My 37-year gig in corporate America came to an abrupt halt when I was laid off earlier this summer. As discussed in Part 1 of this series, I was one of several thousand people thrown into the volcano in a desperate failed attempt to placate the Gods of Wall Street.
My former dysfunctional employer ("DysCo") continues struggling. Their stock price is still in the toilet, along with employee morale. My friends who remain there are plotting their exit strategies, a logical reaction to the continued presence of the Corporate Grim Reaper lurking in the hallways.
DysCo didn't come up with their clever plans by themselves: they paid millions to Bain & Company for management consulting advice. My diary from a month ago explains the "dynamic" between Bain & Co. and DysCo, which has not experienced the epic turnaround that Bain & Co. clients have been led to expect.
Follow along below the dark cloud of malaise for some reasons why...
Until recently, employees at DysCo could count on certain protections, certain covenants that existed between them and the company. When we hired on (or whenever the nitwits in Human Resources came up with new safeguards to protect the company from the employees), we were required to certify our acceptance of these agreements.
Yes, we understood that we were all essentially "tenants at will". Our employment could be terminated at any time, with or without cause. We got that. After all, we could leave at any time, too. We get it. Loyalty doesn't matter. You're welcome to work at DysCo for 5, 10, 15, or 20 years, assuming you can evade the reaper for that many years.
I was pulled into the DysCo Borg Collective through an acquisition. DysCo was on a big buying spree, quickly growing by acquisition into quite a large enterprise. The beauty of growth by acquisition is that it creates a moving target. Wall Street can't really tell if there's any organic growth, or whether profits are improving, because the money moves all over the place, tucked away in buckets like "restructuring". Figuring out real performance is as challenging as nailing a slab of Jello to the wall.
One day, though, acquisitions slow, and someone switches the lever from "growth by acquisition" to "organic growth". Then Wall Street (and all other sentient beings) can see: this emperor has no clothes. It's no longer possible to play the financial shell game. the stock starts to tank, and desperate measures become the order of the day.
Bain & Company has some helpful advice for executives like those at DysCo: change the rules! It's your company. Tell those pesky employees that "things have changed". It's nothing personal; just business.
Start with the big-ticket items like severance pay. When we signed on, the deal was one week of severance for every year of service to the company and its predecessor companies. For many people, this single provision gave them the assurance that, if the Reaper whacked them after 20 years at DysCo, they'd get enough pay to sustain them as they looked for a new job.
Bain & Company advised that this quaint little deal needed to be thrown onto the scrap heap. New policy? Severance is capped. So if - like me - you were laid off after more than 20 years with the company, tough sh*t. Here's your 10 weeks of severance, and oh... by the way: you don't get a penny of it unless you sign away all your rights to say anything against the company or take any legal action.
Used to be, when you got laid off, you'd get two weeks' notice. If they wanted you out right away, they'd give you the two weeks of pay in lieu of notice. Now? They paid me through the end of the day they laid me off. That adds up to some tidy savings for DysCo. Sure, it broke the covenant, but hey: it's just business. Nothing personal.
For those who remain, company-paid benefits are being cut. Cell phones - required for nearly all employees who work in the field or deal with clients - were paid for by the company. Now, it's "bring your own device" and pay for your own plan. So if an employee signs up for a one-year plan and gets laid off after three months, oh, well.
There are rumors that the health care plan will be converted to a voucher system. Gee: where did they get that idea? Any chance it was the clever Bain kids who suggested that this was yet one more way that DysCo could be a pioneer in their sector?
All sorts of other cost-cutting measures are being rolled out. But don't worry, DysCo employees have been told that the most Draconian measures will only be in place through the end of the fiscal year. They're pulling out all the stops to make their numbers. Well... not all the stops. The executive team will still get their bonuses. After all, they're the hardest working people in the company. I know this for a fact: they said it themselves.
I guess it must be hard work coming up with new excuses for the Wall Street analysts... and coming up with new ways to break the covenants with the folks who are really the hardest working people in the company.