Should Companies That Fire Shoot First

Chapter 11, pages 362-363: Case Incident 2, "Should Companies That Fire Shoot First?"

Instructions:

Answer the four questions following the case. Use outside research to substantiate your responses (number your answers as they correspond to the questions).

1. Do you think Tesla CEO Elon Musk did the right thing when he blogged about impending layoffs just before announcing them to employees? Why or why not?

When I first read this question, my immediate response was “How could he do that?! How could a CEO blog about layoffs before telling his employees?” But after researching this topic, and reading about how commonplace this has become, and the reasons behind it, I do think that Mr. Musk did the right thing. I do not necessarily agree with these methods, but I do understand why more and more companies are taking this approach. Companies are trying to take a proactive approach and provide information regarding layoffs before the media gets wind of it and reports inaccurate information. In this day and time, with all of the technology, it would be difficult to keep the news of a layoff quiet up until the formal announcement which is why it seems better to put it out there, than to hide behind it.

For example, in October 2008, Zappos.com CEO Tony Hsieh and his management team were forced to make the gut-wrenching decision to lay off 8% of the company's employees in order to cut costs in the wake of the recession. Of course, many companies were also conducting layoffs around the same time, but it's how Hsieh went about announcing his decision to cut 135 jobs that set he and his company apart. Specifically, Hsieh took a very transparent approach to his unfortunate duty, tweeting and blogging about why the layoff was needed and how the company was doing its best to compensate each laid off employee with severance pay and health insurance coverage as best it could. He also encouraged employees to use their own judgment in how they communicated the news via their own social networking connections. The end result was that Hsieh, by taking a transparent and, by most accounts, compassionate approach to the layoff, actually generated more good will than bad. Compare the Zappos story with any of the disaster stories that seem all too common these days, where employees are surprised when they are met at the door by armed guards or prohibited from returning to their desks, and you begin to realize that if you're forced to go through a layoff, there is a better way to do it. Obviously, most business owners never want to let anyone go, especially in a mass layoff. But the reality is that your job is to keep your company going, to survive, and a layoff might be your last stand in that mission. It also makes good business sense to treat your exiting employees well, because what a lot of business owners don't realize is that their laid