Layoff Costs: Could They Last Two Years?

[00:00:16] Thanks for listening to this week's episode of Quick Take, where we talk about the questions that are on the minds of executives everywhere. Connect with us and share what's on your mind.

[00:00:25] You can find us on LinkedIn, YouTube, or whatever nerdy place on the internet you find your podcasts. All the links you really need are in the show notes.

[00:00:35] Welcome to Quick Take. I'm your host Susie, along with James, and I appreciate you, James.

[00:00:41] I appreciate you, Susie.

[00:00:42] So James, I was working with an executive team this week and we were talking just in general about kind of the status of the business and what they're looking to achieve in the next year.

[00:00:54] And it was kind of a strategy meeting and they started talking about some changes that had happened in the organization, some layoffs that had affected the team.

[00:01:04] And it was interesting to me, not that they brought that up because they were looking toward the future and what they didn't have on the team.

[00:01:11] What really struck me was the layoffs happened more than 12 months ago.

[00:01:15] And I even said to them, I said, when did this happen? Did this happen recently?

[00:01:20] And they were like, they also had to think about the longevity of it.

[00:01:25] It seemed very recent to them.

[00:01:27] So I just thought it was interesting.

[00:01:30] I find that layoffs are very disruptive and we think about the disruption happening to the person that left.

[00:01:36] Like we focus so much on that and we don't really talk about what happens to the people that are still there.

[00:01:42] Yeah, it's an easy thing to overlook because you do spend as an executive so much time trying to go through who's going to leave, you know, the financial plan around that.

[00:01:53] And like many things, you know, we spend too much time on the planning of an event.

[00:01:57] And once it happens, we don't look at the all true after effects of it.

[00:02:02] And I think layoffs are just are insidious.

[00:02:05] They go on forever.

[00:02:06] Yeah, it's funny because you think about the person, you think about the package and you think about the communication plan.

[00:02:12] And it's almost like then it stops once you press send or when you have the conversation like, OK, it's over.

[00:02:18] Clean our hands.

[00:02:19] That's all.

[00:02:20] Right.

[00:02:20] That's not true.

[00:02:21] No, not at all.

[00:02:22] In fact, there's a really interesting company called Culture Amp and their CTO or their CEO and their people, head of people experience actually just published a study on this in the Harvard Business Review.

[00:02:35] That was just extremely telling.

[00:02:36] I mean, their analysis says that, you know, the impact of a layoff can last as far more than 24 months and that they showed their research showed that those who are laid off have like a 25 percent decrease in their willingness to either recommend the company or commit to the company.

[00:02:56] 25 percent decrease still after two years following that layoff.

[00:03:01] So it is absolutely devastating.

[00:03:04] And I think that left to its own momentum, it's really difficult for companies to rebound.

[00:03:13] That's so interesting.

[00:03:15] And I it takes that's such a long time.

[00:03:18] It is to think about that team.

[00:03:20] It also makes me think about the collective, the group and the disruption of that and how important it probably is to rekindle that that connectivity.

[00:03:33] Does that make sense?

[00:03:34] No, absolutely.

[00:03:35] I think, you know, just like anything related to culture, it takes a continuous effort.

[00:03:40] And I think that if you as a leader think that the layoff is done once the desks are empty and your team will be happy to have survived and continue to be motivated, I think you're sorely mistaken.

[00:03:54] And I think even if you have a strong culture and you have good artifacts of processes or ceremonies or things in place that promote that culture.

[00:04:05] Yeah.

[00:04:05] I think you need to, you know, turn the knob to 11 post layoffs to really move the move that chart back into the positive territory.

[00:04:14] You know, I think it brings up such a good point, too, that leaders aren't just developing individuals.

[00:04:18] They're creating a team.

[00:04:20] And you really need to think about the collective.

[00:04:23] I remember Google did a study around the difference between hiring a person or hiring a group.

[00:04:29] And they made the point that it's a lot better bang for your buck to hire as a collective because this group already kind of knows how to work together.

[00:04:40] I think those events, those things you can do together just makes a big difference.

