Monday, January 21, 2008

Layoffs and an Open Book Policy

Layoffs can occur for many reasons. The first one that comes to mind
is that company income is not sufficient to support the current
number of employees. Another reason I have witnessed is that you
company merges with another company and there are departments that
are now duplicated. Often these duplicate departments are H.R.,
Finance, I.T., etc.

Another reason for a layoff is to reassign the money that was going
towards salaries. Whatever the reason, the company wants to spend its
money on something other than salaries. Could be the company is going
to pursue a new direction or buy out a competitor. The bottom line is
the company needs to free up some cash.

For the general work force a layoff is typically a surprise. Yes,
there may be rumors floating about, but when it finally happens it
usually surprises most.

Now imagine a different type of work environment. Imagine that the
books are open and the conversations of the Executive Committee and
the Board of Directors is made known to the entire company. Also
imagine that you are just an employee, lets say a software developer
working on your company's search engine and indexing technology.

With this open book policy you find yourself with information. With
information you can make decisions, choose how much risk you want to
take, plan your future, make predictions for the future, etc.

Scenario A:
Suppose the information indicates that there is a dramatic downturn
in profits. You know about it as soon as the EC and Board know. There
are those that oppose the open book policy and through the use of
uncertainty and doubt say, "We can't have an open book policy because
if people hear about the down turn they will start to quit in droves
and thus worsen the situation and make it impossible for the company
to implement a plan inorder to turn things around." I personally
think that this attitude under estimates the worth of a company that
implements an open book policy and underestimates the employee. If
you were to work for a company that gave you all of the information
then you would value that aspect, that distinguishing aspect, of the
company and you would not want to leave the company on a whim and you
would want the company to succeed. Also, with the open book policy
you can know that information from your department is making it to
the top and that the information is accurate (accurate in the areas
where you have knowledge and responsibility). This omni-directionaly
flow of information will enable you to have confidence that the EC
and Board are making informed decisions. This makes the company even
more appealing to you. If the EC and Board are planning for layoffs
then you can make choices. Maybe you find another job. That saves
your manager the stress of laying you off. It also saves the company
the severence payouts and paperwork and such. Also, it allows you to
leave with dignity and keeps the door open for when the company
rebounds. Maybe you can't find another job and you are laidoff.
Because the process was open the chances of illegalities may be
reduced. You definetly couldn't choose the people to layoff by race,
gender, etc. It would be likely that you would layoff people by
teams, departments, and divisions and it would be less likely that
people could protect their "friends" by transferring them off of a
team that was to be let go and placing them onto a team where they
would not be laidoff. The protecting of friends and special employees
are one of the things that make layoffs so personal and so hurtful
and damaging. Also, for defense against a possible future layoff it
causes people to play games and work on only the cutting edge teams,
both of which are not in the companies interest. (This makes me think
of all of the games we play at work inorder to protect our jobs and
how they are not in the best interest of the company and how people
say that open book policies are not in the best interest of the
company. Clearly the argument to do things in the best interest of
the company is not sound because the current mode of operation for
most companies support "games", politics, posturing, and positioning.)

Scenario B:
The company wants to take $1,000,000.00 that was going for salaries
and use it to buy out a small startup company. The open book policy
allows you to know about this choice as soon as it happens. Since the
EC and Board know that everyone will know about this choice they will
also have taken time to consider the ramifications. A layoff while
the company is profitable is tricky at best. I myself have survived a
few such layoffs and you always wonder why they did the layoff, which
usually becomes apparent 3 to 6 months down the road, and you always
feel lessened or devalued. Back to the story... so the EC and Board
has decided to layoff and have considered such things as salary
reductions and taken a loan. So you know, because of the open book
policy, that the EC and Board has considered many options. Since they
have decided to reduce the work force then they have decided to
reduce the work as well. The open book policy allows you to see in
which areas the company is going to ellimate work. Maybe this time
they pick who goes and who stays based on the previous performance
review (that is why I think that that a Maverick-ish review process
is so important). I believe that if you do it on a performance score
then you have to let everyone go that falls into the catagory. Let me
give an example. Suppose that the performance scores are from one to
ten. The company decides to let everyone go that got less that a 7.
Also the company knows that they want to layoff around 60 employees
inorder to recapture that 1 million bucks. Know imagine that 85
people got below 7. I believe it is fair to layoff the 85 if you are
going to base it on performance. If you decide you are going to keep
15 of the 85 then you have the potential for the problems of "games",
politics, good ol'boy network, and such things as Pedro promising you
his protection. If 85 is too many then only layoff those that got a 6
and below. Suppose that number is 47. Then you don't raise the
million solely on layoffs, and the company then decides to take a
loan or reduce everyone's salary (and I mean everyones) by a

End Scenario

When a traditional company has layoffs it is very very messy. Messy
in that it puts into play all kinds of things. Some people are hurt.
Some people loose confidence. Why, because traditional companies
always paint blue skies and dangle sweet carrots (these aren't the
only reasons why, but some... :-) ) I was at a company meeting where
the employees suspected that a layoff might be needed. It was a
friday. The EC was asked if there were any plans for a layoff. They
said "NO". Monday morning the layoff started and 30% was let go.

I have been at companies that have laidoff and then within 3 months
or so they want to hire. Usually because of attrition after the
layoff. They ask us if we know of any good people that we could get
to submit their resume. We all sit there and give them a blank stare.
Why would we bring our friends in when we don't know if we may be
talking our friend out of a good job to come to work here at this
company and then get laidoff 3 weeks later.

Open book benefits both ends of the employee spectrum. The bottom
know what the top is up to. The top knows that the bottom has
reported correctly because the bottom checks that the reports made it
to the top. A Maverick style review process insures that if you have
to do a layoff based on performance that the performance scores are
as accurate and up to date as possible. Open books help elliminate
practices that are not in the best interest of the company. I feel
these practices are extremely expensive. These practices include
personal agendas, back stabbing, networking, protection schemes, etc.

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