Dear Tech Company’s: Stop looking to the CEO for the Layoff Strategy

“The idea of the CEO being the captain of the ship is bankrupt.”

Just watch the video above to see Better.com CEO Vishal Gang laying off 900 employees unexpectedly on a zoom call.

There is no way a group of stakeholders for Better.com would come up with this as the best idea - only the brilliance of a siloed CEO caught in a Bureaucracy could achieve this stupidity.

This is why bureaucracy, which over indexes looking only to the CEO for strategy, needs to stop.

At the end of this post, I outline 5 Steps Leaders need to consider when approaching layoffs.

If you put these into play you can unleash collaboration and Team Flow like you’ve never seen before. Feel welcome to jump to the steps now if you want, or read on to learn why this approach works.

Below is what I’m discussing with the executive clients I coach in the Tech Industry. It’s what I’m challenging them to consider during this critical moment in their leadership.

This is, indeed, a critical moment.

It is a moment where the decisions that leaders make will reverberate throughout their organizations, forever.

It is a test of their character.

The question employees - those who stay and those who leave - will ask themselves in the future is this:

“How did my company live in alignment with their values? Did they just say they cared about our input, or did they act in that manner.”

With the weight of that challenge, understandably, leaders will become emotional - possibly even emotional dysregulated, and then feel the need to scramble to find the “right” answer; or at least put their nerves to rest.

Just as Vishal said, he was hoping not to cry when he laid people off. Incredible really, his level of self-absorption.

But humans are prone to “experiential avoidance” - that is, wanting to avoid emotional discomfort.

This avoidance, ironically, is the source of many of the mental and behavioural health issues — it is also the number one obstacle leaders face going from good to great.

For leaders, the problem with wanting to avoid uncomfortable emotions is that it limits decision making ability, most commonly leading them to make decisions that just get them out of the emotional discomfort, and as quick as possible - rather than making the best decision.

In my dissertation I wrote about emotion-regulation and decision making which you can download for free here.

This gets to a bigger problem which I’m seeing rampant with all the suggestions we read on twitter, IG, or youtube — they provide comfortable “technical solutions” to a difficult and messy “adaptive problems.”

As outlined in Leadership on the Line: Staying Alive Through the Dangers of Leading,

Applying technical solutions to adaptive problems it the most common mistake that leaders make.

This is the mistake leaders must not make.

Technical solutions are easy and clean cut interventions - like an expert coming in to teach a new system, or install software that will solve issues. Or, simply firing people on a zoom call to immediately reduce overhead like Vishal did.

Adaptive solutions deal with the not-so-easy, the messy, and even the hard to talk about - like properly caring for your employees during layoffs.

But the biggest difference between technical and adaptive solutions is this:

With adaptive problems, only the people with the problems can solve them.

To solve adaptive problems you have to hand over the problem to the people who have them.

To put another way, the CEO cannot (adequately) solve it on their own - they must relinquish the proverbial captains hat.

Could layoff strategy be a company wide conversation?

Are layoffs an adaptive problem rather than a technical one?

I think so.

Here is a classic example of the power of taking the adaptive approach:

In 1994 the Chicago Bulls had an adaptive problem when Scottie Pippen took himself out of the game because Toni Kukoc was selected to take the game winning shot.

Toni hit the shot, but the team was crushed that their leader abandoned them.

Coach Phil Jackson couldn’t solve this rupture in the team interpersonal synchrony through a top down enforcement - this was a people problem.

He couldn’t steer the ship alone, he needed everyone onboard to take ownership.

So what happened instead?

The players spoke up and gave a voice to the impact of Pippins actions and discussed among themselves how they would solve the challenge.

During this current market of fear and uncertainty, many leaders are at risk of reverting back to treating the adaptive problem of layoffs like the technical challenges they solve everyday.

Again, it’s our natural tendency to want to avoid the messy and uncomfortable emotions associated with adaptive solutions.

This is particularly true for leaders in the West who value freedom and autonomy; they’re likely to immediately isolate and problem solve.

Nothing like being the hero who emerges from the cave with the solution, am I right?

The individualistic personality of the Western leader has many strengths, particularly taking big risks, further individuating their uniqueness and striving to self-actiualize!

But those from a collectivist cultures, that is, those who are more oriented around maintaining social harmony, also have strengths - and these strengths are around solving adaptive - people like - problems (this is not to ignore the clear dark side of collectivist cultures).

I wrote about cultural difference in flow in my dissertation as well.

Last summer I was fixated on studying people-centered organizations.

I dove deep, like really deep; I mean I was studying shamanism as a Regenerative Leadership approach at one point.

I also read my good friend Michel Falcon’s People First Culture - another fantastic book I recommend.

One of my favorite books on the topic, one that was filled with a lot of practical advice, as well as the statement “The idea of the CEO being the captain of the ship is bankrupt,” was Humanocracy.

Humanocracy, written by Gary Hamel and Michelle Zanini, argues that this previous vision and understanding of the CEO’s role as the captain of the ship is now dead.

And it’s dead because we are living in times of rapid change where innovation is the greatest asset.

And if there is any industry ripe with change, its Tech.

This is what they mean:

“What we need aren’t extraordinary leaders, but organizations that mobilize and monetize the everyday genius of “ordinary” employees.”

Why is this the case?

They argue because “the world is becoming more turbulent faster than most companies are becoming more adaptable.”

And that companies are not adaptable because they are bureaucracies - and that bureaucracies are nothing like adaptable people.

