Elon Musk - Twitter - Elon Musk - Twitter ... if you'd write a book about it, the title would probably be "Destroying Corporate Soul"

This is a special newsletter as there has been a dominating topic over the past two weeks. The twitter acquisition by Elon Musk is definitely worth taking a serious and closer look at how to not manage a massive layoff – and look at examples such as AirBnB and Stripe how to manage a difficult situation in a better way.

The L-word is making headlines: 

Lay-offs when Elon Musk takes over twitter

The “ Make Work Better ” editorial team has put it perfectly: “Elon Musk has brought some serious Liz Truss on a hen weekend energy to his newly minted ownership of Twitter.com.”That is the perfect summary of an acquisition that made headlines over many weeks. Is he buying twitter? No. – Yes. – No. – Yes. And finally, the takeover is probably going down as one of the most toxic ones in the history of business.

Let me quote some of the Make Work Better newsletter: “Firstly, some context, I tend not to talk about it but I worked for Twitter for eight years from 2012 to 2020. Initially I helped to build the UK team then evolved to a leadership role across Europe, Middle East and Africa. It was most decidedly not exclusively down to me but the culture of the London office was famed throughout the business. It was also the best performing large office in the internal ‘pulse’ surveys.

It was when the culture went wrong (after a second round of global job cuts around 2015-16) that I started my podcast. At the time it was partly an act of rebellious subversion against what I saw as misguided global decision making, and partly it was an attempt to learn what I was doing wrong myself. As a few people have asked my perspective here are what I think are Elon Musk’s workplace culture mistakes from his first 12 days in the firm.

I have no doubt that Elon Musk is a formidably successful businessman, using his earnings from PayPal to acquire Tesla and to help him win a major NASA contract to set up Space X. But that doesn’t make him immune to making mistakes with Twitter and his behavior since he first mooted buying the firm has been chaotically unpredictable.” He then lists the 3 Work Culture Mistakes of Elon Musk. They are all so obvious:

1. Killed psychological safety at birth
2. Filled an explanation void with crass behavior
3. Turned culture into ‘them’ and ‘us’

Killed psychological safety at birth

One of Musk’s first acts was to order Twitter’s development team to ship a new feature of paid-for-verification within 10 days. If the team couldn’t hit the deadline Musk said he would fire them.

Communicating an urgent deadline isn’t inappropriate, leaders sometimes want to signal that the company is on a wartime footing rather than having the breathing space of peacetime. But getting workers to walk the gangplank, telling them that their mortgage payments are dependent on them getting the job done is a surefire way to destroy psychological safety.

Many of us are familiar with the VW Dieselgate affair where the German car maker had set their sights on becoming the biggest car manufacturer in the world. To do that they needed to sell more diesel cars in the US. One of the major hurdles in front of them was to improve their engines to pass the exacting cleanliness standards that were being implemented in states like California. To overcome this challenge pressured VW engineers hatched a duplicitous solution. When the car was in ‘test mode’ the engine would go into gloriously low emissions operation that allowed it to skip through any tests. Once the car was unhooked from an exhaust pipe measurement it would revert to burping out its standard noxious output. When the affair came to light CEO Martin Winterkorn quickly resigned in disgrace. The cost of Dieselgate was estimated to be around $35 billion and it continues to cast a shadow over the brand’s reputation.

Psychologist Amy Edmondson delved deep into the culture at VW in her book The Fearless Organization. She said that there had been a long-standing climate of bullying at the firm that led workers to make decisions out of fear. Edmondson cites a story of a previous episode under the leadership of the Winterkorn’s predecessor Ferdinand Piech. Piech had been furious about the quality of bodywork on a new model and is reported to have shouted at the gathered engineering team: ‘You have six weeks. I have all of your names. If we do not have good body fits in six weeks, I will replace all of you'.

Visualize being confronted with such a threat. If the solution is in your control, then you can focus and get it done, but if the demand is impossible, it invites workers to start anxious improvisation. Edmondson observed that a culture of intimidation and fear doesn’t produce better results, it merely invites employees to speculate how they can achieve the unachievable by other means. In the case of Dieselgate the engineering team couldn’t easily make the diesel engine cleaner, so they focused on performing what they were instructed: ‘make sure we pass these tests’.

Telling workers, they will be fired if they fail to achieve a goal can not only invite teams to cut corners or to make slapdash compromises, but it also signals that doing your best work isn’t good enough. At any moment you could lose your job and jeopardize your livelihood on the whim of an unpredictable leader. Ultimately most of us don’t want to negotiate with terrorists, let alone work for them.

Filled an explanation void with crass behavior

As I write this media is reporting that Musk still hasn’t addressed Twitter employees since he bought the firm 12 days ago. His first act on taking over at the firm was to walk into the offices carrying a sink. (‘Let that sink in!’ he joshed, the week before firing half of the workforce). While half of the company was being dismissed on Friday morning, he was exchanging jokey tweets with someone who was speculating that he was an alien.

