No Layoffs Pledge

By Alex Yastrebenetsky posted 05-28-2020 12:21 PM

  
Only a few years out of college, I was a software engineer working for one of the largest software companies in the world, Attachmate. Our Cincinnati office had 250 people; this used to be an independent company that was acquired by Seattle-headquartered Attachmate.

One not-so-fine spring morning in 2002, in the middle of the post-9/11 and IT recession, all 250 of us gathered in a conference center across the street. The CEO walked in and read a memo. I don’t remember what exactly was in the memo, but I clearly remember his hands shaking and his voice trembling. Then he got back in his car and flew back to Seattle. 230 of the 250 people were let go.

I was fortunate to be one of the lucky 20 who still had a job at the end of that day. I wasn’t impacted (at least in the sense of my employment), but this experience scarred me for life. What about the rest of the organization?

That was the day the entrepreneur in me was born.

Nearly 20 years later, I find myself CEO of my own company. In January 2020, our month-over-month revenue was up 70% from January 2019. Then COVID-19 hits, and in March 2020, we find ourselves about 10% down from our all-time high in January.

Fortunately, very few of clients are canceling contracts, but some projects are ending, procurement is taking much longer to start new work, a number of clients are in rough condition, asking us for a 3-month delay in paying the bills so they can pay their staff. Right now, it’s all about cash flow.

In mid-April, we were supposed to fly our entire global team to Cincinnati for a week of learning, annual planning, training, and most importantly team building. With so many new people who started over the past 12 months, we were really excited and planning all kinds of fun events. Obviously we had to move this event to online-only: a week’s worth of half-day long Zoom meetings. How exciting.

Our event started on Monday, April 13. We were prepared, but something was missing. From day one of the crisis, I reprioritized my day-to-day responsibilities in order to focus on only two things: protecting the “mothership” and taking care of our team. Fortunately for me, we have an amazing team that takes all sales and customer service/delivery responsibilities off my plate.

I knew that as the CEO of the company, I had to find a way to help people fight fears and anxiety. When you remove fear and anxiety, people make better decisions; with all the craziness in the world, though, how do you demonstrate some sort of control in an uncontrollable crisis? We were transparent, communicating like crazy, and honest—but I knew that something was missing, and could not quite figure it out.

Tuesday or Wednesday night, a video of Mark Benioff, CEO of Salesforce.com caught my eye. I consider Salesforce.com as one of the most socially-responsible organizations out there and I very much appreciate the fact that Marc has become an activist CEO who is not afraid to fight for what he thinks is right.

Salesforce announced a no-layoffs pledge, and a number of Silicon Valley companies followed the movement. A light bulb went off in my head. Late Sunday night, we launched our own No Layoffs Pledge (http://nolayoffpledge.org/), and I had a clear plan of what I was going to say to my team.

We opened our conference with the story that I shared at the beginning of this article.

The two most important qualities of a leader in crisis are 1.) transparency and 2.) doing what you say you were going to do. I am not afraid to publicly share that our worst-case scenario solution is short-term needs based pay with a promise that the company will make everybody whole as soon as possible. If we are truly a “Best Place to Work” where everybody is an “A”-player, then we cannot consider a forced ranking-based system and cut C players—because we don’t have any.

We shared our No Layoffs Pledge with our team and published it publicly on our website because we wanted to “burn the bridges,” so to speak. But something interesting started to happen: other organizations started to join our pledge. Three short weeks later, we have CEOs from five countries (U.S., Canada, Nigeria, Pakistan, and South Africa) who have joined the pledge, representing over 11,000 employees worldwide.

Our new BHAG is to get this pledge to 100,000 employees by the end of June. Our April business numbers are already up—we never stopped providing more services to our partners who were in a position to spend more money with us—and we are hiring team members. (Because, god forbid somebody gets sick, we want to make sure we have capacity for people to take time off and take care of themselves and their families.)

It’s not about maximizing economic return right now— the top priority is managing team psychology. This is not an economic recessionary crisis; we are in the middle of an unprecedented humanitarian and health crisis. No playbook exists for dealing with a crisis like this, and the only solution is to do whatever it takes to protect your team, to get the best advisors, and to come up with solutions together.

A very sad report caught my attention recently; 65% of advertising professionals fear layoffs from pandemic. Not a day goes by that I do not find another article on AdAge or AdWeek about yet another agency letting people go. We are all “numbers people” in DAA. How about a few more numbers:

  • Downsizing a workforce by 1% leads to a 31% increase in voluntary turnover the next year.
  • After a layoff, “survivors” experienced a 41% decline in job satisfaction, a 36% decline in organizational commitment, and a 20% decline in job performance.

We are working on a series of articles to share ideas and support our #NoLayoffs tribe. There are so many straightforward options—3-month unpaid sabbatical with benefits, deferred compensation, needs-based pay, etc. At the same time, if you think about the root cause of why you’d have to consider a layoff, it all goes back to fixing cash-flow issues, and there are many options for how you can make small changes to your business operations to address this.

Sometimes we need to remove the easiest option off the table, commit to keeping your team, and do whatever needs to be done.

Right now the interests of the owners should be last in line.

We all are proud to compete for those coveted “Best Place to Work” nationwide recognitions. My call to action to the CEOs of other DAA member companies: let’s give ourselves permission to be great and earn our place on those lists by finding a way to take care of our cash flow issues without letting our team members go. I encourage you to join our tribe of CEOs and over 11,000 employees worldwide by putting your name under our #NoLayoffs Pledge and proudly sharing this with your organization. I promise you one thing: if you do that as an organizational leader, your team will find a way to deliver on that pledge.

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