Sunday, January 24, 2010

A theory of layoffs

Silicon Valley does layoffs periodically regardless of the state of the economy. It is clear that our current recession is sufficiently serious that layoffs are necessary to reduce costs and ensure survival.

Layoffs don't happen in the way that you think they should.

You would think that the senior management of the company would look at the overall operation and figure out which groups perform the least essential function of the company, and either eliminate the group or retain just a few key staff from each group.

But that is not what happens.

The senior management abdicates the responsibility for the layoffs to the second level managers (and sometimes first level managers are included). These managers use a different set of criteria; they consciously or unconsciously select the people on their teams who are the most difficult and most challenging to manage.

We all know who these people are.

Some of them are eccentric and quirky, maybe not socially gracious, maybe not poised, but at the same time they have insights, ideas, and points of view that no one else has. Those ideas can lead to breakthroughs that are essential to the future of the company.

Some of them are very passionate about their ideas and aspirations for the company's product or service; they openly argue with their manager to do what they think or feel is right. They are managing from the bottom up; they like to figure out the game plan and persuade their manager. They do not want to carry out orders from above.

So what happens? These are the people who get laid off because they are the most difficult to manage; they are "the problems". The first and second level managers have made their life a lot easier. All the remaining staff know their place, are socially gracious, and everything is lovely without those troublemakers.

However, over the next three to five years, the company does not have any breakthroughs, new ideas, new dynamic product and service offerings. The company just becomes a resting place for drones. Then it dies a slow death.

The solution is that the senior management should not abdicate; they should identify the creative quirky individualists with their passion and their ideas. They should take steps to protect them from the layoff process.

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