[00:04:46] And I think it's important that you just, you know, you think about it.

[00:04:50] Yeah.

[00:04:50] You think about the individuals and the collective together.

[00:04:53] Right, right, right.

[00:04:53] So what are your tips for us?

[00:04:55] You know, I think one of the most important ones is it kind of bridges the gap, if you will.

[00:05:00] And I can't help but think about a layoff that Airbnb did in 2020.

[00:05:04] Their CEO, Brian Chesky, did something really unique and it got a lot of praise, both in, you know, in print or media, but also, you know, on the grams.

[00:05:18] He actually held these transparency and prioritization summits where he actually explained the layoff in detail.

[00:05:26] Wow.

[00:05:27] Explained the packages, the severance packages that the employees got.

[00:05:31] He even created an alumni talent directory.

[00:05:34] So people who are no longer part of the company, they were alumni, were still part of the talent pool that could either be brought in or be even recommended for the roles.

[00:05:45] So by, you know, by really recognizing the situation, being transparent and not avoiding the situation as painful as it is, you know, I think that what they did there was very unique and drove, created that culture or maintained that culture of connectedness that I think they really were proud of at the time.

[00:06:06] I think that's really good.

[00:06:08] I think that just to also remind people, you can have that seance or that meeting, if you will.

[00:06:14] But you also need to be open to the questions that are asked and be really thoughtful about the questions.

[00:06:20] My daughter, they had a similar thing after some layoffs and nobody was asking questions.

[00:06:25] And she asked some, just some clarifying questions.

[00:06:27] And she kind of, they didn't really answer in the moment.

[00:06:30] And then she got a message through her boss that she needed to ask her questions differently.

[00:06:37] And so it changed such a, it changed everything about the intent of that meeting by not, not really thinking about the questions and how you transparently answer those on the spot.

[00:06:50] Right.

[00:06:51] I, you know, I, I know that we have both worked at companies.

[00:06:54] I think, you know, our listeners have also looked at, worked at companies where there's that one individual who will always ask a question.

[00:07:00] You know, first question asked at a town hall is always Jerry's.

[00:07:04] First call, you know, first hand up is always Tom or, or Mary or whomever.

[00:07:08] It's always that one person.

[00:07:09] And they don't always ask the most, you know, well-rounded, well-thought-through questions.

[00:07:14] Then you have to be, as a leader, be prepared for that.

[00:07:17] And your daughter, maybe not as seasoned, not a senior executive, asked a real question that was probably on the minds of many people.

[00:07:25] And maybe not the format for that.

[00:07:27] But if you're not prepared to deal with that in a professional adult way, maybe that was an inappropriate question.

[00:07:32] I know your daughter, it wasn't probably, she's very bright.

[00:07:35] No, but it's a good point.

[00:07:36] In the worst case scenario, still, you have an opportunity as a leader to, to, to completely move that question to the positive column or the negative column.

[00:07:45] And it sounded like in this situation, they just really, really continue to dig the hole.

[00:07:50] Yeah.

[00:07:51] Didn't do a good job.

[00:07:52] That's such an important, like, don't just think about the questions that are going to be the obvious ones, but really like reframe it or really talk through.

[00:08:01] I think what you mean by this.

[00:08:03] Yeah, I know.

[00:08:04] Right, right.

[00:08:04] Right. Or if nothing else, just acknowledge it.

[00:08:07] Yeah.

[00:08:07] You know, I hear what you're saying.

[00:08:08] I really appreciate your question.

[00:08:10] And I'm sure that's on many of your minds.

[00:08:12] You know, I'm not really comfortable answering that right now.

[00:08:14] We don't know.

[00:08:14] It's still a fluid situation.

[00:08:16] There's lots of ways to do it.

[00:08:17] Fair.

[00:08:17] But, you know, I am constantly surprised how, how unprepared people are for obvious questions that are coming.

[00:08:23] But, you know, but that transparency still goes a long way.

[00:08:26] I agree.

[00:08:27] I agree.

[00:08:27] All right.

[00:08:28] What's your second tip?

[00:08:29] The second one I think is, is really acknowledge the fact that your organization may be changing.