In fact, they argue that bureaucracies try to turn humans into semi-programable robots.

John Stuart Mill described bureaucracy as a vast tyrannical network.

Hey Vishal, are you listening?!

As Hamel & Zaninni say,

“As human beings, we are resilient, inventive, and exuberant. The fact that our organizations are not suggests that in some important ways, they are less human than we are.”

Their antidote to solve the innovation bankruptcy of bureaucracy?

Creating organizations as amazing as the people inside them; that is, building a Humanocracy.

To be honest, I like how Michel Falcon put it better with creating People First Cultures.

“In a bureaucracy, human beings are instruments, employed by an organization to create products and services.

In a humanocracy, the organization is the instrument - it’s the vehicle human being use to better their lives and the lives of those they serve”

Or put another way, People First Cutlures’ optimize performance through The Power of Ownership, The Power of Markets, The Power of Community, Experimentation, and Paradox.

All topics you can read in Humanocracy.

This is not a new argument.

Maslow even wrote about Humanistic approaches to leadership and management in his 1965 book Eupsychian Management.

But does Humanocracy provide any useful advice for leaders right now? — Yes, I think so.

First, philosophically.

Hamill and Zaninni make clear that Bureaucracies do not enable organizations to change as fast as the world around them — and how today’s evolutionary advantage is the capacity to change as fast as change itself.

While they make obvious that bureaucracy is a worthy enemy, because it does bring the competitive advantage of consistency and scalability, they make a strong argument that the technical solutions of bureaucracy are not functional in all contexts, and certainly not during layoffs when we’re dealing with people and culture.

This is where people-centered approaches trump:

The competitive advantage of treating layoffs as an adaptive problem is innovation - and innovation is what we need.

Experimentation creates “interpersonal synchrony,” which is the scientific term for when brains and hearts literally sync up in workplace teams.

Bureaucracies create siloes where people are jockeying for status, they’re averse to experimentation and impede innovation.

Competition does not lead to optimal Team Flow, or being “in synch,” collaboration does that.

And yet, for the reasons described above, I suppose it should’t come as a surprise that we’re terrible at innovation.

A Mckinsey studied shows that “94% of executives expressed disappointment with their organizations innovation performance.”

With this all in mind, lets get to actionable steps for you to consider.

This is my current flow prescription for leaders who are facing the decision of how to best approach layoffs.

5 Steps Leaders need to consider when approaching layoffs:

1. Get the frame right.

The question at the core of a bureaucracy is,

“How do we get human beings to better serve the organization?”

Ask yourself this (although you probably already are), and write down your ideas.

Now, alternatively, ask yourself the question at the core of a humanocracy:

“What sort of organization elicits and merits the best that human beings can give?

Write down your thoughts to this question, and you will likely get a completely different answer.

And it is likely an adaptive solution.

Let the values which emerge from this answer guide you.

2. Tackle the climate of fear.

With all of your direct reports, as you process your approach, you need to be asking these questions:

“Where is my thinking stuck?”

“What other options do you see?”

“What would you do differently?”

3. Hand it over.

Drive Team Results By treating this like an adaptive problem and give it over to the team itself to solve.

Have your teams organize and host a conversation about unit performance and their next steps to face the market challenges.

Let team members create the agenda, assemble the relevant information, identify areas for improvement, and develop action plans.

Give them ownership to solving this (adaptive) problem.

Next, create and environment where the team is self-managing their performance by facilitating peer-to-peer feedback.

Hold a session in which every team member is given constructive feedback by their colleagues.

4. Run the experiment

The end-goal is this:

Create a culture where teams are determining staffing needs - Not the CEO.

Teach them how to run an experiment to test their hypothesis of staffing needs — and attach possible layoffs to the experiment if performance goals and or financial challenges are not solved.

This requires you as a leader to teach them how to run an experiment to test their hypothesis.

If you need a design template, please email me at BrentHogarth @gmail.com and I’ll send you the best one I’ve found.

Rather than the CEO creating an elaborate plan on how to layoff hundreds, if not thousands of employees, build experiments within different teams (test groups) until the best solution if found.

And once the best solution is found - scale that to the whole organization (when appropriate).

5. Create a Coaching Culture

And what’s the CEO’s job in all of this?

Hold every damn leader at every level responsible for mentoring experiments and peer-to-peer coaching.

The leader is there to provide support and to challenge teams to reach for BIG aspirational goals.

Everyone must commit to shared goals that are aspiration. To achieve this, leaders must ensure employees base psychological needs are satisfied so that teams choose growth and not safety goals.

More on this in future posts, but as a starting place, you may review the new metaphor of Maslow’s Heirachy of Needs developed by my friend, the great and powerful Scott Barry Kaufman.

And to learn more on how to create a coaching culture schedule a call with me.

I utilize stakeholder led coaching which is a transparent, efficient and most importantly an effective approach.

If you do these 5 steps, when your staff looks back and asks how you handled the 2023 Tech Layoffs, they will remember you did it with the spirit of “togetherness,” wholeness and maybe even transcendence.

And for that, they will see you as a true leader.

Transcend the legacy of bureaucracy in order to improve your innovation during times of chaos.

Considering ditching the formal hierarchy, power being vested in positions, authority trickling down and strategies and budgets being set at the top.

If this sounds frightening to you, it should - and if you want coaching on where to start, schedule a call here.

Sincerely,

Dr. Brent

P.S

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