The Need for Strong Communications in Business

When you have a whole division to eliminate from your company payroll, do you:

A) Have the HR people descend upon the target and deliver the bad news in cold, concrete terms clearly designed to limit lawsuits;

B) Go down yourself (as CEO) to pass out severance checks and shake hands with everyone as they exit the building; or

C) Make a vague reference to your decision to eliminate their jobs in a blog post.

If you answered B, then you have the heart and guts of a Hemingway. On the other hand, if you answered C, then you fall into the category of Tesla Motors new CEO, Elon Musk. On October 15^th, Musk, who is also the Chairman of the Board and Product Architect for Tesla, posted a blog post about his ascension to the CEO position, his vision for the company and, oh yeah, were shutting down operations in Rochester, Michigan, a suburb of Detroit. The relevant passage that announced to all and sundry in the Rochester office that most of them were soon to be unemployed (the remainder have to make their way, on their own dime, to San Jose), read like this:

One of the steps I will be taking is raising the performance bar at Tesla to a very high level, which will result in a modest reduction in near term headcount. To be clear, this doesn’t mean that the people that depart Tesla for this reason wouldn’t be considered good performers at most companies – almost all would. However, I believe Tesla must adhere more closely to a special forces philosophy at this stage of its life if we aspire to become one of the great car companies of the 21st century.

There will also be some headcount reduction due to consolidation of operations. In anticipation of moving vehicle engineering to our new HQ in San Jose, we are ramping down and will close our Rochester Hills office near Detroit. Good communication, tightly knit engineering and a common company culture are of paramount importance as Tesla grows.

Apparently, the good-performers-at-most-companies employees who got the pink-slip blog post aren't special enough for the special forces philosophy to which Musk subscribes during these hard economic times.

There is no argument with the lay-offs per se, sometimes you have to do things like that to remain competitive. The problem is in the way he chose to go about it.

The people in that division should have had at least a head's up that this was coming. These people were fired for economic reasons, not for cause, and they were blindsided by their new CEO when he did it. Blindsiding someone with termination, unless it is for cause, may be legal but it is certainly not ethical or fair, a fact that the Federal Government recognized in the Worker Adjustment and Retraining Notification Act (WARN), which stipulates that qualifying employees must receive 60 days’ notice before the closing of their workplace. Under WARN, a company does not have to give employees notice of their termination if it “could not reasonably foresee business circumstances” that led to the closing.

But perhaps Tesla isn't covered. According to the Department of Labor:

In general, employers are covered by WARN if they have 100 or more employees, not counting employees who have worked less than 6 months in the last 12 months and not counting employees who work an average of less than 20 hours a week. Private, for-profit employers and private, nonprofit employers are covered, as are public and quasi-public entities which operate in a commercial context and are separately organized from the regular government. Regular Federal, State, and local government entities which provide public services are not covered.

Tesla employed well over 100 people, which means they are covered under the law. The question is, what will the laid-off employees do?

WARN and the question of notification is the basis for a suit filed in the Northern Alabama U.S. District Court by two employees of the now defunct Bill Heard Chevrolet store in Huntsville, Alabama. The suit, which seeks class-action status, was filed on September 25, seeks to encompass all employees who lost their jobs in September but did not receive notice or compensation. The plaintiffs seek back pay for the 60 days that Heard should have paid them after notifying the workers that the company was closing its stores. They also seek reimbursement of legal fees.

There is no question about it, doing right by your employees is every bit as important as doing right by your company. Terminations can be traumatic for those effected on a number of levels and so have to be approached properly, and personally. Email pink slips, or doing it over the company blog, are weaselly cop-outs. Still, if you don't know how to do it, here are some tips from an article on workforce.com by attorney Alan L. Rupe:

• Know your company’s terminator. A common factor in bad firings is a poorly trained human resources director. Know the personality, training and background of that person. Ensure that the individual has the temperament to be fair and impartial, and the ability to ask some hard questions: Is this termination legal? Does anyone have a hidden agenda? What are the repercussions of this termination? Make certain the terminator has an impartial script prepared in advance that responds to all possible questions by the employee.

• Treat each termination as if it were thine own. Business owners and boards of directors are ultimately responsible for their employees’ actions. View each termination as if your own job were on the line, and do not simply "rubber stamp" each recommended termination. Remember that an employee lawsuit will almost certainly require your deposition and trial testimony, and you will have to explain your actions to a jury most likely composed of more staff or line workers than supervisors and business owners.

• Expect the unexpected. Although I am not a proponent of escorting a terminated employee from the building, particular circumstances may dictate otherwise, and employers should be prepared in the event that the unfortunate or unexpected occurs. Be prepared, but not obvious.

• Three words: civility, courtesy, candor . Too many employees are told, "You’re not a fit with this firm," or "This is an ‘employment at will’ company," or "We don’t have to give you a reason." In an effort to obtain an explanation, those employees generally go to a phone book, thumb through the yellow pages and find an attorney eager to sue an employer. I recommend that employees be told the reason for their termination. There is nothing wrong with responding, "Because of your continued poor performance."

• Don’t be a jerk. Enough said.

• Remember that this is business and not personal. Firings are not an opportunity for the employer or its representative to vent or relive past affronts to the corporation. If an employee tries to turn the termination into a "boxing match," the terminator must remain as levelheaded and calm as a chess player. Remember that events at the termination might be replayed many times in a lawsuit and before a jury.

Treating your soon-to-be ex-employees well, with honesty, discretion, sensitivity and a personal touch, is the first, best step to keeping the repercussions to a minimum.

One Small Word About the Economy

At the risk of setting off another foot-stomping tantrum from the folks who think Marxism is the way to go, and just in case you thought the problems we face today all stem from modern economics, check out these words of wisdom:

The budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt. People must again learn to work, instead of living on public assistance.

—Marcus Tullius Cicero, Roman Statesman, Philosopher and Orator, 63 BC

You would think that at some point in the last 2071 years we might have learned something.