For CEOs, layoffs aren’t what they used to be

There was a time, not too long ago, when layoffs were celebrated as a symbol of CEO mettle. For a few years in the early 1990s, Fortune ran a list called America’s Toughest Bosses that celebrated the likes of Warnaco CEO Linda Wachner, who advised an executive to fire people if he wanted to be taken seriously, or Dart Group CEO Herbert Haft, who fired his own wife and son. In today’s business world, however, sobriquets like those given to “Chainsaw Al” Dunlap or “Prince of Darkness” Ed Artzt are no longer medals of honors. Empathy is in.

But why, then, have 150,000 tech workers been given their walking papers since the start of this year?

Some of it results from the unpredictability of the times. CEOs tell me forecasting over the last few years has been harder than ever before, and mistakes have consequences. For the tech sector, the layoffs also reflect a suddenly changed paradigm—where investors have gone from favoring growth at any cost to prizing profits. And some of it seems to be, as Colvin suggests, just bad management.

How you do it also matters. Elon Musk provided a case study in how not to do it when some Twitter employees first learned the bad news because they couldn’t log into their laptops. And this week, McDonald’s raised eyebrows among the HR-savvy by closing its offices to make layoff announcements remotely.

Why? The word from the Golden Arches was that office closings were done “out of respect” for those losing their jobs. In the old days, folks were called into a conference room with the windows papered over, and then had to walk back to their desk, heads down, to collect their personal belonging. Telling them remotely, the theory goes, helps them keep their dignity.

Maybe. But I think the lesson of the last few months is that there is no good way to tell someone their services are no longer needed. And the lingering morale effects of layoffs can be substantial. Sudden market changes may force companies at times to trim their sails. But the best companies—witness Apple as the leading example—work to minimize such moves. 

More news below.

Alan Murray
@alansmurray
alan.murray@fortune.com

TOP NEWS

What CEOs need to know

Occidental Petroleum CEO Vicki Hollub recently discussed with Fortune's Leadership Next podcast how she believes that oil and gas companies can address climate change while still maximizing returns for shareholders. Hollub explained that she is uniquely positioned to tackle the challenge of reducing carbon emissions due to Occidental's core competence in the oil and gas industry. She emphasized the challenge of finding alternative ways to produce products that are made from oil and gas derivatives and the need for trillions of dollars to support the transition to a more sustainable future.  Fortune

Remembering Bob Lee

Bob Lee, the chief product officer of MobileCoin and the creator of Cash App, was fatally stabbed in San Francisco on Tuesday. Lee had a distinguished career in the technology industry, contributing significantly to the development of Android and serving as CTO of Square before joining MobileCoin. The circumstances of his death are under investigation, and no further details have been released at this time. The Associated Press

Who wants a raise?

The gender pay gap cannot be attributed solely to women not requesting higher wages, as research shows that only slightly more men (32%) than women (28%) asked for a raise during their last job interview. Pew Research Center's findings also suggest that getting women to ask for raises more frequently would not significantly impact the gender pay gap. Although researchers cannot precisely determine the amount of the 70% of the pay equity gap that is immeasurable, many believe that discrimination plays a role. Fortune

AROUND THE WATERCOOLER

Tech companies have been pouring billions into VR tech that teens don’t really care about by Prarthana Prakash

Twitter just designated NPR as ‘state-affiliated media’—and Elon Musk approved Twitter’s policy rewrite to intentionally change its status by Tristan Bove

Microsoft and Amazon’s ‘high barriers’ could soon trigger U.K. cloud antitrust probe by David Meyer

ChatGPT falsely accused a mayor of bribery when he was actually the whistleblower—now he wants to sue in what could be the first defamation case against a bot by Prarthana Prakash

‘We may be looking at the end of capitalism’: One of the world’s oldest and largest investment banks warns ‘Greedflation’ has gone too far by Will Daniel

This edition of CEO Daily was edited by Jackson Fordyce.