In the midst of the worst economy of modern times, banks have been particularly hard-hit. Caught up in the sub-prime mortgage fiasco, banks are now getting squeezed by the new “Dodd–Frank Wall Street Reform and Consumer Protection Act,” while their every attempt to increase a fee or two is met with howls of indignation.
With little near-term hope of improving their bottom line, the big players like Citigroup and Bank of America are looking under every figurative and literal rock to find savings, as well as ways to improve revenues and profits.
Apparently finding insufficient new revenue and savings, Bank of America CEO Brian Moynihan last week announced that overall employment levels at the bank “would be reduced by 30,000 over the next few years.”
Pretend you’re an employee of Bank of America and you read that. Which part of that statement would bother you most? Is it the fact that 30,000 people at your company are likely going to lose their jobs, including maybe you? Or is it the implicit uncertainty as to when the axe will fall? For me, it would be the latter.
I think sure knowledge of impending doom is preferable to uncertainty that bad news will occur at some undetermined point in the future. It’s akin to being a pre-adolescent, in trouble with Mom one afternoon for breaking a window, and then hearing her ominous threat, “Just you wait until your father gets home!” It’s a postponement of Judgment Day.
Understatement of the Year
My candidate for understatement of the year would be the lead sentence in the Sept. 19 Wall Street Journal article about the cuts: “Morale quickly turns ugly after a company warns about layoffs – even if the job cuts won’t happen for a while.” I would change that to read: “…especially if the job cuts won’t happen for a while.”
One analyst quoted in the article says that he doesn’t know “anybody who’s not looking for another job” there. No surprise. That would be a natural reaction to such gross uncertainty.
The trouble is, in this lousy economy, there are not 30,000 open jobs out there to which these people can jump just for the asking. So they sit. And they’re not happy. And they’re not likely feeling too loyal toward Bank of America.
From the Journal article, we also learn that “managers have tried to send short notes to reassure employees but it seems they are nervous about their own positions.” No kidding. How can you, as a manager, encourage your employees to have confidence in and trust the institution when you don’t yourself, suffering the same uncertainty as they are?
Look, I understand that Moynihan is as much in the dark as anyone else about the state of the economy going forward and whether the fortunes of his bank will improve next quarter or even next year. He can’t very well enact immediate job cuts, lest it make the organization non-functional and further worsen its business case.
Self-Fulfilling Prophecy
But at the same time, he has created a self-fulfilling prophecy of doom. In such circumstances, even his most talented people are not going to be at their best, focused less on the job at hand than on whether and when the axe will fall on them.
He didn’t ask me, but if Moynihan wanted my advice, I’d have told him to hold this one closer to the vest. The Journal article quotes an analyst speculating that he made the announcement to mollify Wall Street. I sure hope not. It wouldn't have made much sense if that were his purpose. In this climate, with BAC stock stuck at historic lows, the announcement didn’t cause so much as a blip in the price.
Better that he work through the implications of near- and long-term strategies regarding job cuts – if, in fact, he and his executive team determined that to be the wisest path. Clearly, a cut of such magnitude (representing more than 10 percent of the total workforce) implies some drastic changes in the way the bank is going to do business.
Perhaps they’re planning to get out of some businesses, or maybe some geographic areas. That’s where his public statements ought to have been focused: on the business changes he is planning and their likely personnel impacts.
It is near impossible for a company of its size to inform the internal audience before going public. So there should have been a concerted effort to inform the affected employees at the same time as the public announcement, while providing them with as much information as possible while answering as many questions as they had.
A dismal internal morale already pervades Bank of America. But having the CEO operate with greater certitude and a sense of urgency is far more effective in retaining employee focus and commitment than the aura of uncertainty that Moynihan cast last week. The company is going to need as much employee focus and commitment as it can get if it’s ever going to be successful again.
1 comment:
Having been in this exact situation -- Bose Corp. told its US employees there would be layoffs three months before the ax actually fell -- I can attest to the tremendous drop in morale, not to mention the drop in the amount of work accomplished, as a result of that warning.
No one talked of anything else most of the time, speculation as to who would go, what they would do was rampant. Some people had worked themselves up into quite a nervous frenzy by the time the actual day arrived.
The only advantage that comes of knowing so far ahead that you may be "terminated" is that you have the chance to pack up your office and take any work files you want to make sure you have continued access to, before the dreaded day actually falls.
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