Most of us who have worked through the length of an economic cycle recognize that there are times when companies need to let workers go. Whether because of their own actions or because of the performance of the organization it’s an unnerving thing for an individual to be told they are losing their job. But there is a way to do this with grace. The important consideration is to recognize that most workers who are leaving don’t care about reasons - they just want to know what the decision means for them. Typically, when preparing to lay off workers leaders are told that those losing their jobs won’t take in anything after discovering the decision. Managers are instructed to provide the information in back-up form afterwards. But for those being asked to stay explanation is vital. A leader’s role is to be a storyteller, to provide narrative and clarify about where the organization is heading. To paint a picture of what lies ahead.

But Musk, who in the last fortnight has found time to endorse the Republican party, egregiously slander the husband of Speaker Nancy Pelosi and permanently ban comedians who choose to impersonate him on the platform, still hasn’t talked to his employees.

Twitter employees told Casey Newton ‘That they had been struck by the cruelty: of ordering people to work around the clock for a week, never speaking to them, then firing them in the middle of the night, no matter what it might mean for an employee’s pregnancy or work visa or basic emotional state’. The fact that the job cut email wasn’t signed, merely coming from ‘Twitter’ added to the savagely impersonal approach. 

Jobs cuts are never easy but organizations like Stripe and Airbnb have implemented them with grace. Team members who remain are looking to answer a simple question - am I making a good decision by staying here? Do I trust the vision being laid out for the organization? For Musk, staying absolutely silent, while behaving like a obnoxious teenager in public, is likely to lose the loyalty of those who have been retained.

Resilient culture has a clear sense that ‘we’re all in it together’

Great cultures - whether in organizations or even when we consider groups like the people of Ukraine, are resilient when they have a cohesive sense that ‘we’re all in it together’. That sense of 'we-ness’ is protective, but can also find itself focused in opposition to outgroups. We’re all familiar with the idea of ‘us’ vs ‘them’ arguments. It’s certainly possible to frame Boris Johnson’s downfall by recognizing that when he was booed at the Queen’s Jubilee it was because he’d ceased being viewed as ‘one of us’ (by his supporters) but was now being perceived as ‘one of them’. Groups can be mobilized by sharing a common cause, or even by having a common enemy, but it’s a dangerous place to be on the wrong side of the people you employ.

Liverpool manager Jurgen Klopp has always had a visceral understand of strong culture. According to his biographer Raphael Honigstein, when Klopp was the manager of the German Bundesliga side Borussia Dortmund, he made it clear to everyone in executive roles at the club that they ‘had to develop this feeling of “we”’.

In Klopp’s mind the mentality of players had to move from ‘me’ to ‘we’. The manager clearly intuits how important cohesiveness is for good culture. At the start of the Covid pandemic, professional football was challenged by what to do about what was left of the 2019-2020 season. There was a genuine fear that suspension of the league would lead to the season being abandoned.

Klopp’s acceptance of the decision to suspend matches during the early days of the COVID-19 pandemic, even though it involved a threat to Liverpool’s title run in the Premier League, was magnanimous. On 13 March 2020 he released a statement explaining his simple reasoning: ‘if it’s a choice between football and the good of wider society, it’s no contest.’ It was a far cry from the famous words of a former Liverpool manager, Bill Shankly: ‘Some people think football is a matter of life and death. I assure you, it’s much more serious than that.’

In Klopp’s 381-word statement Klopp used the words ‘we’, ‘us’ and ‘our’ seventeen times. Psychologist Alex Haslam explains that ‘For leaders this sense of us-ness is the key resource that they need to marshal in order to secure the support and toil of others’.

Musk has spent no time trying to develop a sense of ‘us’ with his remaining employees. Indeed, if anything he seems intent on trying to encourage them to leave. Good culture requires a strong sense of cohesion. Musk needs to set about cultivating it as a matter of urgency.”

It could not be said any better.

Thriving cultures are 3 times less likely to face lay-offs

Consulting firm O.C. Tanner is providing hard figures in their annual Global Culture Report. In my book Building Corporate Soul, I am sharing the results of their analysis. This is what they found out:

Companies with a thriving culture are

• 13 times more likely to have highly engaged employees and an
• 8 times higher incidence of great work and
• double likelihood to have increased revenues. 

At the same time, employees in thriving cultures are experiencing

• 3 times less burn-out situations. And
• the companies are 3 times less likely to face lay-offs.

What this means? Very clearly, if your company culture is great, a lot of things must come together for your firm to be in such a bad shape that lay-offs become inevitable. Another proof that companies with soul create better business results.

