Firing for Profit: Giving CEOs the Axe
CEOs are profiting handsomely from mass layoffs, which benefit nobody but them and their investors. How can this happen? How can we keep ourselves safe?
The CEO of a videoconferencing company laid off 1,300 employees on February 7. In his announcement he described “mistakes” that led to reduction in demand for their services as companies returned to work during the waning pandemic. He described his decision to forgo his own pay for 2023, and offered to reduced the pay of his executive team.
I published my eBook Firing with Compassion a few days before. As I said then, if you care about people, you should care about how they’re fired. I do, so I want to do this right.
At this time I’ll address the CEO directly: Unfortunately, I have some difficult news. On behalf of the 1,300 employees you fired and all the Safe @ Work readers, I’ve made a difficult decision: We no longer require your services. Today you’re being fired.
This was a very difficult decision and one I didn’t take lightly. I’m sorry that you’ve had to learn about it this way. We wish you best of luck in your future endeavors.
Why it’s time to start firing CEOs
At first glance, the story sounds like an emotionally intelligent innovation. The CEO seems to admit he was wrong, and takes a compensation hit as a sign of accountability. There was a lot of fawning coverage in the press. “Here’s what high-EQ leadership looks like” somebody said.
A friend sent me a link to the coverage with “Hey, finally somebody doing the right thing” tone. When I saw that the room tilted 15 degrees to the left and started to spin and wobble. I clutched the edge of my desk and I reached for the wastebasket. I knew that we’d been had.
🪓 What if I told you that the CEO, who “sacrificed” his 2023 compensation as part of these layoffs, has a net worth estimated at US$20 Billion?
🪓 That the compensation he gave up was worth about $1 million, about 1/3000th of his net worth?
🪓 What if I told you that more than US$4B of that net worth was in the company stock?
🪓 What if you found out that his stock increased in value by about US$400 million in the days after he made the layoff/pay cut announcement?
Yep, the CEO made paper profits of more than $400 Million from firing those 1,300 people. The PR masterstroke of a meaningless pay cut may have contributed millions to his fortune.
That's not the worst of it. This CEO is one of dozens of CEOs doing the same thing — firing people and making millions in the process. More companies are joining in on the action almost every day.
Given the public adulation this one earned, it would be a shock if the next one didn’t also throw in their own token pay cut. Maybe the next will up the ante by throwing in a demotion from CEO to SVP.
They’re playing us for fools. Our careers, our lives, and our mental health are knocked off the board like pawns. They’re pocketing profits from firing hundreds of thousands of people through lockouts scheduled remotely in the middle of the night.
The CEO’s announcement includes an incredibly empathetic section titled “Supporting departing [employees]” that says “I want to focus on what matters most; you.” that then goes on to offer a “1:1 check-in should you want it” (emphasis mine) with a leader from the organization that just fired them. Can you believe that?
As a sign of courtesy and respect to those leaders, I’ve prepared these 2,3513 words as a kindness that your colleagues have not been offered: a cogent explanation for why you must be fired.
Who decides who lives or dies
Data gathered since the 2008 financial crisis confirmed what many of us suspected, those of us who still have any human stuff left inside. People who experience job loss endure lasting harm from the experience. Suicide risk is elevated. Mortality risk rises, especially for those over 50. The research shows it’s not an exaggeration to say that layoffs have a real cost in human lives.
Firings are necessary as long as we want hiring to continue. Like any job that must be done, firings can be done well, or they can be done poorly.
I haven’t seen data specifically analyzing the impact of overnight lockouts, or reporting on the outcomes for immigrants on H1-B guest worker visas forced to separate from their families.
I can’t prove that the employers who made these specific cowardly decisions have harmed their employees’ mental health. I also haven’t seen data that conclusively proves that it gets dark at night. If you see it, please send it to me.
(I did notice this article from last week’s Seattle Times. In it an employee directly blames their employer’s layoff practices for causing their own health emergency. They describe ending up in the emergency room after learning they were fired by email by a Big Tech employer.)
The data also show that layoffs do not improve company performance in the long run. So why do them?
There are reasons. Three of them, that I can find, supported by research. All of them support my decision to fire the CEOs behind these layoffs.
Why do they fire us?
The first, most delightful and utterly delicious reason for mass layoffs: they enrich the people who fire us.
That’s right, the self-interested executives who conduct mass layoffs, which do not actually benefit the companies themselves, are making scads of money when they happen. Who… Steady friend. Drink this, please. You know, you’re actually handling all of this quite well.
None of this was invented by this particular CEO. We are living through a mass humiliation event. Dozens of CEOs and thousands of investors are making billions of dollars in profit. Hundreds of thousands of workers are losing everything as their mental health is destroyed. Some will die. It is intolerable. It’s outrageous.
I do not want to deny companies the right to fire people. If we stop firing, we stop hiring. However, companies should be required to make every effort to minimize unnecessary harm to their employees when they are terminated. It’s just as simple as that.
The next reason, number four hundred million and two, is that everybody else is doing it. A herd mentality motivates companies to do what companies do. Have you wondered why so many companies are suddenly doing layoffs at the same moment, when it takes them 4 months to pay an invoice? This is why.
