Monday, November 24, 2008

The Art of Laying People Off

The Art of Laying People Off

Guy Kawasaki of How to Change the WorldGUY KAWASAKI OF HOW TO CHANGE THE WORLD | NOVEMBER 18TH, 2008 - 11:47 PM 

I hope that you never have to lay off or fire people, but the reality is that you will as you advance in your career. If you are scoffing (“Guy, you are clueless: We’ll never downsize, because we’re growing so fast, and I’ll never make a bad hire”), then you’re my intended reader.

  1. Take responsibility. Ultimately, it is the CEO’s decision to make the cuts, so don’t blame it on the board of directors, market conditions, competition, or whatever else. In effect, she should simply say, “I made the decision. This is what we’re going to do.” If you don’t have the courage to do this, don’t be a CEO. Now, more than ever, the company will need a leader, and leaders accept responsibility.
  2. Cut deep and cut once. Management usually believes that things will get better soon, so it cuts the smallest number of people in anticipation of a miracle. Most of the time, the miracle doesn’t materialize, and the company ends up making multiple cuts. Given the choice, you should cut too deeply and risk the high-quality problem of having to rehire. Multiple cuts are terrible for the morale of the employees who have not been laid off.
  3. Move fast. One hour after your management team discusses the need to lay off employees, the entire company will know that something is happening. Once people “know” a layoff is coming, productivity drops like a rock. You’re either laying people off or you’re not—you should avoid the state of “considering” a layoff.
  4. Clean house. A layoff is an opportunity to terminate marginal employees without having to differentiate between poor performers and positions that you’re eliminating. It’s good for the marginal employee because he’s not tainted with getting fired. Finally, it’s good for the employees who remain because they will see that you know who’s performing and who isn’t.
  5. Whack Teddy. Most executives have hired a friend, a friend of a friend, or a relative as a favor. When a layoff happens, employees will be looking to see what happens to Teddy. “Did he survive the cut or did he go? Is it cronyism or competence that counts at the company?” Make sure that Ted is dead.
  6. Share the pain. When people around you are losing their jobs, you can share the pain, too. Cut your pay. In fact, the higher the employee, the bigger the percentage of pay reduction. Take a smaller office. Turn in the company car. Reassign your personal assistant to a revenue-generating position. Fly coach. Stay in motels. Sell the boxseat tickets to the ball game. Give your 30-inch flat-panel display to a programmer who could use it to debug faster. Do something, however symbolic.
  7. Show consistency. I cannot understand how companies can claim that they have to cut costs and then provide severance packages of six months to a year of salary. You would think that if they wanted to conserve cash, they’d give tiny severance packages. Typically, there are three lines of reasoning for generous severance packages:
    1. Cutting head count, even with severance packages, is cheaper than keeping the employee around indefinitely, and we don’t want any lawsuits.
    2. We have lots of cash, so our balance sheet is strong, but we need to cut heads to make our profit-and-loss statement look better.
    3. Wall Street (or your investors) is expecting dramatic actions, so we need to do this to show the analysts that we’ve got what it takes to be a leader.

    None of these reasons makes sense. If you need to do a layoff to cut costs (and conserve cash), then provide minimal severance packages, cut costs as much as you can, conserve as much cash as you can, and deal with your guilt in other ways. If nothing else, it’s a consistent story.

  8. Don’t ask for pity. Sometimes managers go to great lengths to show the person they’re laying off (or firing) how hard it is on them. Th is reminds me of the old definition of chutzpah: A boy murders his parents and then asks the court for leniency because he’s an orphan. The person who suffers is the one being terminated, not the manager.
  9. Provide support. Usually, the people getting laid off aren’t at fault. More likely, it was the fault of top management—the same top management with golden parachutes. Hence, you have a moral obligation to provide services like job counseling, résumé-writing assistance, and job-search help. There are firms that specialize in helping employees during “transitions,” so use them.
  10. Don’t let people self-select. We had a joke at Apple during the dark days of the late eighties that went like this: We would announce that employees who want to quit should come to a big meeting. Those who want to stay at the company should not attend. Then we would let the people go who didn’t attend the meeting and keep the ones who wanted to quit—because the latter were smart enough to know that we were in bad shape or that they had better opportunities elsewhere.

    The point is that if you let people choose to get laid off or retire, you might lose your best people. Deciding whom to lay off is a proactive decision: Select the go-forward team to ensure that you never have to lay people off again. Do not leave this to chance.

