It’s high time that CEOs be held accountable. If there are downsizings and cutbacks, top executives ... [+]
Last week, Braden Wallake, CEO of HyperSocial, a small marketing startup, posted a picture of himself crying on LinkedIn, in response to having to downsize staff. Wallake wrote, “We just had to layoff a few of our employees.” He took full responsibility for his company’s downturn, “I've seen a lot of layoffs over the last few weeks on LinkedIn. Most of those are due to the economy, or whatever other reason. Ours? My fault. I made a decision in February and stuck with that decision for far too long.”
Despite admitting to making poor business decisions, Wallake’s job is safe, while some of his staff were let go. Also, although he said his employees are like “family,” noticeably missing from the post was a plan for how he or his company would offer help or assistance to his downsized staff during this transition period. The post quickly went viral on LinkedIn, with people calling it “narcissistic and tone-deaf.”
Why are CEOs and top executives immune to layoffs? Whenever there is an event that causes the need for businesses to cut costs, it’s usually the average worker who gets laid off. This occurs so routinely that people take it for granted. They resign themselves to the unfairness that it has always been this way and will always be this way.
It’s Time For Top Management To Be Held Accountable For Poor Performance
Over 70,000 people have been laid off this year, as the economy softened. LinkedIn members place #OpentoWork banners on their profiles and ask for help finding a new job. Sites, such as Layoffs.fyi, keep count of the number of tech professionals let go from their jobs, and share their information for recruiters and hiring personnel to help them with their job searches. How many chief executives do you see on these lists?
It’s high time that CEOs be held accountable. If there are downsizings and cutbacks, top executives are not above reproach. Low-performing C-suite executives should be considered for downsizing or reducing their compensation packages.
There is no reason why the average worker should automatically be targeted. More often than not, the decisions made by the executives, like Wallake, led the company into difficulties, and they must be held accountable. If roles were reversed and a rank-and-file employee made a grave mistake, they would automatically be fired, but that same standard doesn’t hold for the executive team.
During the pandemic, as major corporations fired and furloughed workers, the CEOs and C-suite executives almost always held onto their jobs and lucrative pay packages. Some publicly announced they would take a pay cut to avoid mass layoffs. However, they were provided with lush stock options that more than compensated for the token salary decrease.
C-suite total compensation plans should be slashed, including salaries, stock grants and options, and other exorbitant perks and benefits that are not offered to the workforce. If they are to blame for the precarious predicament of their organization, the CEO and other top executives should be laid off in downsizings. Since their compensation ranges upward to millions of dollars, one executive being terminated will save dozens of jobs for hard-working Americans.
CEOs Need To Hold Onto Workers
As evidenced in the current labor shortage stemming from the Great Resignation, businesses have learned how hard it is to find, attract, recruit, hire and retain workers. Experienced managers and executives know that even if the United States is in a recession, it will ultimately pass. It is a prudent decision for companies to hold onto their employees tightly. In an inflationary environment, the prospective candidates will demand more money than those who previously held the role.
Executives need to recognize that without an entire workforce, it could cause significant damage to the firm’s brand and reputation. This is especially true if the company enacts a massive downsizing via an online, one-sided video call, it will invoke anger and social media backlash, calling out the tone-deaf and callous attitude of the company’s management. Some of these organizations may never recover from the adverse publicity. Lessons from Better.com show that it's wiser to hold onto people and hunker through the rough patch.
There Are Options Other Than Massive Layoffs
- Instead of a knee-jerk downsizing, offer temporary furloughs with an option to return once the circumstances get better.
- Convert employees into temporary or contract assignments for the short term until the economy rebounds.
- Rather than automatically defaulting to layoffs, employers can consider pruning the employees’ pay and reducing hours worked.
- Offer a four-day workweek.
- Provide the option of going on a sabbatical and returning when the situation improves.
- Enact work-sharing programs.
- Institute hiring freezes, allowing attrition without replacement.
- Use this time wisely to train people, teach them new skills and give them new projects.
- Adopt a remote-first program. Sell off the costly real estate, don’t renew expensive leases and the cost savings could be used to keep the employees on the payroll.
