or two people often creates a hole as big as hundreds do in a larger organization.

What to do?

Follow the lead of the designers in the article without spending the bucks.

1. Don’t leave the spaces, whether offices or cubicles, empty. If you do, they become a constant reminder of friends who are gone.
2. Reusing the spaces, equipment, furniture or stuff is fine, but not on a first come, first serve basis. Assign it based on real need, not seniority, and don’t play favorites.
3. To use the space in the most productive way bring your people together and brainstorm ideas.
4. Changes, such as a lounge or brainstorming area, can be done without expensive goodies.
5. Use imagination instead of money in changing/redecorating the company and reinventing extra spaces.
6. There is amazing art to be had in thrift stores and garage sales and you may have employees who love that kind of shopping.

Finally, this kind of creativity is fun and exciting; it not only saves money, but unites people in a common goal.

Like the alchemists of old, you can’t really turn a layoff into a positive event, but you can, with effort, keep it from being a black hole and convert it to an opportunity to move forward.

Image credit: Jake Sutton on flickr

How do you set policy at your company?

In Saturday’s links we have an example of just how badly companies write policy.

“His severance package gave him 6 months salary guaranteed, plus a 3 month extension if he still hadn’t found a job at the end of the 6 months. The culture of the company is such that most people just don’t notify the company when they find a new job, and so end up getting the full 9 months of severance. As a manager, he told people he had to lay off to do this (not report their new job), and his manager told him the same thing. He recently met with a former HR manager who is also now laid off from his former company and she is doing the same thing…not telling and just collecting the extra 3 months. She says it is common practice.”

The numbers are nothing to sneeze at, for an executive at $100K annually that’s 50 thousand dollars; Assuming it’s the same at all levels, a far more junior person, say $40K/yr, its ten grand. Even today that pays the mortgage for several months.

Sure, it’s unethical to take the money, but it’s also appears to be common practice in this company. It’s difficult to believe that the company, in the form or the CFO or someone else in finance, isn’t aware of what’s going on; HR certainly must know, since one of its own is doing it.

Who writes a policy such as this? Maybe HR, but since it involves severance it would be signed off by finance and, depending on the size of the company, the CEO.

So the question becomes WHY? Why would the executive team approve a policy that could cost the company tens of thousands of dollars when it could least afford it?

WHAT were they thinking? Two things come to my mind…

• The board favored a stingy severance package (although six months doesn’t seem stingy) and this was management’s way around that; or
• management is completely asleep at the wheel.

What do you think?

Image credit: MichiganMoves on flickr

Last Friday I described a problem that “Jim” had called me with and asked you to offer up ideas that Jim could use.

In a nutshell: Jim is an executive and his CEO planned to scale necessary pay cuts so that young, single employees would take the biggest hits and those with children the smallest. Jim questioned the legality in terms of reverse discrimination, but worse he believed that the differences would become known and that would destroy employee trust and decimate the company’s culture. He wanted ideas on what to do.

In the first round of comments everyone agreed that Jim shouldn’t say anything, but also agreed that it was unlikely to remain a secret.

Everyone commented that what Jim could do was dependent on how open his CEO and the culture was—I assured them that Jim had indicated that it wasn’t a done deal and that she was completely open to other approaches.

Rob Hooft suggested that “within each function group, establish a base salary (e.g. comparable with the lowest starting salary in the group), and cut a percentage of what the people earn in that group above the base. An employee with a salary of 55k in a group with a 40k base and a 20% cut would lose 20% of 55-40=15k, that is he will be cut to 52k.”

But I’ve found that complicated actions are frequently misunderstood, so I couldn’t recommend this to Jim. However, Rob also said, “The cutting of the morale must be prevented by positive communication around the process, a real hard job for the CEO.”

Everyone agreed that this was critical to whatever solution was finally adopted.

Rick pointed out that “…the CEO that her pay needs to be cut more (in amount, not necessarily percent) than anyone else’s, and the amount of the cut needs to be leaked. Or, she could simply announce her own cut without any hoopla.”

Phil Gerbyshak suggested that when she makes her statement she should “mention that this cut was done in place of massive layoffs or in place of selling the company, something nobody wants.”

More was said, but you need to read the post.

My own suggestions parallel most of the comments, but while I agree that the CEO cut needs to be the largest, the percentage can’t be smaller than her employee percentages or it will look like a scam.

Additionally, I think all the execs needed to feel the pain and exempting so-called stars could destroy the rest of the organization’s moral.

The CEO might also use a series of Town Hall meetings to solicit ideas and input from employees at all levels on ways to cut expenses.

Sunday Jim and I discussed the suggestions so far; he is excited and is planning to show the thread to his CEO.

He’s hoping that over the next few days more ideas will come in to fuel a discussion with the rest of the executive team this week.

I’ll post updates as the come in and share the results when a plan is decided.

Image credit: svilen001 on sxc.hu

Alexander Kjerulf over at Chief Happiness Officer shared a fascinating write-up (one of the case studies for his new book) about Wim Roelandts, CEO of Xilinx, managing through his eighth recession. During 2000 recession Wim decided there was a better way than the standard Silicon Valley of repetitive rounds of layoffs—and he proved there was. He called his strategy “Share the pain;” it was completely voluntary and 2799 out of 2800 employees opted to take the graduated pay cuts. He held fast in spite of opposition from both his Board and Wall Street analysts and it worked.

Next is a new book by Dave Hitz who co-founded $3 billion NetApp, number one of Fortune Magazine’s 100 Best Companies To Work For. How To Castrate A Bull & Other Corporate Survival Tips looks like a great read. Enjoy!

Last but certainly not least are two takes on Tony “A company’s culture and a company’s brand are just two sides of the same coin” Hsieh, the guy who built a billion dollar company on its culture. Both are takes on his keynote talk at SXSW 2009, but bring out different points. The one from Fast Company includes seven steps to incorporate Zappos core values into your company; the other is The Onion’s Baratunde Thurston via CNET.

Have a wonderful weekend!

Image credit: flickr