Early in December 2002, Allmerica Financial CIO Greg Tranter stood before his assembled IT team of about 500 and announced the news all CIOs dread: Despite intensive cost-cutting and the layoffs of 42 colleagues the year before, 65 more IT people would be laid off that day.
As he ended the meeting, his people applauded.
Why would employees applaud such devastating news? To support a leader they thought had done all he could to play straight with them and mitigate the coming pain.
"They were grateful that everything had been attempted to minimise the layoffs," says software assurance manager Art Nawrocki. "They felt there had been honest and open communication."
Infoworld US' annual Best Places to Work issue typically celebrates the good news about life in IT: great projects, training, salaries and advancement. But last year, 28 of our Best Places experienced IT layoffs, and since adversity can bring out the best in great companies, we decided to look at how they helped their people through bad times.
Lay a foundation
Managing well in hard times has everything to do with how you handle things before you have to deliver the bad news, says Dick Fishburn, vice president and CIO at Corning (No. 85), which laid off 550 of 1200 worldwide IT employees last year.
"You don't start preparing for something like this when you're faced with taking the action," he says. "It starts with open communications when times are going well about the status of the company and how that will affect the IT organisation."
At the Corning, New York-based company, a sharp downturn in telecommunications-related businesses foreshadowed trouble for IT.
"As we began to see very sharp revenue impacts in the company, we began to communicate with people in the IT organisation," Fishburn says. "You tell everybody everything you know as soon as you know it so that when you say something, people don't second-guess you."
"We were well attuned to the downturn, and we expected an impact," says Molly Rumbarger, Corning's manager of corporate/enterprise applications. "Dick and his staff have always been really open. If he knows, he's very upfront and honest."
When Tranter got the news that he had to cut $US20 million from the IT budget at Allmerica (No. 78), he immediately told his entire organisation.
"Our employees expect that we will tell them what we know when we know it," he says. "We said we would attempt to find strategies to lessen the impact but there were no guarantees."
Bill Mangano, director of client technology services at Worcester, Massachusetts-based Allmerica, says IT employees appreciated Tranter's candor.
"It made them nervous, sure, because they could do the numbers and they figured we might have to do layoffs, but they were glad to hear it upfront rather than behind the scenes," he says.
Mitigate the damage
The Allmerica management team slashed spending in every category from capital expenditures to travel. They left positions unfilled and brought contracted work back in-house. Employees were kept in the loop through an "Ask the CIO" website as well as numerous all-IT meetings.
"It was like a fund-raising campaign," Tranter says, "but instead of 'How much have you raised?' it was 'How much have we saved so far?' "
IT people wanted to help, so management offered part-time work and encouraged them to take unpaid furloughs. About 75% did. Allmerica outsourced 114 positions and transferred an additional 25 people to the outsourcer to be placed in other jobs. Allmerica also transferred more than 20 IT people to the business side.
At Corning, while divisions like fibre optics were laying off IT workers, others, like environmental sciences, were still hiring. So Fishburn's staff searched the company for openings. If a person couldn't relocate, he was sometimes able to virtually join a team located elsewhere. (One person on Fishburn's staff lives in Wales.)
MetLife (No. 100) in New York, which had to lay off 168 of its 4066 IT workers last year, came up with the novel idea of trial jobs for relocated workers. IT people who could be placed in the business were offered a six-month trial in a new location. "If they liked it, we'd move them," says Donna Mazzola, vice president of human resources.
When Allmerica ran out of options with $US6.5 million in cuts still to go, Tranter met with the business people to reorder priorities.
"We didn't want to slice 10% off our workforce and still have 100% of the work," he says. "We worked extensively with them so work would go away as people went away. I won't say there was no added work, but we tried to minimise it."
Corning's Fishburn agrees. "There are times when you have to lay people off without the work going away, but our philosophy is to get rid of the work," he says.
Face the music
The task of choosing those to be laid off at Corning started with senior managers at the sites where employees were being laid off. They drew up preliminary lists, and other managers reviewed them, adding and deleting names based on performance nuances. Finally, an independent corporate diversity panel assured that no group would be disproportionately affected. The multiple reviews eliminated any chance that layoffs were related to personality issues, Fishburn says.
The evening before the layoff announcements at Allmerica, Tranter called the management team together to hear who would be laid off and prepare for questions people might ask. "Greg set the tone," says Nawrocki. "He had to lay off some of his leadership. The pain was shared."
The next day, Tranter called the department-wide meeting, announced the bad news, explained what would happen throughout the day and took questions. Afterward, every person met with his direct manager. Those who were retained were told whether their role, responsibilities or manager would change. Those who were laid off met with a human resources person about the severance plan and placement services. Outplacement and other employee services were available on site.
Corning took a creative approach to outplacement services. In good times, there had been on-site recruiters for the growing telecom-related businesses. When the layoffs came, the recruiters morphed into outplacement advisers.
At Allmerica, a group of people who had been laid off thanked Tranter for the way he had handled things. "They were prepared," Mangano says. "They understood the situation and felt they had been treated with respect."
Linda McGowan, strategic measurement consultant at Allmerica, says she saw one laid-off employee advising colleagues on how to complete his work. "He said, 'If you need help, give me a call. Don't worry about it,' " McGowan recalls.
Many employees at Corning seemed more concerned for their supervisors than for themselves, says Karen Madison, IT human resources manager. "I heard them say, 'I know this is hard on you. Are you going to be OK?' "
When the layoffs were done at Allmerica, Tranter told everyone via email. "In some layoffs, you wonder when it will ever end," McGowan says. "We had a clear understanding of what was happening, why, how and when it was over."
Allow the dust to settle
In the days immediately following, Tranter made sure there were no formal meetings so all managers could be available in their offices.
"We also did quite a bit of management by walking around," he says. "We encouraged management to bring groups together and talk things through and let people open up and vent if they needed to."
About a week later, he called everyone together again. He told them it had been difficult but it was over and it was time to talk about the future. "Greg said there are no guarantees anywhere, but we had a lot of work to do and we had to move on," Nawrocki recalls. "There is no security. You have to be resigned to that, but you don't dwell on it."
"We have some really neat strategic stuff that has been able to energise employees," Tranter says. "Business is still investing in some really good technology, and employees see that there is a future here."
Fishburn cautions that getting back on track after layoffs is tricky, because if you try to focus on the future before the worst is over, you can destroy your credibility. "There's a certain 'clutch and accelerator' aspect of communication," he says, and you don't want to start revving up until you're sure the layoffs are done. "You get only one chance to refocus on the future," he says, "so that's a timing issue you need to think about and work your way through."
Layoffs are always painful, but people survive when they're approached with honesty and respect. "People here were prepared," says Sue Matys, HR relationship manager for IT at Allmerica, "and that made the difference."
Melymuka is a freelance writer in Duxbury, Massachusetts.
How to ease the pain
- Be honest. Tell the truth, as soon as you know it.
- Communicate. Keep everyone informed throughout the process.
- Include. Let people help; solicit their ideas.
- Mitigate. Do everything possible to lessen the number of layoffs.
- Share the pain. Lay off at all levels.
- Prioritise. Make some of the work go away.
- Notify. Tell everyone exactly when and how the layoffs will be communicated.
- Help. Do whatever you can to assist those laid off in finding new jobs.
- Finish. Tell everyone once the layoffs have happened.
- Grieve. Don't go back to business as usual. Give people time to vent.
- Move on. After a time, refocus on the work to be done and challenges ahead.