The Morality of Mass Layoffs: What Business Leaders Need to Know

15:14Roland Frasier:And I don't think that there's anything morally wrong with that. In fact, I think there's something morally wrong about making business people and executive leaders feel guilty or make them feel like that they're in some, that they have an obligation to pay people. That would suggest that we exist in a socialist, you know, communist type state, which we don't, at least not in these United States of America where you and I are operating our businesses. Yeah, not yet. Moving towards a pretty quick. And what I would also say is, why don't we invert it? Because there was one person I read in the article, there was one person who said, you know, drove up from Texas and kind of stood outside of executives thing and held up a sign like, you know, I built your data center for I spent 12 years building your data center.

16:02Roland Frasier:Yeah, who got laid off? Before which you were paid. Right. And that's the point. Like you were absolutely paid. I would assume that this person was paid for 12 years for that. And so it is sad. And I do sincerely, I feel bad that this person was let go after 12 years. That sucks objectively. We can hold both of these truths in our head at the same time. We're all smart, wise people. It sucks that this person was let go. But let's invert it. What if this person had quit and gone to work for Google? What, how uncool would it have been if executives from Oracle went and picketed outside of this person's home and said, we paid you for 12 years, how dare you?

16:47Right?

16:48Roland Frasier:Of course that would be weird. And it brings up -

16:52Ryan Deiss:It's an asymmetric loyalty expectation. That's a really good thing to point out, right? The companies are supposed to be loyal to us as employees, but we're supposed to be absolute just scoundrels with respect to, remember the great resignation? Remember when there weren't enough employees and everybody was like, I'm out of here to go to this company to get paid more and screw you. It's clear that that's the case. And I didn't really hear any big pushback out there in the world from anyone, including business, about that. It was just kind of like, yep, that makes sense. They can pay you$100 ,000 more than we can.

17:34I get it, right?

17:36Roland Frasier:There are plenty of mature business owners who responded that way. We had a number of clients, and I had a number of friends, and I had to talk off of ledges. And I know I've been certainly early in my career guilty of just being very self-righteous and very, how dare they? How dare this person leave? I can't believe after we've shown them so much loyalty at the company, how dare they do that? And I've had to say to them, look, they get to do that. This is a transactional relationship.

18:07Ryan Deiss:It is a transactional relationship.

18:09Roland Frasier:If they can get a bigger, better deal somewhere else. then they should take that. And we had somebody working for us for a number of years. Her name's Susie. And we basically taught her everything that she knew about community management. And she started out in customer support, learned community management from us, got so good at it that she was literally poached by Facebook to be Facebook's community manager over their community of community managers. Like how freaking meta is that for meta to go and do, right? So that's the job that she got. And I remember she came and she felt really, really guilty.

18:48Roland Frasier:She's like, I don't know what to do. I feel really, really bad. And I'm thinking to myself like, this sucks. Like, I don't want to lose this person. She's incredibly valuable. We have invested a lot into her. And I was like, well, what are they going to pay you? And she told me. And I was like, look, you have to take the job because I'll never be able to pay you that.

19:09Ryan Deiss:they have all we had to do was create stock that would appreciate at the same rate that facebook

19:13Roland Frasier:would right they have the ability to monetize you and your brilliance better than we can and so good for them we you know obviously i need to get my act together and do a little bit better like you know facebook does if i want to be able to retain talent like you and and you know i'm She ultimately did take the job. You know, we stayed in touch, like still friends to this day. And she went on to be very successful. But I could have very easily been like, no, that'd be really disloyal of you. And that would have been horrible. That would have been incredibly wrong to do that. Because again, it's not a family.

19:52Roland Frasier:But I see businesses do this a lot of times in manipulative ways. And everybody agrees that that's manipulative if a business does that. And yet now the media is wanting to come over the top. And as long as the company is big enough, basically argue that, no, no, no, it should really be a family and you should care for them forever. I just don't think you can have it both ways.

20:12Ryan Deiss:I think it's comical how few business journalists know anything about business or have any business experience. Like when you read the writing by so many of them, it's just like, I mean, it seems like to be a business journalist, you should not just be a journalist. You should actually have some experience being a business person. because the attitudes that come through are, you know, very Pollyanna-ish, I think.

20:37Roland Frasier:Yeah, I would expect that if somebody is going to be a sports writer, they maybe didn't have to play the sport, but like, perhaps you were around it.

20:46Ryan Deiss:You probably want to play Little League or, you know, Pop Warner or something, right? At some point.

