Feature
For most people in white-collar jobs in the US, the week before Thanksgiving is a time to wind down, a time when many experience half-empty offices and less-than-optimal productivity. For the folks at OpenAI, maker of ChatGPT, the week before the holiday was anything but that.
In five days' time, the company had three different CEOs, a major board reshuffling and a full-on employee mutiny. If you didn’t keep track of everything amid turkey and football, Time published a full rundown of the events.
But in short, on the Friday before Thanksgiving week — a week that OpenAI was supposed to be closed for a well-deserved break from an already eventful year — the board of OpenAI fired CEO Sam Altman under vague terms. Almost immediately, top investors spearheaded by Microsoft tried to reverse the decision. The board reconvened with Altman over that weekend but failed to reach an agreement. Microsoft seized the opportunity and announced it would be hiring Altman (and anyone else from OpenAI who wanted to join) to lead a newly created independent AI unit.
Meanwhile, 95% of OpenAI employees signed an open letter threatening to resign if Altman isn’t rehired. By Tuesday, Altman was back at the helm of OpenAI.
Whew. That’s a long five days.
Where Things Went From Bad to Worse
If you spend enough time in the tech space, you occasionally see CEOs lose their jobs — even those at relatively successful companies. It can happen for a variety of reasons, but missing expectations and internal misconduct are the most common.
With Altman’s ouster, the board argued that he wasn’t completely candid with them regarding certain issues and that they had lost faith in him to lead the organization. The lack of specificity didn’t help their cause.
Executive transitions are not always pretty. Fellow executives may decide to follow the leader out of the organization. It can deflate morale for employees, even if they don’t personally know the CEO. OpenAI has fewer than 800 employees, so there’s a chance that every person had met Altman or seen him before.
In the worst circumstances, a leader’s departure can cause rank-and-file employees to start returning recruiters’ LinkedIn messages or seek out new opportunities. A slow drain of talent, while not great, can be counteracted by hiring.
None of this is typically fatal to an organization.
For OpenAI, however, it nearly was. The mutiny of OpenAI’s staff led to an existential crisis for the organization. Losing almost all of its employees at once would have certainly caused OpenAI to shut down, at least temporarily — though it seemed unlikely it would have ever recovered.
The bigger issue here is that this wouldn’t just be disastrous to OpenAI but also to the thousands of applications built with ChatGPT APIs.
Still, the board seemed willing to call employees’ bluff. That is, until they realized that Microsoft could hire all of them with ease under the banner of an independent unit that Altman would run. For workers, they would just keep working on the same types of problems they were already working on — just with a different company signing their checks.
Evidently, Altman has his employees to thank for his rapid return to the company he helped found.
Related Article: OpenAI's Future May Be Uncertain, But Microsoft Copilot's Seems Assured
An Argument for HR on the Board
All of this makes you wonder why anyone on OpenAI’s board was surprised by the worker rebellion. Sam Altman is the public face of OpenAI and the cultural standard-bearer of the company. With just over 700 employees, it wasn’t like he was some faceless, unapproachable CEO that no one would miss.
Why did the board underestimate (or worse, not anticipate) the impact of their decision on OpenAI's talent? Even without Microsoft, was the company's glut of talent and the demand for anyone with OpenAI on their resume weighed into their choice?
Research shows that CHROs are present on just 8% of boards in the Russell 3000. If you think that sounds bad, it’s actually better than it’s ever been. The number of HR leaders on boards is three times higher than it was in 2017, when they were virtually non-represented. Like most boards, OpenAI had no one with any appreciable background in HR to foresee employees’ reaction.
Could this situation have been prevented by an HR leader at the board level? It’s hard to imagine it could’ve gone much worse.
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While many board members come with deep expertise in finance, the same depth isn’t always there with talent. Having a board member who understands talent, culture and workforce issues is helpful for many reasons, but at the very least, anyone who had ever experienced the impact of a well-liked CEO’s departure on a workforce would have been able to foresee the outcome of that decision. Moreover, a person who understood the level of talent the company had wouldn’t have been so careless with risking that advantage.
It shouldn’t take a crisis of this proportion to reevaluate whether HR and workforce leadership deserve a spot on a board. The lesson we should take away from all of this is that in a world where talent is at a premium, boards and senior management teams need a member who understands that world — just as much as they need someone who understands the financial world.
