by Larry Eder
The Human Price of “Reductions in Force”
1. The late dictator of the Soviet Union, Josef Stalin, is attributed with the following statement, and I quote,” A death is a tragedy; a million deaths is a statistic.” The correct attribution to Commissar Stalin is, “ If only one man dies of hunger, that is a tragedy; if millions die of hunger, that is a statistic.”
2. My family worked in the auto industry. My grandfather, Adam Eder, participated in the longest strike by autoworkers against Ford Motor Company in the 1940s. Upon the end of the strike, my grandfather’s entire strike check for lost wages, $1750, was signed over to the neighborhood grocery store owner, who had given my grandpa’s family (my Dad, Stan, was the fifth of six kids) for their groceries. Layoffs were and are part of the auto business. I saw the human tragedy in these layoffs. My Dad told me about the difficulty when his father was on strike and had to work under an assumed name at Anheiser-Busch Brewery in Saint Louis. His stories resonate with me all of these years later. My father and Uncle managed at Ford plants, and I worked on the line through college in summers and on breaks. While proud that his sons moved to management, my grandfather did not trust management as a lifelong UAW member.
I watched my Dad get laid off after 26 years at Ford and then work at two computer chip companies with the same result. Finally, he worked at NUUMI, a partly Japanese-owned project, and loved his last twelve years working in the auto industry.
3. I worked at Runners’ World from 1981-1987. In 1984, around Thanksgiving, RW let most of its employees go, like 130 of 168 employees in one day. There was crying and screaming in the halls. I survived, and my fifteen-mile run home was broken up into 3 or 4 walks. I was exhausted and terrified. At 26, newly married, I was trying to survive. RW was sold to Rodale in the spring of 1985, and six employees ( I was one of them) went to the new owners in Pennsylvania. I am grateful for my time at RW. It started me in lifelong jobs in the publishing industry. But it was a difficult time.
4. Nike announced a Reduction in Force (RIF) of 2 percent last quarter. Recently, 740 Nike employees, many with over 20 years of experience, were let go. A former NIKE employee was told of their demise per one LinkedIn thread over a Zoom call. The sad thing, in my mind, is that NIKE has let many of the most experienced staff members go, saving salaries. Still, NIKE is also losing the intangibles of these veterans’ experiences.
5. The human cost? Employees who moved families across the country changed schools, and married spouses damaged careers for the good of another family member. What are the financial issues this causes with families and the anxiety of where the next mortgage payment comes from? RIF is now a legitimate tool for many management teams across American businesses.
6. John Donahoe is the CEO and President of NIKE. He has come from a non-footwear background, and that can be good. However, NIKE has seen this several times, and the board seems to forget that management, which does not know running or footwear in general and NIKE in particular, just does not get it. Mr. Donahoe was noted as saying that he did not understand why NIKE employees tell him, upon meeting, how long they have been at NIKE. Leadership is essential at NIKE. Mr. Donahoe does not seem to get that whole NIKE DNA thing.
7. NIKE can’t make disruptive products because people work at home? Mr. Donahoe actually was quoted as saying that in several interviews. Noted. Here’s the funny thing. Nike Innovation is run by Tom Clarke. Mr. Clarke is the President of Innovation at NIKE. Clarke is a long-time shoe geek and former NIKE President. New products do not come off an assembly line; creativity, access to resources, and an environment that encourages creative thinking are critical. Wondering if you will be the next to be fired is not conducive to developing a disruptive product. Second note: why do people call running shoes “disruptive”? Steve Jobs said it best in a lunch convo with former CEO Mark Parker. When Mr. Parker asked how to make better NIKE footwear, Jobs looked up and said, without hesitation, “ Stop making shitty shoes.”
8. In 1989, I was laid off twice, first after launching a Sports Medicine magazine and the second after working on a custom publishing venture. I started my own business the next day, and since then, except for 12 beautiful years at WD Hoards (RunningNetwork), I have been on my own. I never recovered from the two layoffs financially. It was part of what destroyed my marriage, and it took a few years of therapy to appreciate. The price of layoffs is tremendous, and management seems to forget that, at any American company, until they are let go.
9. I spoke with Barb Frank, a longtime footwear professional who has had nearly two decades at NIKE, ASICS, Brooks, Under Armour, and recently, Sorel. Barb Frank told me, in a soon-to-be-posted Zoom interview, that the price for RIFs is huge, individual by individual. “Some can talk about it, some can never.” Barb also noted, “Many of my friends told me, upon getting the white envelope, that they loved the company. That is the problem; the company can not love them back.”
10. What do we learn? The days of working for an American company are over from the start of your career to the end. According to government statistics, most Americans change their careers 7 times in a lifetime. Each Reduction in Force, whether from NIKE or any other corporation, comes at a price for each individual and their family. RIFs that are done to keep investors happy are some of the most depraved actions one can imagine. Making money off the sorrow of others does not sound like enlightened thought to me. It is why many of the current New Generation have little or no loyalty to businesses, and why should they?
11. Companies that use RIFs to get through tough times are short-sighted. Imagine a management team telling the staff that while times are tough, they will not do an RIF and need everyone to consider how to right the keel of the corporate ship. Honesty with employees? How fascinating!
Soon, these companies, who, in many situations, let the most veteran staff go, may find themselves with little or no experienced team leaders due to their salaries. And those left have been traumatized by the layoffs. This RIF theme does not seem to work. One wonders why companies have not found other options.
One final comment: I am not a NIKE hater. I have worked with Nike since 1985, and for nearly 40 years, I have benefited from Nike’s marketing and advertising programs and their support of my brands, American Athletics, American Track & Field, RunningNetwork, and finally, RunBlogRun. NIKE is a bellwether of the footwear industry. Most corporations are, well, dysfunctional. That is because they are only as good as the humans who manage them.
Please comment on this column and all others. Email me at [email protected], and I will respond.