20:50Roland Frasier:Let me see you just throw a ball. I just want to see you throw a ball or kick a ball. Like, just do something ball-related if you're going to write about the thing. And so whatever the equivalent of that is from a business perspective, like just show me that you can do that because, yeah, just the level of business illiteracy is astounding. And what pisses me off about it is that's the thing that much smaller business owners will use and it'll be in the back of their mind. And it's the reason they'll delay making the decision that they need to make and feel guilty about making it when ultimately that's what they got to do.

21:29Roland Frasier:and that's why this frustrates me so much. I'll tell you the thing that I've started saying, I've been doing this now for many, many, many years. To anybody coming into the company, especially if they're gonna be kind of even, I don't really have any direct reports anymore, but if they're even gonna be in my orbit, what I say during the interview process is, look, this is a mutually exploitative relationship and I use those words intentionally because I want them to like hit. Your job is to get as much as you can out of this relationship with us. Similarly, our job is to try to get as much as we can from you, right?

22:05Roland Frasier:As long as those two things are aligned, we're going to do great together. If at any point in time you feel like you can get more from someone or somewhere else, then you should leave. And my only ask is that you give us notice, you leave on good terms. And my agreement to you is that we'll do the same thing. And I do believe that that is the obligation, is that when it does come time to part, that you part the right way and to the extent that you're able, that you part professionally. And so that maybe we could talk about is sending an email the most professional way to do it. Are there better ways to do it?

22:48Roland Frasier:But I absolutely think in terms of is this the moral thing to do? Absolutely for the stewardship of the company. But you brought up another point. It's the right thing to do for those people. Those people, nobody asked the question, and I hope there's 30 ,000 of them, and I'm sure none of them were asking this the day that they got that email. I hope now that it's been a little bit of time and they've had an opportunity to think about it and process through it, I hope at least some of them are saying, what could be really great about this? What new opportunities and what new doors could this open for me?

23:21Roland Frasier:Because many of them will be far better off because of this than they would have.

23:27Ryan Deiss:Yeah. I wonder for you, for me, my experience has been I've had a lot of really, really bad things happen to me. I mean, I have had, I've been through some stuff and I have always found, think about this, I have thought about it, but just like rethinking it. I mean, it's always ended up putting me in a position to be better off. Even if there was a time of adjustment, you know, I had, I got, when I got divorced, I mean, I, that was like the gut punch of gut punches in a very, very difficult time, but it was, um, you know, I was not in a position to be a good spouse at the time. And, um, and the relationship wasn't the best relationship for me.

24:19Ryan Deiss:And ultimately, it took me a good year of not wanting to get out of bed, but it basically led to a significantly better life. And so like, I guess if you're happy with your life now and you feel like you've advanced, you can look back and say every door that closed, every gut punch I took led to this better thing that I've got now, because otherwise I'd be in a situation that wasn't really, you know, optimal for me. And I'm, I'm guessing that that's the case for you too. So, so if what you learn after you go through some of the more severe ones is that, um, that when it happens, you don't have that visceral feeling.

25:07Ryan Deiss:You're, you're not afraid because you've seen yourself get through it. I think that's a big thing. Like if this was your first job and you worked in it for 12 years and you got a cold email from the company that you, you know, that the boss was like, we're family here at Oracle. And you thought that was your career path forever. And now you just bought a house and, you know, had a baby and got married and you're like, how am I going to pay for all this stuff? That's a tough spot. But if you've been through it before and seen yourself be resilient and seen that tomorrow comes, you know, it really is a gift to go through those things and get that confidence in that level of, you know, perseverance and resilience, you know, known resilience.

25:53Ryan Deiss:and you really are going to be better off because if either of the two parties of a relationship is in there when they don't want to be,

26:01Roland Frasier:it's not going to be good for either of them. There was a time I was utterly undone and I thought my professional career, my professional life was just broken. Like I was never going to be what I thought I could be because, and this is important, I don't know if you even know this about my history, Roland. I was rejected from the business school at the University of Texas. I applied for it. They wouldn't let me in.

26:33Ryan Deiss:And this kind of changes our like maybe we should.

26:37Roland Frasier:I mean, this kind of changes our partnership. I know. I know. I don't I don't have a business degree. They wouldn't let me in. But no, I mean, it's rejected by a business school. My sophomore, my sophomore year of college, I was I started out as like liberal arts undeclared. And I was like, OK, no, I definitely need to do business. I'm going to do business stuff. I'm going to be all businessy. And so I tried to get into that. And all my other friends were able to transfer to the business school. I'd made a C in ancient Greek, which is different, you know, you know, different story altogether.

