Feature
There's only one thing worse than having a nitpicky, unpredictable boss. Needing to be one.
With pressure from Wall Street to keep expenses low, managers who catered to their employees only one year ago are now under pressure to rate them, work them to the bone and prove to management that they are essential. Blame Mark Zuckerberg for introducing austerity as a management style, the post-COVID trend of over-hiring or AI. In 2024 managers have a mandate to keep payrolls lean and ensure that every worker is earning their keep. Fun? Not hardly. The question is how do managers juggle all of these variables and lead with empathy knowing they might be forced to give employees poor ratings or lay off workers who don’t necessarily deserve it?
Managing Through Fear and Uncertainty
Managers at Citigroup have begun to experience the latter. Last January, CEO Jane Fraser announced that the company will cut 20,000 jobs by 2026. Many employees don’t yet know if they will be affected. In some cases, neither do their bosses. Some are nervous wondering “am I next?” or “how will we get this work done if someone from my team vanishes?” CNBC quoted a former employee who said, "Morale (at Citigroup) is super, super low. They’re (current employees) saying, ‘I don’t know if I’m getting hit, or if my manager is getting hit.’ People are bracing for the worst."
Needless to say, some managers wonder how to motivate their teams with so much fear and insecurity in the air. Many tend to overwork to prove they are worthy of keeping on board. Others don’t care. CNBC quoted a different anonymous Citigroup employee saying, “People are looking (for new jobs) aggressively. I know senior VPs who are on vacation now, but they’re never coming back.”
Executives whose jobs are secure aren’t, reportedly, showing much empathy. Consider that Fraser herself issued a warning to employees. "We don't have room for bystanders, we don't have room for people who want to stand on the sidelines."
Does that sound like empathy, management by objective or more like a threat? Few of the experts we interviewed recommended such talk. To be fair, Fraser also said that "We'll be saying goodbye to some very talented and hard-working colleagues."
If things are tough at Citigroup, the management style used at tech firms like TikTok, Meta and others might not be much better. In February, TikTok asked its executives to give more employees lower scores in their performance reviews. This made staffers nervous about getting smaller bonuses and possibly losing their jobs, according to the Wall Street Journal.
At Meta, where the company's evaluation of individual employee performance was delivered late last year, those workers with the lowest ratings, deserved or undeserved, lost their jobs. Others received smaller bonuses and raises than expected. Worse, some managers whose own ratings depend on keeping budgets low and delivery high are now taking pride in having smaller teams which they pressure to achieve higher productivity. This according to Business Insider.
That’s probably not a good idea over the long haul. “Overwork can reduce innovation. Quality may decline as employees focus on improving productivity to keep their jobs. Managing talent becomes more difficult as existing staff resign,” wrote Sandra J. Sucher and Marilyn Morgan Westner in Harvard Business Review.
Related Article: Companies Are Not Families
A Rebel Who Lost His Job
There’s at least one manager who rejected orders to issue low ratings on demand, namely Brian Birmingham, a former employee of Blizzard, a unit of Activision Blizzard Inc. The co-lead developer of World of Warcraft Classic refused to rate staffers as underperforming when that was not the case. In an email viewed by Bloomberg, Birmingham wrote, "This sort of policy encourages competition between employees, sabotage of one another’s work, a desire for people to find low-performing teams that they can be the best-performing worker on, and ultimately erodes trust and destroys creativity."
Birmingham reportedly later added, “I can't participate in a policy that lets ABK steal money from deserving employees, and I can't be made to lie about it either."
Birmingham’s words were not well received. He was terminated shortly thereafter.
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A Sledgehammer When a Scalpel Will Do
It’s tough, at any time, to be a manager and make hard decisions while at the same time keeping employees, customers, investors and other stakeholders happy. But when you are doing it for the first time, it’s especially difficult. “My sense is that it has been some time now since we had serious rounds of layoffs — The Great Recession — so now we have a new set of managers who don’t know anything much about how to do them,” said Peter Capelli, George W. Taylor Professor of Management at The Wharton School.
As a result, corporate leaders often sit whispering behind closed doors, staring at organizational charts, eliminating divisions, departments, teams and projects and the positions of the workers within them. "They are using a sledgehammer where they should be using a scalpel. A sledgehammer is a terrible tool to use when dealing with human beings,” said Bruce Tulgan, author of "It’s OK to Be the Boss" and founder of Rainmaker Thinking, an assessment and consulting firm that trains leaders and managers.
Tulgan acknowledged that large layoffs do happen. “Staffing needs are fundamentally unpredictable given globalization, technology and other factors beyond a company’s control,” he said. What management can do in these cases is be transparent about the need for lowering headcount, how decisions are made, who will make them and when. This doesn't mean that poor performers remain. “Remember that I wrote the book, 'Not Everyone Gets a Trophy,'" he said. Individuals who are underperforming should already be aware of the fact and should have had conversations with their managers about not living up to expectations several times. In those cases, being chosen to be laid off should not come as a surprise.
If there’s a need for additional layoffs after the poor performers have been pruned, companies can ask for volunteers to exit since they’d be likely to leave the company as soon as a good opportunity arises. This may allow others with similar skills who might otherwise be laid off to keep their jobs. Beyond that there are other options like furloughs, job sharing, deferred merit pay raises, promotions and future discretionary compensation, according to the Conference Board.
Related Article: Breaking the Layoff-Rehire Cycle
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Take Care of Your Employees and Your Business
Regardless of how headcounts shrink, leaders and managers will continue to be tasked with not only delivering but also taking good care of the workers who remain. Here, it’s mandatory for leadership to “assess what work is possible, what combinations of things can get delivered based on the staffing you have, and to then pull together a series of options and alternatives,” said Jesse Meschum, a senior advisor and compensation expert at Exequity.
Management also needs to assess what part of the workload is no longer necessary. “The key here is not to do everything or push your team to do everything they were doing before. When times are tougher, payrolls are leaner and budgets are tighter, a good manager will prioritize what's most important to the organization, and re-align goals and efforts around that work,” said Meschum.
Managers need to be open, honest and update workers frequently. Employees appreciate knowing what’s happening. That said, stay out of your employees way and don’t micromanage. After all, your business rests in their hands.
