As much as we write about workforce trends here at Workforce Management, it’s hard sometimes to get a good feel for how they are affecting real people who are trying to cope with finding and keeping real jobs.
That’s why this story in Florida’s Palm Beach Post is so instructive, and at the same time, so frightening. “These are not happy times in the marketplace,” the story notes, “as anybody who bothers to get out of bed in the morning to float a résumé on Monster can tell you.”
The story gives you some sense of what this all means in one county, in one state, in a previously booming part of the country:
“[Florida’s] unemployment rate hovers at a 13-year high of 6.5 percent,” the Post reports. “The country is coping with cataclysmic financial news, the state is down 99,100 jobs over the same period a year ago, and Palm Beach County’s three job banks are filled to bursting with job seekers.”
Yolanda Mendez, a 57-year-old grandmother and National Guard veteran who broke her nose in a bomb explosion in Iraq and now helps people find work at the Workforce Alliance career center in West Palm Beach, tells the Post: “People say, ‘Give me anything.’ They don’t say, ‘Well, I’m looking for this type of job or that type or I need to make $20 an hour.’ They say, ‘Anything, anything, anything.’ ”
“I’ve actually had to give a few of them a hug,” says Stephanie Ross, a receptionist at one of the Palm Beach job banks. As the Palm Beach Post story notes, “She tries to keep her cool as she directs jobless customers to the computers and counselors and, once in a while, to the tissue box. ‘Yes, they come crying,’ she says. ‘It’s always been busy, but it’s becoming progressively worse. Yesterday, we saw 195 people in this room alone, and that was a light day. I try to tell them they’re not alone,’ she says—which is decidedly accurate, with more than 600,000 Floridians unemployed.”
My guess is that you will soon be reading many more stories like this one from Palm Beach, and that the clear sense of fear and desperation that is evident in this one will become less noteworthy and more commonplace.
As the Good Morning Silicon Valley blog noted, this exercise seems to be the preamble to Yahoo getting rid of more people. It points out the many euphemisms in Yang’s memo, such as “improve and accelerate our performance” and “be more agile in a competitive marketplace,” as tipoffs to Yang’s ultimate goal. It’s also worth noting that when Bain was invited in for a similar benchmarking project at Intel, the consultancy quickly became know as the “TaliBain” for the headcount whacking that ensued.
In fact, Yahoo watchers and Silicon Valley blogs are having loads of fun with this, especially Yang’s notion that the company “needs to get fit as an organization.” One went so far as to hilariously parody Yang as a Richard Simmons wannabe, and put Yang’s “getting fit” pronouncement in the “Grand List of Asinine Corporate Layoff Euphemisms.”
Maybe Bain & Co. consultants will bring something other than a layoff plan to the table, but it’s more likely that they’ll merely reinforce a management decision that’s already been signed and sealed—and just needs to finally be delivered.
“Yahoo really needs to downsize its staff,” said Jeff Lindsay, an analyst for Sanford C. Bernstein & Co., quoted on Good Morning Silicon Valley. “At some point, they’re going to be forced to have to take a few thousand staff out.”
If layoffs are that obvious to people on the outside of Yahoo, why can’t Jerry Yang and team just buck up, get some backbone and do the tough stuff that comes with a management role? I’ve written about that before, and my guess is it’s because Yang is spending far too much time agonizing over a decision that he knows he needs to make, but that he doesn’t have the huevos to actually pull off.
Maybe that’s really why Yang has the title Chief Yahoo after all.
And in that spirit, I have to say a silent prayer of thankfulness and a fond goodbye to Phillip J. Schoonover, the now-former CEO of electronics retailer Circuit City, because like Zell, Schoonover’s idiotic business strategy helped to fuel this blog with no end of wonderfully bad management decisions and practices.
Schoonover was canned by the Circuit City board on Monday, as I predicted they would do last December. As The Wall Street Journal noted, Schoonover was brought in from industry leader Best Buy some four years ago to turn around the troubled Circuit City chain. “Instead, the 48-year-old executive, who was named CEO two years ago, presided over a further decline in the company’s fortunes. He attracted criticism for decisions that backfired, such as dismissing veteran workers to cut costs.”
I love the understated simplicity of The Wall Street Journal, but saying Schoonover dismissed veteran workers to cut costs doesn’t really capture the full idiocy of Schoonover’s “management” decision. He didn’t just dismiss veteran workers, he purposely fired his most senior, highest-paid (and most experienced) floor workers and replaced them with lower-paid employees in some misguided cost-cutting experiment that not only demoralized his workforce and damaged customer service, but led to a number of age bias lawsuits as well.
Schoonover never admitted the terrible mistake he made despite withering criticism of his decision in The Washington Post, The New York Times, The Wall Street Journal, and here in the Business of Management blog. Even a big drop in sales and a sinking stock price failed to dissuade Schoonover of the folly of his decision, and his singular denial of any responsibility for his terrible people-management strategy led me to award him and Circuit City as the winner of the 2007 Workforce Management Stupidus Maximus Award “for the most ignorant, shortsighted and dumb workforce management practice of the year.”
The Journal’s story on Schoonover’s ouster quoted Colin McGranahan, a retail analyst at Sanford C. Bernstein & Co., who noted several of Schoonover’s blunders over the years, such as replacing the highest-paid, most seasoned staff in the company’s stores in an attempt to recoup losses caused by falling TV prices. “He underestimated the disruption that would cause,” McGranahan said. “If you worked at Circuit City, the only way to interpret it was that if you do well, you will be fired. It led to bad morale and staff disengagement.”