27:05Ryan Deiss:And because of that, my critical, a critical core course for business.

27:09Roland Frasier:Critical, critical. I wasn't, I wasn't able to get in. And I thought then I was like, that's it. Like, I don't, I guess I'll be poor. Now, what actually happened, right? What actually happened is I started my own business. And fast forward, those who know, well, that worked out. And I shudder to think how different my life would have been in probably not as good a way had I gone into the business school. Because I don't think I would have started my own business. I think I would have taken a very different path And I don't think it would have been as good of a path. And I think similarly, and I'm not saying that all these people who got let go, that all of them will take an entrepreneurial path.

27:48Roland Frasier:I'm sure some will, and I'm sure it'll be great.

27:50Ryan Deiss:They will all take a different path that will leave them better off than had they stayed where they were.

27:54Roland Frasier:They may wind up going to a smaller company where they have more upward potential. Where they won't be is in a big company that clearly doesn't value them because they got laid off, right? And that's the important thing. and now they have the opportunity. And so I just think it's important anytime something bad does happen, and this is how you can start to build up some scar tissue and some resiliency, is just to ask, how could this wind up being a good thing? What could go right about this? And it's really hard to ask in the moment.

28:23Ryan Deiss:I like the timing of when you said to ask it too. Ask it now. Like ask it when the email comes before you put yourself through all of the worry, which is just such a waste of time and energy.

28:35Roland Frasier:That's a really good point that you made. Well, and that's maturity. right? And that's, I think you're, you're able to do that because you've lived in, like you said, you've seen yourself go through it. I mean, you and I have experienced our fair share of business and life failures and have watched us come out the other side, not just alive, but better for it. And so we can be on the brink of one and be like, I don't want to do this. It hurts. It sucks. It sounds hard and unpleasant, right? You can say that. Yeah, it's hard. I don't want, I'd prefer that it just work out. But if it doesn't, I know I'm going to be okay.

29:13And what could make this awesome?

29:17Roland Frasier:Like, what about this? If this does happen, you know, what about it could make it an even better situation? And it's just that little mindset shift can make all the difference in the world. Like I said, that's such a, I know I'm saying this from a position of privilege and whatever. give me all the comments you want. I don't actually care. But the people who say that of the 30 ,000, they will be better off for it than the ones who just decide that because of this, their life is undone and they were just a victim of the system. Yeah.

29:46Ryan Deiss:Yeah. I think so. So then let's go to the last part of the analysis that we talked about, which was beyond the moral, just the actual means. I don't really have a problem with a text or an email that lets them know because I feel like particularly at that level of scale that most of the relationships are impersonal anyway. And I don't know how you would make 30 ,000 meetings, 30 ,000 phone calls, whatever. I think about George Clooney and Up in the Air. And I think about Norm from Cheers in one episode was like so good at being empathetic that they hired him to fire everyone. And he started from taking them to the bar and like crying and being sad and all to just being kind of being like, yeah, you're gone.

30:38Ryan Deiss:You know, you can't maintain that level of empathy for 30 ,000 fires, Right. So what else are you going to do? I can't, I can't think of it. I, you know, maybe in our company, you know, like one of our smaller companies where you've got, you know, 20 or 30 people and you've gone to, you know, I will actually, I'll give you and Richard, right? If for some reason things align so that, and Richard's an owner, so it wouldn't apply just for those of you who are listening. But, but let's say in this situation, Richard is, you know, he, he reports to you and he wasn't an owner and things were such that he needed to be let go, I think it'd be pretty freaking cold after you playing golf and everything else with him and having a friendship for years and years to just send him an email and go, okay, so I won't be seeing you anymore at the office because you're done.

31:33That context is different, but not in a

31:37Ryan Deiss:true just, you know, and in a larger company where there's lots of employees and especially if it's a mass layoff, I don't know. I think it would be ridiculous to do anything different.

31:49Roland Frasier:Yeah, I don't, I don't, I don't know how, so I've, I've never been a part of a 30 ,000 person reduction in force, thankfully. But what I can tell you is the way that you do a layoff, if you need to let a couple of people go and the way you need to do it, if it's 10 or more, It is different. And so if you're just going to let a couple of people go, then you do go and have conversations with them individually. But if you do need to have a true reduction of force, and it's more than 10 people, then what you do want to do is you want to bring them all into the same room and you want to do it collectively.

