Embracing the Profound Responsibility of Leadership in Every Season

December 20, 2022
  • Bob Chapman
  • Bob Chapman
    CEO & Chairman of Barry-Wehmiller


For some, this holiday season is going to feel a lot less merry and bright as we’re starting to see reports of significant layoffs from well-known media and tech companies.

About these current circumstances and layoffs around the holiday season in general, The Wall Street Journal said:

December’s above-average layoff numbers often stem from companies trying to adjust costs and reboot in the new year with a new balance sheet. This year, some company leaders are worried about rising interest rates and the war in Ukraine, in addition to supply-chain issues and softer global demand for goods and services, says J.P. Gownder, vice president and principal analyst with advisory firm Forrester Research Inc.

“They want to set up finances for success in 2023,” he says. “It’s a good bet that tech companies that haven’t yet laid off employees are carefully considering whether or not to do so. It wouldn’t be surprising to see more layoffs in the next few weeks.”

We live in a time where downsizing, right sizing and restructuring is a common practice to boost financial performance, and yet do these executives and boards give serious consideration to how it contributes to a high level of stress and anxiety for the people who are impacted? Do they consider the collateral damage to those that remain?

“Set up finances for success” sounds more to me like boardrooms looking to use uncertainty to “cut cost.” But anytime we “cut cost,” it ultimately means “sacrificing our team members trust and livelihood to give investors what they want.”

I am confident that in these boardrooms, they’re talking about how it will meet the expectations of the analysts and investors and not how it will affect the lives of the people in their span of care.

The Last Resort

I recently read an Inc. article about layoffs at Facebook parent company, Meta, and how their leadership team handled their layoffs.

Meta CEO Mark Zuckerberg made the announcement in a message to all team members and I’d like to highlight a few things he said:

I want to take accountability for these decisions and for how we got here. I know this is tough for everyone, and I’m especially sorry to those impacted…

There is no good way to do a layoff, but we hope to get all the relevant information to you as quickly as possible and then do whatever we can to support you through this…

I view layoffs as a last resort, so we decided to rein in other sources of cost before letting teammates go…

This is a sad moment, and there’s no way around that. To those who are leaving, I want to thank you again for everything you’ve put into this place. We would not be where we are today without your hard work, and I’m grateful for your contributions.

To those who are staying, I know this is a difficult time for you too. Not only are we saying goodbye to people we’ve worked closely with, but many of you also feel uncertainty about the future. I want you to know that we’re making these decisions to make sure our future is strong.

Without speaking to the more questionable aspects of Facebook’s business, by comparison to public situations at other notable tech companies, at least Zuckerberg’s message showed candor and sensitivity.

Layoffs should be the last resort for executives and boards after all other options have been exhausted. Furthermore, we senior leaders and board members should own our role in this failure and handle the transition with as much compassion as possible.

Unfortunately, this is not often the case.

The Human Impact

When advisors to the board or senior leaders suggest layoffs are necessary to achieve financial targets, or make structural cost adjustment that analysts expect, it seems to me that the train of thought is traditionally focused on the investor and not focused on the many stakeholders in the business. I doubt there is a real discussion of the human impact of these job reduction programs.

In fact, the human impact can be quite costly. In Stanford Professor Jeffery Pfeffer’s book, Dying for a Paycheck, he cites numerous studies that layoffs can lead to adverse health consequences for those separated, as well as those who remain, including higher rates of mortality.

Pfeffer also makes the case that layoffs often do not achieve their intended purpose in restoring the financial health of the company, especially at the expense of the those who are hurt the most.

He says:

If layoffs improved corporate performance, then the costs of the layoffs in physical and psychological ill-health and increased health care spending would need to be balanced against the economic benefits arising from the layoffs…. Consequently, there is a misalignment of costs and benefits.

A singular focus on financial health often operates with blinders to the physical and psychological health of those who are impacted by decisions their leaders make.

A discussion of the impact of the health and safety of our team members should run parallel to the discussion of financial health. The impact to all stakeholders should be kept in mind, not just shareholders.

Getting on the Bus

A few years ago, the Business Roundtable came out with a statement saying that corporations need to shift their focus from shareholders to all stakeholders.

The times we are in now provide the opportunity for corporate boards and executive teams to aspire to this approach, which very much aligns to Barry-Wehmiller’s vision: We measure success by the way we touch the lives of people.

This requires a constant focus on the vibrancy of the business model and the organizational design, -- always challenging it – to ensure it is creating value and safety for all stakeholders.

One business metaphor I use in all my speeches is a response to an idea from Jim Collins’ seminal book, Good to Great.

In it, he says, “It’s about getting the right people on the bus”

But it’s much more than getting the right people on the bus, I believe it's about building a safe bus, which is your business model. And then you need drivers, your leaders, who know how to drive it safely and know where they're going. And then anybody you invite on the bus is going to be fine.

So, it is much more than the “right people.” It is equally important that we have a business model that gives our people a grounded sense of hope for a future with our organizations! It gives our people a chance to raise kids, buy a home, live life in some sense of safety and comfort.

Maintaining the Engine

Prior to my transformation from management to leadership, I felt that layoffs were just part of the job. It was nothing personal, just what you do when you are faced with financial challenges. I was never taught or did I ever consider the impact on the people.

And on the surface, it is easy to calculate the impact on earnings by simply looking at salary and benefits reduction. But what I have learned is that you can’t calculate the impact on the lives of those let go or the collateral damage that erodes trust and safety for those that remain.

Remember, 88% of all team members feel they work for an organization that does not care about them! And that certainly happens when people are seen as expendable “costs” as compared to our view that they are all someone’s precious child that should be treated as we would want our children treated

Several years ago, professors from Harvard University wrote a case study on the impact of our people-centric culture within Barry-Wehmiller. I was there when it was introduced to a group of about 160 global executives at a leadership event.

I sat in the room as they discussed our case study for more than an hour. At the end, Jan Rivkin, the chair of the MBA program, said to this group, "Is Barry-Wehmiller successful because of its culture or its strategy?"

They discussed it for about 10 minutes more and then voted. Seventy-five percent of the people said Barry-Wehmiller is successful because of our culture.

Then Jan asked what I thought. I stood in front of this group of very prominent global executives and said, “I understand why you think our culture is the foundation for our sustained value creation, but let me give you my perspective.

“The foundation of our 30 years track record of over 10% compound growth in share value is that we built a robust business model in the late 1980’s and we stayed true to that model where the core strategic focus is a balance of markets, technology and customers combined with financial stability”  

Our business model is the engine of our bus. Our culture is the premium fuel that makes the engine perform to the potential of its designers!

A Safe Destination

In our stewardship of those within our span of care, we have to continually ensure that we have a robust business model that gives our team members a sense of employment safety so they can have a grounded sense of hope for the future and plan their lives with this sense of financial security.

It is time for our business leaders and their boards to consider the financial impact of team member reductions equally with the impact on their people. The people who have put their trust in their leaders and simply want to know that their health and financial security are just as important as a company’s investors.

If executives and boards looked at every person within their span of care as someone’s precious child, if we embraced the profound responsibility of leadership, leaders would be intentional about engaging in continuous improvement and operational efficiency to avoid practices that will hurt people.

Then, everyone on the bus will get to where we’re going. Together. Safe.





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