Yes, it is remarkable that a business strategy that rewards the best in your workforce with involuntary termination would be seen as anything but bad, but that’s why Schoonover won the Stupidus Maximus Award. How could anyone with any sense see it as anything other than dumb and foolish?
So, farewell, Phillip Schoonover. I’m sorry to see you go, because now there is one fewer shortsighted and idiotic manager to write about. But don’t worry about me. I’ll make out just fine. After all, I still have Sam Zell and his gang to keep me busy.
Need any more evidence that there’s not going to be any mass retirement of baby boomers or a talent shortage anytime soon? Just take a look at last week’s events on Wall Street and some of the comments from average people on the near-meltdown of our financial system and you’ll see what I mean.
“Bob Conrad, a 59-year-old budget director at the U.S. District Court in Dallas, sees his chance for retirement next year slipping further away,” according to a story in The Wall Street Journal. “After his nest egg lost 10 percent of its value, he moved his money a few months ago out of stocks. He thought he was set, but soaring food prices and seesawing energy prices already had him worried. And now, ‘this thing looks like it’s going to get worse before it gets better,’ he said. ‘That’s just my luck. Looks like I’ll be working awhile longer.’ ”
Another worker the Journal talked to, Bradford Roth, the 56-year-old chairman of a Chicago law firm, said his strategy for dealing with the market downturn was to make a deposit to his cash-management account but to pointedly avoid checking the balance of his retirement account. “The less you know,” he told the Journal, “the better you feel. There’s nothing wrong with working in your 80s.”
These are only two stories from two individuals, but they very much follow what I have been saying for a long time: We aren’t going to have any shortage of workers anytime soon. The prognostications of a massive outflow of boomers into retirement and a subsequent gigantic talent shortage across the American workplace will not come to pass. This week’s events on Wall Street and throughout the financial markets underscore that.
I’m one of those aging boomers, and, frankly, I’m reassessing my own future in the wake of what happened last week. I can identify with Bob Conrad and Bradford Roth because I’ve had many of those “looks like I’ll be working awhile longer” moments, too.
In fact, I think the biggest challenge for all workers, from Millennials to boomers and everyone in between, is just holding on to their current jobs in such a turbulent economy. It’s a tough job market for everyone, and unless the efforts by the federal government to help stabilize the financial system take hold and calm things down, people might find themselves wishing they could put off retirement and work into their 80s. That would certainly beat an impoverished life of unemployment.
Here’s one lawsuit I want to follow: A group of former and current Los Angeles Times editorial staffers is suing Tribune Co. (the paper’s corporate parent) and Tribune CEO Sam Zell, “contending that reckless management is destroying the value of the company,” according to a story in the Times.
The lawsuit, which seeks class-action status on behalf of all employees of Tribune, was filed in U.S. District Court in Los Angeles and “alleges that Zell and former Tribune CEO Dennis J. FitzSimons devised a plan to take the company private to enrich themselves to the detriment of employees,” according to the Times. “Tribune’s roughly 18,000 employees became owners of the company when it was taken private in a transaction that saddled the business with $12.5 billion in debt and also created an employee stock ownership plan late last year,” the story added. “As part of deal, FitzSimons received nearly $21 million in bonuses, severance and other payouts, according to the lawsuit.”
Problem is, Tribune employees don’t really have much of a say in the employee stock ownership plan, so that has left them at the mercy of corporate troglodyte Zell (apologies to troglodytes) and his ham-handed henchmen like Tribune COO Randy Michaels. Zell and his gang seem to be dismissive of all the journalists and others in the company who have the temerity to ask questions and challenge Zell’s style and strategy.
That’s what makes this lawsuit so interesting. There’s only one current Los Angeles Times employee who is taking part in the suit, but he’s a Times star—Pulitzer Prize-winning automobile writer Dan Neil. “We don’t think the management of the company has been in the best interests of the employee-owners,” Neil told his own newspaper in the story on the lawsuit. “The Los Angeles Times is too important to be left in the hands of corporate raiders,” said Neil, who in 2004 won the Pulitzer for criticism for his automobile reviews.
As The Wall Street Journal points out, Zell’s $8.2 billion buyout of Tribune last December had an unusual twist: “The stock plan, known as an ESOP, became the majority owner, while Mr. Zell invested about $315 million in exchange for a promissory note and warrants to buy 40 percent of the company. The deal weighed down Tribune with nearly $13 billion in debt, but the ESOP structure allowed Tribune to avoid most federal income taxes.”
In other words, Zell only put down about 4 percent of the total price of the company and is using the employee stock plan to fund the rest. Neil told the Journal that he hoped the suit would unearth more information about how the company is run. “There has been a notable lack of transparency in the operation of Tribune, “Neil said. “We as employee owners of the company want to know about the finances of the company.”
Most employees would not have the cojones to get into a lawsuit against their employer. For most workers, suing the boss is not a career-enhancing activity. But if there is anyone who can do something like this, it’s someone like Neil, mainly because superstars have a lot more options than regular rank-and-file workers do. Plus, it throws down the gauntlet and challenges Zell to do something very Zell-like and boorish—like fire Neil out of pettiness and spite because he took part in this legal action.
So this is going to be a fun one to watch. It will surely be an object lesson for all: Executives and managers will get an look at what happens when a star employees confronts the boss, and workers will get a visceral thrill from seeing what happens when one of their own spits (figuratively, of course) in the owner’s face.
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