32:24Roland Frasier:You want to do it collectively because number one, you don't want word to kind of spread and for the news to sort of trickle and to have everybody throughout the day wonder if they're next.

32:35Ryan Deiss:I would absolutely not want to be in that room. I would not want to go that way. I would way rather just get an email or a text. So whatever the means are, I think it depends on how - Is that a metaphorical room?

32:50Roland Frasier:Yes. Yeah. And so, and I think what the room is, is a function of like, how do you typically communicate with these folks? So I do think if everybody's always under one roof and they're all used to working together, then yeah, I think it makes sense. Everybody comes in. Let's get everybody in this one room. You have the conversation. If it's a remote company and everybody's used to communicating remotely, then yeah, you do it remotely. But the point is you need to do it together at once. You don't drip it out. You don't have one on one phone conversations because you got to get the news out all at once.

33:24Roland Frasier:You also want people who are on kind of the receiving end of bad news to have other people around that they can, in fact, commiserate with to realize that I'm not alone in this. This isn't just me. That does make it feel a little bit better. So you need to when you're more than about 10 ish people, you need to do it collectively. Right. The layoff and the news should be distributed collectively. You don't do it one at a time. So if we're going to say that, well, if it's more than 10 and 30 ,000 is definitely more than 10, then we're going to need to do it collectively. You're certainly not going to fill a stadium.

33:59Roland Frasier:Okay. So in-person is likely out of the question, right? Because we need to generally do it at the same time.

34:06Ryan Deiss:I like that picture. It's like, all right, everybody come to the stadium because that's where they'd have to do it. And everybody's like, awesome. It's going to be some cool football surprise game. And you have 30 ,000 people there. you better have an airlift to get yourself out of there.

34:21Roland Frasier:No, like what are we talking about here? You even, oh, let's get everybody on Zoom at the same time. Really? 30 ,000 people on Zoom at the same time? In this particular situation, I mean, they talk about it being a cold email. That's just editorializing. They needed to inform a lot of people that they no longer had a job anymore. And I didn't read the email. I'm sure it was written professionally and professional can sometimes come off as cold, but I don't know how else one would do it. So yes, I don't have an issue. I don't have an issue with it. I do think if you're going to just lay off one person, you probably don't want to break up with them over email or text.

35:07Roland Frasier:You should probably have that conversation with that, you know, with that one person, you should probably have it, you know, face to face. I do think that's the right thing to do. It should be done by the person who's actually led them. so I don't you shouldn't bring somebody in from the outside to do it it should be the leader who's made made that decision who is having that conversation with them but if it is a mass reduction in force the news needs to be distributed ideally in in mass as close to everybody at the same time as being affected as possible I don't know how else one would do it when you're talking 30 ,000 people so for everybody who's saying like oh this was unfair there's what else what else would you suggest what else give me another thing that would be better that's what I was Yeah.

35:47Roland Frasier:Yeah. What'd you come?

35:48Ryan Deiss:Well, I think that, I think there's a lot, uh, a lot of, uh, interesting things from what we talked about. Uh, have you, if you were listening or watching, have you gone through something like this? Are we wrong? Do you, you know, do you feel that there would have been a better way to do it given the, you know, the things that we talked about? Um, have you been, uh, in a situation where you were effectively, you know, broken up with via text and had a much closer relationship and how did you feel about that and how would you have like it done different? We'd love to hear. And if you enjoyed this, we'd also love for you to share it with other people.

36:22Ryan Deiss:And I think that's it for today, right? Unless you got anything else.

36:24Roland Frasier:No, I just say, if you think that there are people on your team and you've been thinking for a good long while that like, ah, probably need to let this person go, you probably need to let them go. And maybe this episode was the sign that you were looking for. And don't let any outside person, and especially people who've never run a business, make you feel guilty for being a good steward of your own, of your business. Exactly. Awesome.

36:56Roland Frasier:Hey, business owners. I've got a quick question for you. Do you feel like you're missing the data you need to make strong business decisions? If so, it's probably time to build a CEO dashboard. It's an easy way to get everyone in your company literally on the same page, focusing on the numbers that matter. So the Scalable Company put together a free spreadsheet template that will give you everything you need to deploy your own dashboard. And to make it even easier, Ryan Dice recorded a short training on how to use it. If you want to get your hands on the template, go to businesslunchpodcast.com slash dashboard.

37:25Roland Frasier:That's businesslunchpodcast.com slash dashboard, and you can download it for free.