Good morning.
Are layoffs a confession of bad management? That’s the question Fortune’s Geoff Colvin asked in a piece for the latest issue of our magazine, which you can read here. He takes aim at Mark Zuckerberg’s declaration of 2023 as “the Year of Efficiency” and asks: What were the prior years? The Years of Squandering?
There was a time, not too long ago, when layoffs were celebrated as a symbol of CEO mettle. For a few years in the early 1990s, Fortune ran a list called America’s Toughest Bosses that celebrated the likes of Warnaco CEO Linda Wachner, who advised an executive to fire people if he wanted to be taken seriously, or Dart Group CEO Herbert Haft, who fired his own wife and son. In today’s business world, however, sobriquets like those given to “Chainsaw Al” Dunlap or “Prince of Darkness” Ed Artzt are no longer medals of honors. Empathy is in.
But why, then, have 150,000 tech workers been given their walking papers since the start of this year?
Some of it results from the unpredictability of the times. CEOs tell me forecasting over the last few years has been harder than ever before, and mistakes have consequences. For the tech sector, the layoffs also reflect a suddenly changed paradigm—where investors have gone from favoring growth at any cost to prizing profits. And some of it seems to be, as Colvin suggests, just bad management.
How you do it also matters. Elon Musk provided a case study in how not to do it when some Twitter employees first learned the bad news because they couldn’t log into their laptops. And this week, McDonald’s raised eyebrows among the HR-savvy by closing its offices to make layoff announcements remotely.
Why? The word from the Golden Arches was that office closings were done “out of respect” for those losing their jobs. In the old days, folks were called into a conference room with the windows papered over, and then had to walk back to their desk, heads down, to collect their personal belonging. Telling them remotely, the theory goes, helps them keep their dignity.
Maybe. But I think the lesson of the last few months is that there is no good way to tell someone their services are no longer needed. And the lingering morale effects of layoffs can be substantial. Sudden market changes may force companies at times to trim their sails. But the best companies—witness Apple as the leading example—work to minimize such moves.
More news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