  11. Show people the door. With few exceptions, all you should do is let people finish the day, maybe the week. (My theory is that Friday is the best day to do a layoff because it lets people have a weekend to decompress.) Showing people the door seems inhumane, but it’s better for both the people leaving and the people remaining.
  12. Move forward. Let people say good-bye and then get going. This is when leadership counts. In bad times, you separate the men from the boys and the women from the girls. After the layoff, this is what the remaining employees will be wondering about:
    1. Guilt: “Why did I survive the cut and my colleagues didn’t?”
    2. Future of my job: “Will I survive the next round if there are more cuts?”
    3. Future of the company: “Will the company survive at all?”

    So you set—or reemphasize—goals, explain what everyone needs to do to get there, and get going, because the best way to move beyond a layoff is to get back to work.

Immediately after a layoff, you might want to retreat to your office, turn off the phones, stop answering e-mails, and avoid everyone. These are the worst actions to take. This is the time for you to motivate by walking around. Employees need to see you, talk to you, and get your help and advice. They don’t want to think their leader is cowering in some foxhole. The brave face that you put on may be a charade, but it’s an important charade.

Reprinted by permission from Reality Check: The Irreverent Guide to Outsmarting, Outmanaging, and Outmarketing Your Competition.  In other words, I asked myself if it was okay. If you liked this chapter, there are ninety-three more where this came from.

Thursday, November 20, 2008

Planning Fundamentals are Business Fundamentals

Planning Fundamentals are Business Fundamentals

How do absolute business fundamentals relate to planning fundamentals? I really believe that's a critical question. Business planning has to relate to the real business principles.

I can think of five key business fundamentals that should underlie good business planning:

  1. It's about results. It's not planning for the sake of truth or beauty. It's not planning for the sake of the document, or formatting. It is about what you need to improve, manage, and plan your business.
  2. Form follows function. What's included in a business plan isn't necessarily anything more than what you need to understand and manage your business strategy (the heart) and work out what's supposed to happen when, and how much it costs, how much it brings in, and who's in charge of it (the flesh and bones). It might never get off of your computer. Or, if you need a so-called business plan, or a summary memo, or presentation, or elevator speech, then that is output from the plan on your computer. It's not the plan, it is output from the plan.
  3. Metrics and tracking equal accountability. Plans should be concrete and specific. How will you know, after time goes on, whether or not you are implementing your plan? That's a matter of things you can measure, and having the discipline to measure them, and track them. And the result, when it's done right, is accountability.
  4. Planning assumes change. You don't plan the next year so you know what to do regardless of what happens. No, instead of that, you plan the next year so you know what the plan was as you track results, and changing assumptions, and then manage that plan.
  5. Planning isn't accounting. Accounting starts today and goes backwards into time, in ever increasing detail. Planning starts today and goes forward into time, in ever increasing aggregation. The tables look the same, but the concepts are very different. Furthermore, while accounting is about profits, planning is about cash flow.

That idea became last Monday's webinar called Back to Fundamentals, which I gave as a free contribution to Global Entrepreneurship Week, and which Palo Alto Software is now rolling out on the Web in four 10-12 minute segments, one per day, plus a final one for questions and answers.

Before I tell you where to click to view those recordings, I should warn you that you have to input an email address, or the click doesn't work. Having said that, you can click here to get to the page and then you add your email address and click the "watch the video" button to view it.

Tuesday, November 18, 2008

10 Steps to Take Action and Eliminate Bureaucracy

“I have been impressed with the urgency of doing. Knowing is not enough; we must apply. Being willing is not enough; we must do.” - Leonardo da Vinci

Article by Leo Babauta. (Follow me on Twitter.)

I’ve worked in a few offices where the paperwork, endless meetings, and other bureaucracy was ridiculous — so much so that the actual productive work being done was sometimes outweighed by the bureaucratic steps that needed to be taken each day.

When the focus is on action instead of bureaucracy, things get done.

I’ve worked for both private businesses and government agencies, and let me tell you, both require too much paperwork, too many steps to get things done, too much reporting, too many meetings, too much planning and too much training. Each of these things is usually management’s answer to a problem, but they add more problems, including a tendency to slow things down and get less done.

A better answer than adding extra steps and meetings to a workday is to focus on action. Create a culture of action and hire people who get things done. Eliminate as much bureaucracy as possible and get things moving.

Today we’ll look at some good ways to do that, based on my experience both as a worker and a manager. Believe me, I know the tendency to throw training and meetings and reporting and planning at a problem, but I also know how frustrating that can be for an employee who just wants to get the work done as effectively as possible. Why am I sitting in on another meeting when I could be getting work done? Why am I filling out more paperwork instead of actually doing the work?

