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My 37-year gig in corporate America came to an abrupt halt earlier this summer when I was laid off from a large dysfunctional company we'll call "DysCo". For background, check out Part 1 and Part 2.

Today in the 3rd installment of "Corporate Life in the Rearview Mirror", we consider the forgotten stakeholders in the DysCo debacle: the customers. When a company like DysCo decides that enrichment of the executive team and (if there's anything left) the shareholders is the "core value" that trumps all others, you know things won't end well for the employees.

Colorful, bandwidth-consuming e-mails from "corporate" about what a great place DysCo was to work notwithstanding, the communication that resonated with the workers was the handwriting on the wall. Another quarter where DysCo didn't make "plan"? Round up a few more of the employees and toss them into the volcano so Wall Street will see that we're serious about turning around this ship of fools.

Among these human sacrifices were some employees that our customers valued greatly, even if DysCo viewed them as expendable. Nothing tells a customer that you value their business than laying off the people who were providing them with service. No worries, management assured the clients; we'll just plug someone else into the account and you'll be good to go. Secretly, DysCo's operations managers figured this might help increase profit margins, if a cheaper person could be plugged in and billed out at a more profitable rate.

Like our employees, DysCo's clients were bright, hardworking people who had been around the block a time or two. Like us, they could see the handwriting on the wall. As they saw the people who had been doing a good job on their projects get tossed aside by DysCo, they peered into the growing abyss between the promise of this "top rated" company and the stark reality of corporate greed and obeisance to the Gods of Wall Street.

Follow along below the death spiral for more on how the customers came to be the forgotten stakeholders in the DysCo debacle...
 

In some businesses, employees may be truly interchangeable. However, in a service sector that requires an intimate knowledge of a customer's business - knowledge that may take years to acquire - the people who service the account are anything but interchangeable. A good project team that operated efficiently and remained intact was part of the "value proposition" that DysCo could offer a client... back in the day.

There's always some turnover of personnel in a company like DysCo, and that's fine if there's succession planning to mitigate the impacts. DysCo didn't waste time on foolishness like that, unfortunately. Proper succession planning takes thought and time. For every position, a company identifies the logical person to take over in the future. That person then gets to participate in "job shadowing" or other preparation (training, variation in work assignments, etc.) so that they're prepared when the time comes. The person they replace goes through the same thing for their next role. It's a great idea for everyone: employees get to craft their career path; customers are assured of continuity.

DysCo didn't spend any time on succession planning. First of all, it was an overhead activity. Why work on that when you could be working on paying projects? Secondly, with their already high rates of turnover (voluntary and involuntary), why bother with career paths, when they all end so soon?

As a result, when key people were let go, the clients were left hanging. Many of them simply followed the laid off people to their new employers, and those employers were only too happy to have them bring along their clients. So, to recap: DysCo lays off a person or two, and loses the whole account, which could be millions in current and future work. Brilliant.

In some cases, though, the customer remained with DysCo, as we were one of their "approved suppliers". If our witless management laid off a person who was needed to wrap up some important project work, no worries. DysCo hired them back as a "contract employee" with no benefits, just hourly pay, but billed them out to the client at their previous full rate. Again, brilliant!

Like the neutron bomb that kills off the people but leaves the building intact, DysCo's plan to rid themselves of pesky employees rolls on. Those not laid off are "looking", and doing so with more determination than ever. "Headhunters" looking to populate other companies with good people have been swarming around DysCo like vultures.

The good news for the already laid off and the remaining DysCo folks is that the customers still need to be served. If DysCo can't or won't do it, competitors can step into that vacuum. Sure, there's perturbation of everyone involved in changing employers, rewriting contracts, and getting back up to speed, but apparently it's a price worth paying when contrasted to the DysCo service model.

The age of DysCO dinosaurs may be winding down. Quite a few of the wily little mammals that DysCo threw into the volcano (your intrepid diarist among them) have climbed out and launched their own companies to serve the clients more efficiently and capably. Somewhere, Darwin is smiling. I know I am.

Originally posted to cassandracarolina's fossil record on Tue Aug 28, 2012 at 08:12 AM PDT.

Also republished by Retail and Workplace Pragmatists - Members and Editors.

Poll

What ONE factor do you think is most responsible for erosion of customer service?

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67%36 votes
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9%5 votes
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| 53 votes | Vote | Results

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Comment Preferences

  •  Lots of Wall Street Analysts (6+ / 0-)

    Have large, multi page spreadsheets guessing at every aspect of a company's operating dynamics.  They forecast Earnings Per Share (EPS) based on thousands of guesses, some good, some wild.  If the company misses the EPS guess by as little as a penny, all hell breaks loose, and these folks dump all over the company and it's management.  Obviously the spreadsheet wasn't wrong, so the fault lies with the company.