[00:08:33] You may have a layoff and it may have been skills-based or financially-based.

[00:08:38] But I highly recommend recognizing that your teams need to continue to grow and learn and maybe have a skills growth opportunity.

[00:08:46] Yeah.

[00:08:46] Many companies are going out and trying to upskill their employees.

[00:08:50] You know, I think AT&T did something a few years back.

[00:08:52] They called it their upskill opportunity or no, they call it future ready is what they did.

[00:08:57] And they invested like a billion dollars in, in their existing employees to get them up and more youthful and more valuable to the company.

[00:09:07] And I think you know, as all listeners know as well, that, that keeping an employee and improving their performance is, you know, very, very, very much, much cheaper than hiring a new employee.

[00:09:18] So any, any investment in an existing employee is certainly going to be better to the bottom line than eliminating that employee and bringing on a new person.

[00:09:27] So, you know, my second recommendation is really focus on the skill, the re, the skill redeployment that you can do within the company to not only motivate the folk, but also eliminate future layoffs.

[00:09:39] I also, I think that's great.

[00:09:41] And I think the mindset, what really came to mind for me is the mindset around that.

[00:09:45] And as a leader, you could say kind of bridging both of your tip one and tip two is I've really, you know, this was hard.

[00:09:52] I had to really, I took a lot of time thinking about the people, but I also spent the same amount of time thinking about how do we need to move forward and how, how do we look at ourselves a little bit differently?

[00:10:02] And I want to invest in us so that we can move quickly and kind of stand up and, and move forward as fast and effective by investing in each one of you.

[00:10:15] Yep.

[00:10:15] I think that's, that's a great message.

[00:10:17] It feels good.

[00:10:17] I will say the truth of the matter is I bet that AT&T's budget was a billion.

[00:10:23] I bet you they still have 4 million in the sense that, that employees tend not to take advantage of training and that, that, you know, a lot of that is internal marketing.

[00:10:33] Certainly, you know, I think, I don't know that I've ever worked with a company or been with a company where the department has used all of its training budget.

[00:10:42] So often it's either zero with it, of course, and nothing happens, but if there is a budget, employees just simply don't take advantage of it.

[00:10:49] Yeah.

[00:10:49] And so I do think recognizing that upskilling is important.

[00:10:53] You know, if you're in tech today, this is a no brainer, right?

[00:10:56] Suddenly, you know, three years ago, you know, the, the job opportunities for developers was as high as it could be.

[00:11:03] And now literally within the last year, the question is whether or not we need developers.

[00:11:06] So I do think there's a ton of opportunity to talk about what the next skill is, who and where can you fit into the company and what's the vision and investing in training, I think is a great way to do it.

[00:11:17] I just want to add to is that you're talking a lot of technology and software and upskilling.

[00:11:23] I think development as this is a change in terms of you as a leader and getting through this.

[00:11:29] I think executive development is also something to consider because you're right.

[00:11:34] People are overwhelmed by training, especially internally.

[00:11:37] But maybe how can you get more creative about that?

[00:11:40] Well, I think let's just get my turn my nerd hat off and go, hey, you know, maybe you need to learn how to manage a team that's international.

[00:11:47] Maybe you need to learn how to deal with a larger team, a smaller team, a team of, of, of skills that you're not familiar with.

[00:11:55] You know, I think one of the skills that I'm constantly being reminded that many leaders don't have is how to manage people whose jobs you cannot do.

[00:12:03] Yeah.

[00:12:12] Yeah.

[00:12:13] adjacent to that and suddenly those things are gone. You know, leadership and management are

[00:12:18] two different things. And I think redirecting and repositioning your skillset or the evolving

[00:12:23] market, whether it's tech or whether it's, you know, healthcare, finance, you know, all those

[00:12:29] things, all those industries all are in a state of flexion and adjusting your skills is a great

[00:12:34] idea. Yeah, I totally agree. Concur. All right. So what's your third? And then third is really,

[00:12:39] I think, identify and create a recovery plan for the organization that is articulated and clear and

[00:12:47] help support those remaining employees. I know companies have done things like recharge days or

[00:12:54] had, you know, off sites or a lot of people to take time off to ensure that you do not have burnout.

