After the Layoff…
- Edwin Castaneda
- May 5, 2024
- 7 min read
Updated: May 10, 2024
I just read an article that captured the thoughts of Spotify’s CEO, Daniel Ek after laying off over 1,500 workers in late December 2023. He was wrestling with what he called “likely see backlash” from the diminishing of staff, which is a reality that most executives stow away in the shadows as something they will have to deal with eventually. The general public often does not get a view into the CEO’s mind weeks and months later after the layoff. Ek states, “Although there's no question that it was the right strategic decision, it did disrupt our day-to-day operations more than we anticipated,” Hmm? Right decision, but disruption was incurred.
Degree of Impact
From his vantage in the organization, the impact was significant enough to be noticed and mentioned in a true CEO fashion. However, for a CEO to feel that impact, I bet that the reverberation was more prolific at the lower levels of the organization. Picture an upside-down cone with the CEO sitting at the top of that cone and the sweep of impact is spread across that organization and impacts more personnel all along the way down.
The effects of impact are strange at best in an organization. At the lowest and highest point within the organization, the magnitude of impact can be either high or low as far as intensity and or result. From the CEO level, Ek felt the impact of the layoff enough to report it, but carried on with eyes set on the new horizons. However, if the layoff took a turn for the worse and the impact affected the bottom line, Ek could be on the chopping block and have to endure the same plight as those he laid off.
From the lowest levels of the layoffs, the workers could have received additional tasks and or responsibilities, which would impact the day-to-day, but not be quite as severe as receiving a layoff notice. The impact of receiving the layoff notice is the highest degree of impact that a blue-collar worker could experience.
Accountability and Responsibility
As players in the corporate game, layoffs are a reality as far as legitimate business moves and affect everyone along the corporate ladder. It seems that in the technology space, this has become the “modus operandi” for managing the ever-demanding financial constraints and requirements that the executives must meet to their owners and or shareholders. Layoffs are trending and will continue.
What is often not looked at closely are the impacts and fallouts that might occur on all sides of the layoff equation. As executives, they are accountable to their owners/shareholders without any doubt. However, what is not at the forefront is their responsibility to their employees at all levels to get through the layoff. This responsibility and or “care for” the employees is predominant throughout the tech industry…mix it in with some disillusion and you have an employee base that is at unrest on both ends of the layoff equation - the employed (those who made it through the cut) and those who are laid off.
Realities - CEO
Driven by doing the right thing, the CEO lays off a percentage of the workforce. Trying to do more with less, now they are asking those who are remaining to pick up the slack and work that much harder to meet the organizational goals. Yeah, right. Often, those employees who are still with the organization will be hesitant at best to unite under an organization and pull harder to make up the delta. What is going through their minds is, “Am I next?” or “Man, I got to get off this as soon as I can!” or “Management doesn’t care, so why should I care?” What can management do to facilitate the optimum output and address the new corporate culture/environment that they created? Yes, they created.
What to Do
Executives need to wear their sincerity on their sleeves during this time. Your rah-rah speeches don’t mean a hill of beans when your employees lose faith and are cynical because of the uncertainty of times. Here is a prudent approach:
Communicate often and clearly
Get on the ground level
Empower your core team
Prepare the organization for another storm
Prepare the employees for another storm
1. Wear Your Sincerity on Your Sleeve
Believe me, now is not the time to put up facades to try to relay your message. More than not, everyone’s BS meter is on high alert and can smell a snow job miles away. If tough times are upon the organization, tell it like it is without fluff. No one likes to hear the grim tales of what is to come, but they will appreciate your sincerity…and hopefully, they will support your vision going forward.
2. Communicate Often and Clearly
In organizational dynamics, I cannot tell you how important to be in the ears of all those within your organization. Do not compromise on whether you will have a monthly State of the Union meeting, rather get it on everyone’s calendar for at least the next six months. There should be no guessing on when they will be hearing from Mahogany Row.