    The stock price can plummet, leaving someone's options valueless.  Of course, companies respond to that kind of pressure, usually in the worst possible way......

    “that our civil rights have no dependence on our religious opinions, any more than our opinions in physics or geometry.” Thomas Jefferson

    by markdd on Tue Aug 28, 2012 at 08:25:32 AM PDT

    •  This is soooo true, markdd (4+ / 0-)
      Recommended by:
      Polly Syllabic, Vatexia, JeffW, markdd

      One of DysCo's key failings was driving all the operations manager to "agree to" overly aggressive growth goals, even in the midst of a recession. Anyone down to the entry level employees could see that that was unrealistic. So when the executives rolled up department's "growth at gunpoint" predictions and promised Wall Street that they could deliver these improbable results, they were signing their own death warrant.

      Part of it was their desire to be perceived like one of the "big boys", covered by analysts, hiring Bain & Company to advise them, and so on. In reality, they were also-rans with an underperforming, thinly-traded stock that tanked despite all their cleverness.

      Some drink deeply from the river of knowledge. Others only gargle. -- Woody Allen

      by cassandracarolina on Tue Aug 28, 2012 at 08:30:26 AM PDT

      [ Parent ]

      •  Thinly traded is always difficult (1+ / 0-)
        Recommended by:
        cassandracarolina

        But a smart analyist will look for the poorly covered companies.  With only a few folks digging in their reports you can find some gems, but if everyone's in there, there's nothing new to find...  My wife found one gem, rode it from $37 to 110 in like 9 months, got out when someone made an offer.  But with every shop in NYC, Chicago, Boston, LA, Dallas having an analyist on Microsoft, no one's going to get rich.

        “that our civil rights have no dependence on our religious opinions, any more than our opinions in physics or geometry.” Thomas Jefferson

        by markdd on Tue Aug 28, 2012 at 12:47:20 PM PDT

        [ Parent ]

  •  I tried to explain this to my grandmother (6+ / 0-)

    My grandfather worked 20+ years at one company, got the gold watch, retired with pension. I tried to tell her that situation will probably never occur again in my lifetime, and she was baffled.

    Her mindset on the matter is typical of those in her age range. The world changed, but since it didn't happen to them, they didn't really see it. Many companies are still pushing this midset, but the rest of us are now waking up to the realities of business practices.

    Kind of a sad commentary on the state of business affairs now, and one many will never be able to admit. Gram is liberal, and an Obama supporter, but this is a situation she doesn't understand fully, and perhaps never will.

    "The less time you have, the more you need to use it wisely." - Cpt. Avatar, Starblazers

    by DeathDlr73 on Tue Aug 28, 2012 at 08:27:11 AM PDT

    •  An excellent and sad point, DeathDlr73 (6+ / 0-)

      My parents and in-laws could never understand why my husband and I worked long hours at home and on the road, and even on vacation. They used to ask "Why don't you just say "no"? They couldn't understand that, if we wanted to keep our jobs, "no" wasn't an option.

      Back in the day, people worked at the office, then came home while it was still daylight, ate supper, and relaxed. The combination of laptop computers and cell phones along with greedy, craven employers preying on their people's fear and loyalty have created an out-of-control situation.

      Where loyalty was once rewarded, it's now devalued. Few private sector people get a pension nowadays. Even the company matched on 401(ks) are being curtailed. I don't see this improving even if the economy ever "picks up".

      Some drink deeply from the river of knowledge. Others only gargle. -- Woody Allen

      by cassandracarolina on Tue Aug 28, 2012 at 08:35:44 AM PDT

      [ Parent ]

  •  I am seeing the exact same things play out (3+ / 0-)

    where I work.  Founder and former CEO valued employees first...employees will take care of the customers...customers will take care of the bottom line, and shareholders.  Former CFO, now CEO has reversed this.  Every communication emphasizes 15% Return On Invested Capital.  Stockholders first, customers second, employees a distant third.  Not only the reverse order from the previous CEO, but also the reverse order of how much they have invested in the success of the company.  And very shortsighted.

    When banjos are outlawed, only outlaws will have banjos.

    by Bisbonian on Tue Aug 28, 2012 at 09:40:38 AM PDT

    •  It's very difficult to work in a place where (4+ / 0-)

      customers aren't valued. I have worked for one of my clients 18 years. I feel more kinship with them than I do with my previous employer. Those of us raised in a "customer service" mode of operation can't reconcile the clashing dissonance in messaging from the company versus our own values.

      My husband's company is merging with a "CFO" run place, where everything's run by the finance guys. This seems to be the norm in public companies.

      Whether it's products or services, a company that focuses only on how much they can gouge the customers and the employees in the near term to "make the numbers" seems destined for ruin.