Can the herd mentality really motivate decisions that cause people to lose jobs and sometimes lives? The research is out there in such variety and quantity that no serious person argues about it anymore.
After this, there is one final reason. In some ways it’s the worst reason. It is job insecurity. Some believe that companies felt a “rest and vest” workforce was becoming lazy. In some circles it was said that management was looking for an opportunity to send a message that would put everybody on edge.
For certain employers, insecurity has always been part of the performance culture. Anybody who has worked at a company that uses attrition targets (aka firing quotas) is familiar with this mentality. When 6%-10% of the team is going to be fired for performance each year, you’re going to be working a little harder not to be part of it.
This is a kind of gaslighting. Employees live in fear that their employer’s approval, and therefore their livelihood and their lives, may be put in jeapordy. The quality of the work doesn’t necessarily change, but performance standards change in order to achieve workforce reductions. Like everything else terrible in America, it hits people of color hardest. They’re more likely to depend on employers for immigration visas and their path to US citizenship.
There’s a flavor of job insecurity for every form of privileges, like “up or out” performance policies, and even for our friends on Wall Street with the their famously aggressive performance techniques.
Job insecurity is common, and it’s hard on everybody. It takes a long-term toll on workers’ mental health, undermining their productivity, wellness, and psychological safety. The latter is the best predictor of productivity for teams across industries.
Actions like overnight layoffs by executive leaders that undermine security and safety ruin trust at the team level. This stymies the efforts of leaders like you and me who work so hard to build confident, trusting teams.
What can we do?
Leaders are left with a tough row to hoe after an exhausting investment in self-improvement, empathy, and compassion.
You’ve made yourselves vulnerable to your teams, and cajoled them into a candid revelation with you. You’ve committed your energy in partnerships in hopes you can learn and grow together. All that on Monday.
On Tuesday the CEO fires 1,200 people in an overnight lockout.
On Wednesday you have to skip from one Slack channel to the next with a pencil in hand to figure out which teams have lost collaborators.
As leaders, can we face our teams with promises of respect and dignity? Can we credibly offer kindness and compassion?
On Thursday could you train a new manager on empathy and self-awareness, and say that the leaders of your company will stand behind them? I don’t see how.
Look, do I really expect the CEO to be fired just because I don’t agree with their decisions?
Of course not! I’m not crazy! And I’m not mad because he’s rich, getting richer, or because he fired nice people, or because me and my emotionally intelligent buddies have hurt feelings, or because have to do things we don’t want to do.
We’re reasonable, practical people. We can face difficult things. We understand do what needs to be done.
🪓 Real talk 🪓
These CEOs must be fired because nobody trusts them anymore. It’s right here in black and white. ⬇️
In my totally scientific LinkedIn poll, 80%+ of people say that after an overnight lockout/mass layoff, trust in the CEO will be hard to fully restore. I think if that number was closer to 40% you’d still be totally screwed.
Mass layoffs and overnight lockouts are a mass humiliation event. After this type of event, you need a new leader. The tough part will deciding exactly how to deliver the news to the poor guy. (I am self-policing my pronouns here. Let me know if a female CEO offends here. I’ll lock myself right in the pronoun prison. Seriously, call me immediately if that should happen.)
Purging an emotionally brain-dead spineless feckless CEO will be a difficult moment but it will sure be a proud one! It sets a new standard for treating people with dignity and respect. Think of the optimism and catharsis for the workers!
Mental heath care must be made available to terminated employees. It should continue for as long as is necessary to ensure that they don’t suffer any ill effects brought on by a poorly-considered termination process.
That is essential given what we now know: the terminations were unnecessary, made to enrich the self-interested (now departed) management. They resulted from a policy of job insecurity which also benefitted management at the expense of the workers. It’s a stained legacy but one that can be overcome by better decisions made starting today.
What can we do?
What’s next? How do we keep ourselves and our teams safe at work? What can we do to make our workplaces safer for those who will join us in the future? What decisions can we make as managers to improve our immediate environments, even if we can’t impact the decisions made at the top?
On behalf of you and your team, communicate expectations to your employer that you’ll be treated with respect and dignity at every moment during your employment up to and including the instant of termination.
On behalf of you and your team, communicate to your employer their accountability for any harm caused to employees during termination.
Set the expectation that the termination process must be crafted to protect the mental health of employees. If there is a good faith belief that it has been deficient in the past, a reconciliation process must occur with any people harmed. Mental health services must be provisioned as necessary to those in need of them at no cost.
Clearly express to your employer the impact that mass humiliation events have on your trust in their leadership. Describe the circumstances which your faith in the leadership is impacted temporarily or permanently.
Repetition is a crucial tool for leaders working to cement consensus around shared values. If you believe that mental health is an important aspect of wellness, say it and repeat it. If you believe your company could do more to support mental health at work, say it to your team, to HR leaders, and to executive leaders frequently. There’s a right way and a wrong way to do it. You can be constructive, optimistic, practical, and understanding. You don’t need to be impatient, annoyed, agitating and describing consequences. Although, there’s a time and place for everything. If you need help with the second half, let me know!
Finally, the simple way to stay safe from all of this vicious, malicious, predatory malfeasance is to remember that you’re not your job. Try not to be.
Thanks for reading. Please let me know your thoughts about this article by leaving a comment below.
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