The impact of a traumatic layoff-experience and what companies can do about it

Korn Ferry recently looked at the subject – guess why. Here´s what they say: “One company’s layoff strategy was to have none at all—instead sending out email pink slips. Another firm, meanwhile, spent weeks planning the effort trying to create compassionate communications to employees and stakeholders. But both firms ended up with the same result: a beating in social media. The HR department spent weeks planning layoffs, complete with strategic analyses of impacted departments, compassionate communications with employees and stakeholders, and the kindest of goodbyes. And yet when the smoke cleared, the mood of the remaining employees ranged from nervous to disgruntled, and the company had taken a beating on social media. (…)

“When layoff stories hit the media, it absolutely changes how people think about your company, values, and products,” says Nathan Blain, global lead for optimizing people costs at Korn Ferry. His counterintuitive approach to post-layoff repair efforts is to design them around exiting employees: “Most leaders forget that people have very close work friends.” He believes any behavior perceived as respectful and helpful to exiting employees can go a long way toward improving the engagement and emotional commitment of remaining employees, as well as minimize brand damage. Creating soft landings through career transition services (CTS), which connect exiting employees with positions both internally and externally, can be an opportunity to build the company brand in the professional community.

Remaining employees will understandably be nervous and want to know if more cuts are coming, whether the company is stable, and whether they should be looking for jobs, says human resources expert Ron Porter, senior client partner at Korn Ferry. The best antidote, he says, is frequent communication both one-on-one and in groups, to explain the criteria and business issue that drove those layoffs. “Be comfortable talking about it,” he says. As for layoffs done poorly? Blain says some expression of regret can go a long way in repairing post-layoff damage. “Contrition is usually essential,” he says.”

Well, these are very profound observations. Read more about the subject here.

Twitter vs Stripe vs AirBnb vs Better.com

When two companies do the same, it is often NOT the same. Remember, a while back I compared two companies that fired 25% of their staff: AirBnB and Better.com. The latter got a social media and real media shitstorm like nothing else; the former was hardly noticed. Why? Because AirBnB´s approach was rooted in its purpose and executed recognizing the dignity towards its people, while Better.com´s CEO decided to fire his people on a zoom call pretty much a year ago.

Stripe recently laid off 14% of its workforce and both CEO Patrick Collison and president John Collison learnt from the AirBnB example. Read the full Stripe letter to employees here. At the same time, Elon Musk took over twitter.com and laid of 50% of its workforce … and beat the Better.com performance which was considered the worst for many years by miles. Advisor Scott Monty compared the approach Stripe took versus the approach at twitter.

Here´s what they said to their staff: “Today we’re announcing the hardest change we have had to make at Stripe to date. We’re reducing the size of our team by around 14% and saying goodbye to many talented Stripes in the process. If you are among those impacted, you will receive a notification email within the next 15 minutes. For those of you leaving: we’re very sorry to be taking this step and John and I are fully responsible for the decisions leading up to it.” 

They then go into detail to give context to the decision, to help employees and the public understand what led to this moment. “The world around us - At the outset of the pandemic in 2020, the world rotated overnight towards e-commerce. We witnessed significantly higher growth rates over the course of 2020 and 2021 compared to what we had seen previously. As an organization, we transitioned into a new operating mode and both our revenue and payment volume have since grown more than 3x.

The world is now shifting again. We are facing stubborn inflation, energy shocks, higher interest rates, reduced investment budgets, and sparser startup funding. (Tech company earnings last week provided lots of examples of changing circumstances.) On Tuesday, a former Treasury Secretary said that the US faces “as complex a set of macroeconomic challenges as at any time in 75 years”, and many parts of the developed world appear to be headed for recession. We think that 2022 represents the beginning of a different economic climate.”

Contrast this to the note from Twitter — which is signed, impersonally, as just “Twitter” — that begins tersely and without emotion:

“In an effort to place Twitter on a healthy path, we will go through the difficult process of reducing our global workforce on Friday. We recognize that this will impact a number of individuals who have made valuable contributions to Twitter, but this action is unfortunately necessary to ensure the company's success moving forward.”

Scott Monty´s conclusion hits the nail on its head: “Can you imagine the pit in your stomach as you wait for the “Your Role at Twitter” email to arrive in one of your two inboxes?” In contrast, Stripe concludes their email: “For the rest of this week, we’ll focus on helping the people who are leaving Stripe. Next week we’ll reset, recalibrate, and move forward. — Patrick and John”. Read Scott Monty´s entire piece here.

A little bit of hope at the end

Harvard Business Review is celebrating its 100th birthday this year. One article of their ‘100 Years of HBR’ as part of ‘The Big Idea Series’ looks at the content focus of the magazine over those 100 years. Tejas Ramdas, Raffaella Sadun and Nick Bloom (of Cornell, Harvard and Stanford universities) analyzed every article HBR has ever published.

At the beginning, “finance, accounting and operations” dominated the issues. Then, “strategy and marketing strategy and marketing” became more important and at this day and age, “organizations and human resources” tend to become the areas of focus for the Harvard Business Review. I think this is good news. 

The next edition of the Building Corporate Soul newsletter will be in your mailbox on November 27. Please continue to join me on my mission to make soulless companies a thing of the past in 2022!