By: Brian Redmond, PhD
I was planning on writing about something else, but another round of large layoffs (Zoom: 1,300; Disney: 7,000) keeps these ideas in the forefront of my thoughts. So here I am pondering layoffs again.
Since I’ve already focused on how these types of layoffs hurt the bottom line of a company in the long run, I’m going to comment now on creativity being impacted by these layoffs as well as smoke and mirrors tricks that some CEOs use to make us think that they have the people in the organization in their interest.
Disney Layoffs and Creativity
The Disney ones in particular, have me thinking about the creativity issue. They are laying off 7,000 people. That means that there are at least 7,000 perspectives are lost to a company that literally counts on creativity to generate the products they put out.
Now, I do understand that their television and streaming services aren’t currently doing well, but Disney+ is literally just a few years old. Amazon lost significant money during its first few years as well. Patience pays off, which is one of the main points I’m trying to make, short-term profits impede long-term progress.
So rather than adapt and change, and maybe make use of all those perspectives to create new ideas to help move the company forward, instead, Disney is going to reward shareholders and put out sequels to products that already exist (i.e. non-creative product), that will make them decent money, rather than create a new blockbuster that will actually create a new money making franchise for them. Or find new markets for them. Or develop new strategies. This list goes on and on.
Creativity comes from people. And the fewer people an organization has, the fewer opportunities there are to invent the next new big thing.
Zoom Layoffs and CEOs Smoke & Mirrors Gesture
While laying off 1,300 people who counted on their paychecks to make ends meet, the CEO of Zoom, Eric Yuan, stated he will be taking a 98% salary cut.
On the surface, that appears to be a really generous offer.
Until you realize that what he is doing is smoke and mirrors:
- Most CEO compensation actually doesn’t come from salary.
- It comes from stocks, perks, and other benefits.
- So, while he will be taking a $10,000 salary rather than his normal salary of $500,000. A move he is pitching as a 98% cut.
- But the Zoom CEO is worth $14.7 billion dollars.
- In other words, his actual compensation cut is closer to 3%.
- CEOs often don’t take a salary at all. Steve Jobs famously didn’t take one.
- In addition to it not mattering to them, they no longer have to pay income tax like most of us.
- So, the richest people in the world when they make these “generous” moves are actually contributing less to the public good than the rest of us.
Takeaway
First and foremost, CEOs making these layoffs are putting the money where their values are. Valuing themselves and their positions over the greater good (the long-term success of the organization, employees, and shareholders).
Similar to the last time I wrote about this, the other takeaway is for shareholders, stockholders, and investors. If you are dissatisfied with poor leadership taking away the dignity of the people they employ, as well as killing the creativity of the organizations you invest in that leads to bigger long-term profits that benefit everyone by job creation and shareholder dividends. Let them hear about it. Write these leaders and let them know that you as an investor will no longer tolerate bad leadership from them.