With Layoffs Continuing in 2024 and Employees Paralyzed by Fear for Their Jobs, How Can Leaders Address Crucial Real Problems?

Frances Frei is a Professor at the Harvard Business School.

Frances Frei is a Professor at the Harvard Business School (HBS) where her research investigates how leaders create the conditions for organizations and individuals to thrive by designing for excellence in operations, strategy, and culture. She also led the design and launch of HBS’s innovative FIELD curriculum built around experiential learning experiences.

In 2017, Frances took a leave of absence from Harvard to serve as Uber's first Senior Vice President of Leadership and Strategy with a mandate to help thousands of employees excel in a context of hyper-growth and an evolution in culture. She holds a PhD from the Wharton School at the University of Pennsylvania and her BA from the University of Pennsylvania.

Q. When the topic of artificial intelligence (AI) and its potential impact on jobs comes up, an often-cited platitude is that while some jobs will be eliminated, new ones will be created. Still, the reality is that as Challenger, Gray, and Christmas recently reported, “In light of the backlash some companies have faced for directly attributing job cuts to artificial intelligence, they appear to be framing this shift as a ‘technological update’ rather than an outright substitution of human roles with AI. In truth, companies are also implementing robotics and automation in addition to AI.”¹ With this type of environment, how can C-Suites lead successful transformations for their firms?

Frei:Based upon my research across several industries during the past 25-plus years at the Harvard Business School, C-Suites can lead successful transformation if they leverage a three-step approach of honoring the past, providing a clear and compelling mandate for change, and describing a rigorous and optimistic way forward.² With the introduction of emerging technologies like generative AI, there will be instances where employees’ skill sets are upgraded, like one client which required just five employees after an AI solution was deployed in a department of 50 workers.

In that scenario, the other forty-five colleagues secured new roles at the firm. Still, being optimistic does not mean setting a low bar of performance. If a newly configured department only needs five employees, don’t budget for six to be kind as that is how organizational bloat occurs.

Moreover, I wish C-Suites had a time machine to go back and “slow hire” during growth and good times. Look at the past year’s downsizings that have occurred for technology firms including Google. Historically, this firm has consistently been recognized as one of the best employers and none of my students had to think twice about going to a firm where even a movie was made about their legendary workplace.³ Fast forward to their recent downsizings and Google’s 2024 ranking on Glassdoor’s 100 Best Companies to Work For has plummeted from number 8 to number 26.⁴

As was rightfully pointed out during your discussion with a professor from my alma mater, one study shared how “…downsizing a workforce by 1% leads to a 31% increase in voluntary turnover the next year.⁵ Clearly, C-Suites need to consider how their short-term decisions can threaten not only long-term but also near-term employee engagement and retention.

Still, the good news is that there are C-Suites which have leveraged the three-step approach which I had mentioned and built an underlying foundation of trust to support this operating model.⁶ Specifically, Southwest Airlines’ C-Suite had built a culture where they empowered their employees to be trusted with making decisions and being accountable for their efforts. The Southwest cultural attributes of empathy helped to create a positive working environment and so it’s not surprising that for the longest time, their C-Suite firm did not lay off employees despite encountering the same headwinds of other airlines.

Q. As several readers of this Q&A series are consultants who are parachuted in to support C-Suites’ transformation efforts, what three playbooks should they consider leveraging in their recommendations for transformation?

Frei: First, infuse your recommendations with a focus on trust and speed. As was shared in a recent interview,⁷ there is a false narrative with the 'move fast and break things' philosophy of Facebook in that speed is portrayed in a negative light. As shared in my recent book, Move Fast and Fix Things,⁸ once trust is built, a team can move surprisingly fast; often faster than they thought. Here is the five-day playbook, which my co-author and I had originally wanted to timebox into hours, but our publisher pushed back. Hence, you have extra time to help deploy a blueprint for achieving speed the right way.

• Monday: “Identify your real problem” by bringing curiosity to make sure that the team is solving the correct root problems, not just the symptoms. Toyota employees made famous their mantra of asking “Why” five times to make sure that a team had identified the core strategic pain points. And challenge oneself to see if the team is channeling limited resources towards the most urgent initiatives that can create large-scale quantifiable value, not just pilots.
• Tuesday: “Solve for trust” by creating a good enough plan to engage with the stakeholders with an emphasis on building trust. The outcome is not a perfect plan but a way to engage and learn through others so that you can elevate your thinking.
• Wednesday: “Make new friends” by securing peripheral vision through widening the aperture to gain ideas on the plan that you created on Tuesday. Adding others’ additional dimensions can help make your good enough plan an even better plan.
• Thursday: “Tell a good story” by including the past, present, and future aspects so that they can help elevate stakeholders’ commitment to the plan. In particular, honor those practices of the past which will provide value to the future; and explain the reasons for change of those processes that no longer will be part of the upcoming transformation journey.
• Friday: “Go as Fast as you can” as the earlier steps have enabled you to minimize and or avoid some of the damages which have occurred if you had not taken the previous four strategies.

Second, for the inevitable companies which suffer from the velvet coffin, a culture where it feels nice and comfortable but where you know things won’t change; introduce analogues of those companies where they successfully built trust and moved with speed. ServiceNow is a classic example of a company that adopted AI into their processes early and leveraged it to help employee attrition as well as to identify potential indicators of employee disengagement and a variety of other creative actions.

Tangible benefits have included recognition as a best place to work for employees and more than a doubling in share price over the past four years. With this type of performance, it’s not surprising that ServiceNow had over one million job applications for one thousand roles. Moreover, when you listen to ServiceNow’s CEO responses to questions regarding how he led a successful transformation, you will hear concrete examples of how he honored the old guard’s contributions and communicated compelling cases of change to employees.⁹

Finally, with today’s restructurings that are occurring at some premier strategy consulting firms, consultants need to recognize that it’s also in their own interests to help clients move fast and fix things. As most seasoned consultants recognize, quickly securing tangible value for clients can often lead to repeat engagements and nominal/no time on the bench. By proposing ideas where an organization can build a culture of high trust which then enables them to move fast without being reckless, accelerating excellence can become the new norm at their clients.

About the Author

Michael Wong is an emeritus board member of the Harvard Business School Healthcare Alumni Association.

References

1. https://www.challengergray.com/blog/job-cuts-jump-in-february-2024-ytd-cuts-down-8-over-last-year/
2. Frei, Frances X., Morriss, Anne, Storytelling That Drives Bold Change, Harvard Business Review, November-December 2023
3. The Internship https://www.youtube.com/watch?v=jir62_ptloI
4. Bratton, Laura, Big tech is sliding down Glassdoor's ranking of top employers, Quartz, January 9, 2024
5. Dr. Peter Cappelli, Professor of Management at The Wharton School and Director of Wharton’s Center for Human Resources,https://www.pharmaceuticalcommerce.com/view/traversing-the-biopharma-career-landscape
6. https://www.ted.com/talks/frances_frei_how_to_build_and_rebuild_trust
7. Move Fast & Fix Things: Leading Change w/ Authors Frances Frei & Anne Morriss | Technovation 819 (youtube.com)
8. https://store.hbr.org/product/move-fast-and-fix-things-the-trusted-leader-s-guide-to-solving-hard-problems/10546
9. The David Rubenstein Show: Bill McDermott, https://www.youtube.com/watch?v=VSQOElJEu-w, 2023