      Some drink deeply from the river of knowledge. Others only gargle. -- Woody Allen

      by cassandracarolina on Tue Aug 28, 2012 at 09:47:40 AM PDT

      [ Parent ]

  •  I worked briefly for a small consulting... (3+ / 0-)

    ...engineering firm, that had a policy of jettisoning employees on a regular basis. They also had the attitude that "whatever the customer (mostly the City of Chicago at that point) wants to waste money on, we'll take it". After I was let go, and had endured 11 months of UI, I went to work for...the City of Chicago. Two years later, the consulting firm folded. No stockholders in this case, but employees and customers suffered.

    Float like a manhole cover, sting like a sash weight! Clean Coal Is A Clinker!

    by JeffW on Tue Aug 28, 2012 at 10:11:09 AM PDT

    •  Lots of former DysCo employees (3+ / 0-)
      Recommended by:
      JeffW, Melanie in IA, Calamity Jean

      have taken positions in the clients' organizations, further eroding the work that DysCo could be getting, which in turn will lead to more layoffs.

      The clients have a very good idea of who adds value to their operations, a fact I am counting on for my own new business.

      When I was laid off, I approached some of my long-ago clients, not to shake them down for work, but to ask whether they'd be willing to serve as references for me in my new business. Everyone of them asked about having me work for them on projects once I was up and running.

      Being able to do good work for good clients at a much more reasonable biling rate is a winning idea all around.

      Some drink deeply from the river of knowledge. Others only gargle. -- Woody Allen

      by cassandracarolina on Tue Aug 28, 2012 at 10:16:32 AM PDT

      [ Parent ]

  •  DycCo and others throw employees (2+ / 0-)
    Recommended by:
    cassandracarolina, JeffW

    into the volcano, as you say, potentially leaving customers with next-tier service. But that's not the only way firms screw customers in the quest for short-term results (quarter after quarter.)

    They also find ways to change the fee structure so it hides increases without improving services. In my business the company increased internal mutual fund expense ratios, added 12b-1 fees, increased base management fees, added or increased fees for special services that previously could have been done outside the firm (if the customer wished) and now were mandatorily done within the firm, unbundled accounts to apply a higher overall fee structure...

    They X out support staff with whom the customer would never interact. Customer doesn't know the difference, perhaps, but the customer-facing employee sure does.

    In our world, travel to see clients was curtailed substantially. Rather than going to, say, Little Rock once a year, we were to go every other year and meet with the client by phone the rest of the time. While this worked fine for some, it does not fit universally.

    And as I've mentioned before, training and CE were strictly rationed or simply not available; supplies available were cut; and other measures that ultimately impact customer service.

    This is not the way to run a business. Unless you're trying to run it into the ground.

    •  Are you sure you didn't work at the same place? (2+ / 0-)
      Recommended by:
      Melanie in IA, JeffW

      We too had additional fees, escalating billing rates, people reduced to contract employee status working from home but still billed at full rates.

      Crackdown on travel. No conferences (even if you and a customer had coauthored a presentation or paper!) No budget for training.  

      Best/worst of all: in a recent meeting, DysCo project managers were told that if some of their accounts remained below a particular profit margin, they were to tell the customer that we'd finish the project, but then do no more work for them.

      Some drink deeply from the river of knowledge. Others only gargle. -- Woody Allen

      by cassandracarolina on Tue Aug 28, 2012 at 11:00:46 AM PDT

      [ Parent ]

  •  I have some hope for my company (2+ / 0-)
    Recommended by:
    cassandracarolina, Melanie in IA

    We've had problems from time to time, but the track record in the last decade or so shows some sense.

    Just as an example, in one merger with a competitor that was the "sick man" in our market, our management told us "not a single employee of will lose his job as a part of this merger".    We got only the best of the best from the dying company, all "redundancies" were trimmed on their side.  (and their customers were also our customers, got their business moved to somebody already covering their account, for example)

    We also took pay cuts+no bonuses in 2009 to minimize layoffs....and the pay cuts were bigger the higher up the management food chain you were.   The lower level bonuses started getting paid before the management ones, and when we became profitable again in 2010, they retroactively restored all our lost pay.

    On the downside...we don't rehire after attrition, at least not in USA jobs.   The company keeps its valued employees, but is doing a slow transition of remaining USA jobs to the far east as key people retire, their successor is somebody in a lower wage region (but highly educated, good communication skills etc person)

    We're in no danger of a Bain swooping in.  Our industry is doing well, and we're either the first or second player in it (a good competitor is a real boon to keeping your company from going stupid).

    The stock market doesn't like us though.  They never have.   shrug

    •  Sounds good, greblos (1+ / 0-)
      Recommended by:
      JeffW

      When I worked for a 110-person privately held company years ago, the top 30 of us took a voluntary pay cut to keep from having to lay people off. It worked until we were able to recover from a downturn, and I think it made a positive impression on the staff.

