This is the second in a three part series on trust.
“You have to do a layoff,” said Jim Porter.
We were a fast growing company and an icon of success. In fact our byline was “We are success.”
Cracking the market was exciting. We experienced amazing growth through market acceptance. When a market is buying, there is no better feeling in business. They loved us, and we were all exceeding our goals and making money. We were successful!
There was no way I could imagine we could do a layoff.
Escaping the Patina of Failure
A layoff said we weren’t who we said we were. We had failed and must regroup. Personally, it said, “Charlie failed” to everyone in our company and the market.
“I love our people. They are doing all they can so we will succeed. I’m sure we could figure some other way out of this mess,” I said.
But there wasn’t. We went from making money every year to losing money. We were borrowing from corporate. Corporate, represented by Senior VP Jim Porter, was not going to keep funding our losses. They stopped trusting in our strategy.
Pride Goes Before the Fall
This can happen to any fast-growth company if they are around long enough. To maintain the fast growth, the management team begins to get ahead of themselves. They become prideful and believe whatever they can envision can become a reality.
They get into one too many lines of business or one too many sales channels, and they start losing money. They can’t hit the goals. The misses drag down the successes. They have to cut expenses to survive.
So I asked Jim, “How do you do a layoff? How do you fire innocent people? Is there a right way to do this? Is there a way to do this so the people don’t get hurt?”
What I really wanted to ask was, “What can I do so the people we fire and the people who stay still like me and trust me?” I didn’t have the nerve to expose myself. But Jim was wise. He knew exactly what I was thinking (and feeling).
How to Do a Layoff
1. Decide on a simple strategy. Get back to what you are best at doing. Cut what you are merely good and, obviously, bad at doing.
2. Decide on who and what to cut. Then go even deeper in making the cuts. After the layoff, you gain trust by getting to a manageable and believable expense base.
Best if you are instantly profitable, but if not, then take as much ongoing risk out of the business to ensure survival. This inspires trust in the employees who remain. They come to believe, “We can fight our way out of this. We can rebuild.”
3. Decide to do it sooner and not later. Do the layoff and move on to the new strategy with the remaining team.
The Buck Stops Here
The day we did the layoffs was a dark day. That morning I came into the office, called together my management team, and gave them one last bit of encouragement. They left and then I fired our people, our coworkers, our friends.
One by one the doomed employees were called into their offices and told they were being laid off and given their severance package. Some people took it quietly and understood.
Others were raging mad and made it known to the manager and throughout the office. Some people threatened to sue us and did. That day we released one third of our great team. And it was all my fault. The buck stops here.
The next day I walked around the office and experienced something new. “They don’t trust me anymore,” I said to myself. I could see it in their eyes. “Should I continue to follow this guy?” But they have to trust some employer.
Learning to Trust Again
I came to the conclusion, I can only do what I can do.
First, I had to trust the people who remained.
Second, they had to trust me. Without this mutual trust, there was no way for us to succeed. Any doubts or mistrust would feed on itself.
As the CEO, I learned trust isn’t something you ask for. Trust is something that is given. You earn it. Once you lose it, the only way to get it back is to trust in the person whose trust you are trying to earn.
But first I must learn, again, to trust myself.