C-Suite Confidential: Staggered Layoffs and the Sword of Damocles

An inside look at the executive politics behind layoffs

The layoffs at Microsoft, Amazon, Google, and other tech companies have hit many people hard. I've heard from countless people in recent days about the Microsoft layoffs in particular: what in the world are they doing with staggered layoffs running into March? https://www.geekwire.com/2023/full-memo-microsoft-to-cut-10k-jobs-about-5-of-workforce-and-take-1-2b-restructuring-charge/ Nearly every Microsofty I spoke with was nervous and anxious, even those who were still employed.  

I've spent several decades of my career in the C-suite and on boards of companies large and small. And unfortunately, I've been through countless layoffs. I wanted to share the inside scoop on what happens in those executive discussions on layoffs.

First, though, my deepest sympathies to those of you impacted. It is never an easy process, and for those in the middle of significant life events otherwise, a layoff can be downright catastrophic. If any of my readers need help, please feel free to contact me. I'm involved with a number of companies and projects that are hiring, from engineers to salespeople to even a CEO search. I would be happy to help if I can.

Layoffs are never easy for anyone involved--not for the people impacted, nor for the survivors (and yes, survivors is sometimes the appropriate phrase). Even worse, though, is when a layoff drags out. Microsoft, for example, announced that layoffs would continue into March! 

A drawn-out layoff process can devastate the morale and productivity of a company's remaining employees. The core problem is the "Sword of Damocles" effect, referring to the feeling of impending doom hanging over one's head.

Richard Westall’s Sword of Damocles painting, 1812

The Sword of Damocles is a phrase that originates from a Greek legend about a courtier named Damocles who lived during the time of King Dionysius. Damocles was a flatterer who constantly praised Dionysius and his power. Intrigued by Damocles' words, Dionysius offered to let Damocles sit on his throne for a day so that he could experience the power and luxury of being a king.

Excited by the opportunity, Damocles accepted and sat on the throne, enjoying the luxuries and privileges that came with being a king. However, as he sat there, he noticed a sword hanging above him, suspended by a single horse hair. The sword was put there by Dionysius as a constant reminder of the danger and uncertainty that comes with having power and authority. Damocles was so overcome with fear and anxiety that he begged Dionysius to let him leave the throne and return to his simple life.

While a modern job is not the same as being an ancient-era king, the anxiety and fear phenomenon is the same. How are you supposed to act and feel if, on any day, you might show up to work and your corporate access card doesn't work (and that's how you find out you have been laid off)?

Jason DeRusha @DeRushaJ

Corporate layoffs are an inevitable part of life. But emailing people at 1am and letting them find out they've been laid off when they show up and their key card doesn't work? Come on @Google - do better! Drivetime:

omny.fmGoogle layoffs & the state of unions - Drivetime with DeRushaHour 1: Jason lamented the way Google laid off 12,000 workers. Then he talked with Dr. Dave Kamper, Senior State Policy Coordintor for the Economic Policy Institute about the state of unions in the country.

Thus, it was quite surprising to see this announcement from Microsoft. It is an otherwise well-run company! https://www.wsj.com/articles/microsoft-best-managed-companies-2022-11670630632. Surely Satya Nadella (the Microsoft CEO) and the rest of the senior executives understand the dynamic and impact of dragging out the process.

The short answer: they absolutely do understand it. I was not in the room with them, yet I am confident that the directive and goal was to do the layoffs in one motion as thoroughly and with as much respect and grace as possible and then move on with serving customers. Yet they still decided to proceed with staggered layoffs.

In many of these situations, the reason is internal politics and sometimes leaks that accelerate timelines. Essentially, the CEO gets caught between an "extremely bad option" and a "very bad option." 

One might think that in the C-Suite, it's a more friendly dynamic with fewer political machinations. In smaller companies, I have certainly seen that to be the case. Startups, in particular, at the early stages, often live or die based on the teamwork of the leaders. Even there, though, there are still politics. As the famous saying goes: "you get politics in any organization of more than two people." 

In a Fortune 500 company, the C-Suite politics are often much more subtle--and vicious. Outwardly, teamwork is valued, so it is rare to see blatant: "you should fire so-and-so" type politics (though I have seen this behavior in staff meetings myself!). It's more underground and devious than that!

At the beginning of any layoff discussion, a set of executives will be brought "into the tent." The CEO, CFO, head of HR typically, and then some other execs in the impacted groups. We can break those latter executives into four groups:

1. "Model executive"

2. "Something to prove" 

3. "Company soldier"

4. "Political player"