[00:13:01] I think those conversations have become much more prevalent, which I think is great. And again,

[00:13:06] back to my previous point, companies have learned that losing their existing employees is much more

[00:13:12] expensive than keeping them. And so keeping an eye out for burnout, giving those remaining employees

[00:13:18] some processes and some plans and some tools to help them recover, I think is really key.

[00:13:26] Yeah, I think that's a good one. And I think that it's all, it's so important. If I was

[00:13:32] giving some tactics to an executive who just made some layoffs, I would say, put on your calendar

[00:13:38] for you to kind of take note of how people are doing. What do I need to do and make like put that

[00:13:45] on the next once a month, once every two weeks for the next six months. Right. And just don't just

[00:13:51] forget, don't just forget it's over and shut the door because that emotion, emotional toll on

[00:13:57] executive leadership when they have to make those kinds of changes is hard and that's what they tend to

[00:14:01] want to do. But they have to also invest in the future. So how do you force yourself to do that?

[00:14:06] Make a check in for yourself so that you can really take note of how the team is doing.

[00:14:12] Yeah. And I think it's so important to do it differently than what you've been doing it before,

[00:14:16] because if you just think that you have one on ones and you have staff meetings and you have

[00:14:20] town halls and that's going to suffice, it doesn't suffice. And you need to, it needs to be,

[00:14:24] you need to be seen as behaving differently if your employees are going to take you seriously.

[00:14:28] Yeah. This is so good. All right. So tell us the three tips one more time.

[00:14:33] Really first one, you know, create a, a trend of a, what I would call a transparency summit,

[00:14:39] have a dialogue with the remaining employees. So they all understand what happened,

[00:14:43] share as much as you can be, be overly communicative. So everybody is aware, you know,

[00:14:50] no information breeds misinformation and it's always great to get in front of them.

[00:14:53] Number two, you know, create a initiative that helps upskill the remaining employees,

[00:14:58] avoid future layoffs by getting, investing in your employees to give them the skills to ensure

[00:15:04] that they are the people you need going forward. And then third, you know, put some processes and

[00:15:10] ceremonies in place for your remaining employees. So they do feel valued. So they do avoid burnout.

[00:15:16] You know, I think one of the things we do so often is we just take the work that came from the

[00:15:21] people that got laid off and dump it on the existing employees. You know, that's a, that's

[00:15:25] a double whammy. One, they've got survivor guilt and two, they're not doing double the work.

[00:15:30] You've got to take, recognize that and, and really ensure your people don't burn out.

[00:15:35] Awesome. So good. And so important. All right, James, what is the best compliment

[00:15:45] that you've ever received?

[00:15:47] I won't say that there's a specific compliment, like, you know, this one time Carl from accounting

[00:15:53] said something, but I think the best compliments I do receive are the ones where people will say to

[00:15:59] me that I made them feel a certain way. And I think, I think it's Maya Angelou who said, you know, people

[00:16:06] don't remember what you say, but how they make you, how you made them feel. And those are the ones,

[00:16:11] those compliments really touch me because I, you know, I, I don't go out of my way to make somebody

[00:16:16] feel a certain way. I'm not like, Oh, today I'm going to make Susie feel happy, but you know,

[00:16:21] I do try to be good, a good, a good person, a steward of my friendships. And so when it does

[00:16:26] manifest itself in the outcome like that, that, that is a great, that's a great feeling.

[00:16:30] Good. I like that. I think that comes with wisdom too. Like AKA old age.

[00:16:37] Hmm. Someday I'll know about that. Yeah, I do. I'm, you know, I have, I'm very wise.

[00:16:46] Thanks for listening to this week's episode of quick take, where we talk about the questions

[00:16:51] that are on the minds of executives everywhere, connect with us and share what's on your mind.

[00:16:56] You can find us on LinkedIn, YouTube, or whatever nerdy place on the internet. You find your podcasts.

[00:17:01] All the links you really need are in the show notes.