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Media and Crisis Management

Laying Off your People With Class

Posted on: July 28th, 2012

Crisis Management: Laying Off your People With ClassCrisis communications

The severe economic downturn ensures layoffs.  They’ve begun.  It’s bad and there is no sugar-coating it.  So this is a good time to relate the story of how 300 employees, after being told their plant would be closed, gave their “executioner” a standing ovation.  I consider it a parable.

Ron Vergakis, a former New Breed Logistics executive who now heads a Virginia company first told me years ago how this happened.  His experience exemplifies the importance of leading others with respect and open communications amidst awful financial turmoil.

In the mid-1990’s the manufacturing employer Ron worked for bought a Midwest plant already on shaky ground.   Ron said it wasn’t making money, the previous owners were also the biggest customer and were struggling, the major product was overpriced and in poor demand, and employees had been treated poorly for 12 years.  Ron told me over lunch, “It was a marketplace disaster from day one. I warned them not to buy it, but they did it anyway.”  Ron took over the plant and promptly lost three essential managers within three months. Against this grim backdrop Ron began the actions that would not save the plant but accomplish something remarkably human.

To shore up the anxious and leaderless work force he hired a well-qualified businessman to be plant manager: someone who treated people well.

To build trust Ron briefed employees every two weeks on what was happening to the company.  He and the plant manager walked the floor to talk to workers.

Ron said he tried to tell employees everything including all the bad news. He also delivered good news and rewarded excellence.   Ron said the employees always knew which forces were beyond their control and which challenges they should strive to meet. For them to survive, he outlined mandatory goals for marketing, efficiencies, and cost control. This transparency and specificity meant that all 300 understood the inevitability of their fate if business did not turnaround soon. It did not.  Everyone witnessed the slow-motion collision of their company and future with economic reality. Their best efforts and Ron’s were to no avail.

Ron and his plant manager assembled the workforce for a final meeting that surprised no one. He told me, “We had tears in our eyes when I thanked the employees for all of their efforts to try to improve the business. I told them that we had not been able to achieve the targets that we had given them. We would be discontinuing operations in 60 to 90 days. Their jobs would be going away.” Ron said the company would do its best to help them move on with their lives. Job-hunting and unemployment counselors stood nearby as he answered questions.

Ron said an employee stood to say, “We recognize that you have tried to do everything you can to save the business. I want to thank you for all you’ve done.” As she finished, employees around her – all about to lose their jobs – spontaneously applauded. The clapping spread through the congregation of workers until everyone rose and rallied around the very people dismissing them.

Ron said, “We were stunned.”

When I asked him why he thought it happened he said, “To me it was the total honesty. We were open and honest. The goal wasn’t the ovation. It was to do the right thing by everybody.”

I believe that despite the plant’s failure, Ron Vergakis was a hero.  But then I suspect he’d say the men and women of the factory floor were.

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