Here are some ideas to get to the action and cut out the bureaucracy:

1. Know what you want to get done. Often bureaucracy happens when people focus on processes and forget about what the end result should be. Where are you trying to go? Find the shortest route to get there, rather than making things complicated. Visualize your desired result, and keep the focus on that.

2. Know your priorities. Keep in mind the most important work your company or organization does. It almost certainly isn’t paperwork or meetings (with a few exceptions, possibly). Of course, if you’re going to have a meeting with a potential client in order to sign him up, that’s probably a priority. But for many employees, the real work will be something else: writing code, writing articles, designing, making calls, crunching numbers, etc. Know the important work, and focus on that.

3. Eliminate paperwork whenever possible. How many forms does your company have? Much of that uses the same information. Can a simple computer program or online form be used instead, so people don’t have to fill out paperwork but can just fill in an online form where the basic information is stored and re-used so it doesn’t have to be re-entered? Often using a computer program (online or off) will also automate things so paperwork isn’t needed. Or just eliminate the paperwork altogether if it’s possible — sometimes it’s just better to take action without having to fill in things.

4. Cut out processes. Are there steps and approvals and work that people have to do that can be eliminated altogether? Keep an eye out for these processes and eliminate when possible. Every time someone is doing something routine, ask whether it’s really necessary, or if can be reduced or eliminated. Can several steps be cut out to make things quicker? Often the answer is a resounding “yes”.

5. Empower people. Often a manager becomes a bottleneck, requiring his approval before anything can get done. Worse yet is when approval is needed several times along the way, meaning it has to be bounced back and forth a bunch of times. Better: give people clear instructions about how to handle things and when approval is authorized, and allow them to handle it. Monitor things closely at first to ensure that they know how to follow the instructions, then give them more room to work independently and just report to you every now and then. Make sure the instruction include the circumstances when they need to alert you to any major problems.

6. Don’t put off decisions. Worse than a manager becoming a bottleneck is a bottleneck where decisions are delayed and things pile up. When a decision is required, try to make it quickly. Make sure you have all necessary info, know what criteria you’re using to make the decision, and then make the decision immediately. The longer you wait the worse the problems become. Indecision is the enemy of action.

7. Have the information you need ready. If you don’t have information, you can’t make decisions properly. This is often the reason people put off decisions, but they don’t always realize it. As a result, they sit on a decision for awhile. Instead, go and get the info you need so you can make the decision immediately. Better yet, have the information sent to you beforehand, so you have everything you need to make the decision when it’s time. Figure out what information is needed for your regular decisions and have it regularly on hand.

8. Keep “Action” at your forefront. Put up a sign on your desk that says “Action”. Make this your mentality throughout the day. When you are putting something off, remind yourself to take action. When you have a bunch of steps you have to do, remind yourself that eliminating steps leads to taking action sooner. When you’re in a regularly scheduled meeting (like, every day), ask yourself if this is preventing action.

9. Look for action-oriented people. When hiring or selecting a team, look for people who get things done. This can be seen in their track record. Give them a trial and see if they tend to focus on actions and decision, or processes and paperwork. Action-oriented people will get things done more effectively.

10. Reward action. Reward team members as well as yourself for action taken. Rewards could be as simple as praise or as big as a promotion or a bonus to the most action-oriented employees. These rewards tell your company or organization — or yourself — that action is a top priority.

“Action is eloquence.” - William Shakespeare

If you liked this article, please share it on, StumbleUpon or Digg. I’d appreciate it. :)

Unconventional Guide to Working for Yourself

I recently received a copy of a great ebook that I think a lot of you will enjoy … it’s from Chris Guillebeau and it’s an amazing guide to becoming an entrepreneur and being your own boss. I’ve done this myself and highly recommend it to anyone who likes to be independent and is highly self-motivated.

Some of the chapters in the ebook include:

  • Info on creating multiple income streams
  • Ways to make money via blogging, selling information products, consulting, photography and more
  • Affiliate and ad programs
  • Creating a launch event
  • And a whole lot of other stuff I don’t have room to list here

In addition to the ebook, the package includes three mp3 audio guides:

  • Questions & Answers on Very Small Businesses
  • 24 Actions You Can Take Today to Create Online Income
  • 18 Tips to Get Traffic to Your Website or Offer

I recommend this package to anyone looking to work for themselves.Click here to view more details. (Affiliate link.)