Your message should give them a status of progress from your initial communications to where you are now. Give the people your real impressions on what worked, what didn’t, your next steps, and your expectations for yourself and each individual that is within earshot. Simple and not convoluted with propaganda. Utilize the KISS principle of “Keeping It Simple & Sure.”
The expectations of your next steps and the direction of the organization should be clear to your management staff to not only communicate but to make it all real. All management should be on the same page and use the gist as a “True North” for all to align up to. Empower them to make decisions based on your communications of the True North and support them. This is when your strategic plan becomes their focus to live out the tactical aspects of your plan. It becomes “their plan” and ownership is spread across the organization.
3. Get on the Ground Level
Get out of the glass tower and down onto the battlefield. Your accessibility to the lower levels of your organization needs to be evident and proven. One way is to get on the ground floor to see for yourself.
An extreme, but relevant example of this practice is the story of Elon Musk sleeping overnight on the floor of Tesla manufacturing. This was a typical scenario for the life of Musk and his approach to making Tesla what it is today. What does this show the employees as an example that their CEO is living out before their eyes?
He is serious about the mission of the organization and is not just a Paper CEO.
His dedication to the company is unquestionable. He is willing to leave it all out on the floor (literally) and work as hard as it takes to get it done.
Each minute, each second is important and should not be wasted.
He cares and you can see to what extent.
He is accessible to everyone.
If there are any issues they can bring it to the CEO’s attention and something might be done…no red tape.
In citing all these points, I don’t know if these were Elon’s drivers to sleep on the manufacturing floor, but the reality is that these are my impressions. Just like a client with an impression of a company, it is real and becomes the reality that a company must deal with.
4. Empower Your Core Team
Now that you have made it clear as to the current status and what needs to get done, it is up to your management team to see it through. Give them the latitude to make decisions to execute the plan. Provide the resources to support the decisions that are made and be ready to jump in when needed.
5. Prepare the Organization for Another Storm
As a CEO, you need to have plans in place to deal with another wave of layoffs and or other obstacles that would have the same or more dramatic impact on your organization. These would be the general areas that need to be focused on
People
Policies/Processes/Performance
Technology
Resources
Expectations
Accountability is a heavy crown worn by the CEO and the span of concern and focus is vast. Don’t get caught not tending to all if not most of these things. Think of the sailor learning to swim in the middle of the Pacific while it is sinking. A little too late…
6. Prepare the Employees for Another Storm
Your management team should have been on this like white on rice…it is called career mentoring. You don’t teach a sailor how to swim in the middle of the Pacific, rather this should have been addressed at basic training. There should be a fully vetted and managed career path that gets discussed monthly with each individual. It should be littered with training, certifications, and experiences that contribute to growth and market potential. Demonstration of caring for the employee as an employee and their future and if and when the hard decisions have to be made.
Layoffs will come, and hard decisions in hard times will be made, but what will define the legacy of a CEO is what you do for all the people involved. Your clients, your management, and your employees. Accountability is a heavy crown worn by the CEO, but you are not alone.
Closing
It would seem that Spotify and Daniel Ey have passed the rough transition as he reported in the article. From layoff (self-inflicted problem) to steady-state and the new norm (self-managed). The particulars of how to get from one state to another were not evident in the article from the client's perspective, one doesn’t care as long as I get what I paid for. The manager in me wants to know what happens in the middle. We know the A and the C, but the value in this is knowing the B, which is what this article hoped to provide.
Two things. First is a quote from Daniel Ek:
“I think we're back on track and I expect to continue improving on our execution throughout the year getting us to an even better place than we've ever been.”
Finally, companies exist to serve the people, not people existing to serve companies…keep this as your true north.
Ed Castaneda, aka Dr. C
Reference -
Kelly, Jack, Spotify’s Recent Layoffs Impacted The Company ‘More Than Anticipated’, Forbes.com
About the Author
Ed Castaneda is a man of faith, an IT executive, educator, researcher, and writer. Latest adventure as an entrepreneur through Ashwood Research and Consulting Corp.
Contact Info:
Email - docejc@ashwoodrcc.com
Website - www.ashwoodrcc.com
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