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Media and Crisis Management

Announcing A Layoff to a Round of Applause

Posted on: July 28th, 2012

Crisis Management: Announcing A Layoff to a Round of ApplauseCrisis communications

When layoffs roil the corporate landscape, imagine telling 300 people that you are closing their plant and then, a few minutes later, they give you a round of applause and a standing ovation?

It happened.

Ron Vergakis, now an executive of another company, was manufacturing vice president for different firm in the mid 1990’s. His employer had just bought a plant in the Midwest. The purchase worried Ron because the newly acquired plant’s future was already highly uncertain: 1) it wasn’t making money, 2) the previous owners were having money trouble and they were the single biggest customer, 3) the major product was overpriced and in poor demand everywhere, and 4) the employees had been treated poorly for 12 years.

Ron said, “It was a marketplace disaster from day one. I warned them not to buy it, but they did it anyway.”

After assuming overall responsibility for the plant, within six months Ron lost three critically important managers. One quit, one died, and one was fired for sexual harassment. “No one was left who knew how to make the product,” Ron said. Yet, against this grim backdrop Ron began taking steps. Ultimately his actions would not save the plant, but they would accomplish something remarkable.

Hiring a “down-home” manager
Badly needing to shore up the shaken and leaderless work force, Ron hired a well-qualified businessman to be plant manager. He also wanted to build employee confidence so he made sure this new manager treated people well. “He was a down-home kind of a person,” Ron said.

Briefing employees
Regular briefings were central to the rebuilding effort. “Every two to three weeks I’d meet with employees so they could understand what was going on,” Ron said. The plant manager met them daily. Both executives often walked the manufacturing floor to talk with individual workers.

Telling the whole story
Ron said he tried to tell the workers everything he knew. That included bad news about marketplace problems, excessive costs, and unnecessary positions. He also delivered good news with appropriate rewards. This knowledge enlightened the workforce. Ron said employees understood all too well the serious implications when their former owner – their single biggest customer – filed for bankruptcy. They were keenly aware that no other companies wanted to buy their primary product. The employees always knew which forces were beyond their control, and which challenges they could strive to meet. Survival goals for marketing, efficiencies, and costs were clear.

Comprehending the inevitable
Open communications meant that all 300 employees understood their fate if business did not turnaround rapidly. It did not. They witnessed the slow-motion collision of their company – and their future – with economic reality. Their best efforts were to no avail.

Ron and his plant manager eventually assembled the workforce for the final meeting that surprised no one.
Ron said, “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 experts stood nearby as Ron invited questions.
A woman 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 rallied around the very people dismissing them.
Ron said, “We were stunned.”

Why the applause?
I found it inspiring that a strong management-employee bond like this could form under such adverse circumstances, especially at a plant with a history of poor employer-employee relations. Furthermore, since my clients often complain how hard it is to find good people and retain them, I thought perhaps Ron would have some “magic bullet” advice. “What won that applause against all odds,” I asked him?

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.”

Could it really be that simple?

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