      I brought up this idea at DysCo to the fellow who was my supervisor a while ago (great guy, like me, got there by acquisition), and asked whether DysCo would ever do something like that as part of our efforts to cut costs and save staff.

      He told me that his firm had done that in the past as mine had, but that when someone raised the idea to DysCo executives, their answer was a resounding "no!".

      Why? Because - and I hope you're sitting down, or near a wastebasket or barf bag - these top level executives claimed "we're the hardest working people in the company!"

      Yeah. Right. Tell that to the people working 70+ hours a week out in the field in all kinds of weather. Or racing to get proposals and reports out the door. Or working the "hidden factory" shift to redo work that was messed up and now there's no budget to fix it.

      Some drink deeply from the river of knowledge. Others only gargle. -- Woody Allen

      by cassandracarolina on Tue Aug 28, 2012 at 11:55:37 AM PDT

      [ Parent ]

      •  Yeah. Our company seems to still value (3+ / 0-)

        its employees.

        I mean..we're a multinational corporation with a typical management structure.  So the CEO and top executives make a zillion times more than a Thai factory worker.

        But...I've been to those factories.  They're good, safe working conditions.  The people who work them seem to be pretty happy with their jobs.  They work normal shifts, 40 hour days.  (unlike us stupid Americans on salary who often voluntarily work too many hours and don't take our vacations).   I know we've put in roads, access to medical care, sewers, other infrastructure where we didn't find it overseas.

        And at home, well, if you are one of those high paid Americans who they are hoping will retire, they've got a very nice severance package for early retirees, if you're 50+.   We get several health care options to choose from with premiums that have been rising but are still affordable on our salaries.  Our 401K gets a match, it's got a lot of funds to choose from, our employee stock purchase gets you a guaranteed 15% return every 6  months if you sell immediately plus often a lot more if the stock market has been moving around randomly, as it is wont to do with our stock (the lowest of the start and end of offering period is our purchase price).

        We also have a good record with respect to pollution, green-cycling and safety no matter what country we're in.   We prefer cross-licensing patents to doing apple-like suits.

        And there is career training stuff.  Majority of promotions are from inside.  We cross train enough to take vacations and survive somebody leaving.  Etc.

        So not as dysfunctional as most.  But we are very good at offshoring, have been doing that since the late 80s, we're very good at mergers and aquisitions and I'm pretty sure we have one of those tax structures where most money is "made" outside of the USA and never seems to leave low-tax countries.  

        So not evil to the employees and customers.  A reasonably good corporate neighbor.  We even build real products from dirt, and push the tech envelope of our products, with long range R&D.  

        But still...some things about being a publicly traded multinational just make you a little bit evil.   You get the sense that our upper management is fighting a headwind to stay sane and make decisions that aren't always evil.   Part of what has kept us somewhat sane is that the stock market has always hated us, since I first joined over 20 years ago.   Our stock is a pinball, and it rises and falls in ways that usually have little to do with the fundamentals of our company.

        Our executives are all big stockholders.  So their contempt of the stock market perhaps keeps them from being a slave to it.

        •  It's possible to make money while doing (2+ / 0-)
          Recommended by:
          JeffW, greblos

          the right things for the environment, the employees, the community, and the shareholders. Indeed, mounting evidence shows that sustainability and progressive social policies for employees and the supply chain add to the bottom line.

          One of your thoughts in particular resonated with me in terms of Dysco:

          And at home, well, if you are one of those high paid Americans who they are hoping will retire, they've got a very nice severance package for early retirees, if you're 50+.  
          Laid off at 59, I would much rather have had the option to get a "buyout" as many firms provide as an incentive for those near retirement age to take retirement now. It's a way to exit gracefully, rather than being summarily shoved out the door in a matter of hours for your Walk of Shame to the parking garage with your personal effects.

          Some drink deeply from the river of knowledge. Others only gargle. -- Woody Allen

          by cassandracarolina on Tue Aug 28, 2012 at 12:16:30 PM PDT

          [ Parent ]

          •  It is a good enough deal (1+ / 0-)
            Recommended by:
            cassandracarolina

            That I'm strongly considering it once I hit 50, assuming I have some other job lined up.  I'm not going to plunge into the unknown blindly, especially if the economy remains bad the next few years and/or the ACA gets rolled back or proves ineffective at providing non-employer-based insurance.

            I'd like a second career closer to my community and giving back more than my current career, which pays well and has made me comfortable, but that's about it.  The severance package would be enough to pay off my mortgage.  That's enough for a game changing difference in my life.

            And yeah, the dignity is a lot higher.  Plus you have the chance to train your replacement in a sane way, instead of being an instant security risk as in a layoff.

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