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The Downsizer's Dilemma

Struggling with the prospect of having to cut jobs, and other difficult decisions.

Inc Query

In times like these, certain issues rise to the top of the heap. This month we have questions about dealing with the emotional side of layoffs, raising start-up money, and pricing for profit.

But What About My Employees?
As the CEO of my own ad agency, I know what Norm Brodsky means when he talks about the awesome responsibility CEOs have for the lives of their employees. (See " Groundhog Day," July 2001.) With advertising so slow right now, I wake up at 4 a.m. thinking about my people and their children and what's the best way to take care of them if things don't turn around soon. From a personal standpoint, I wouldn't mind down-sizing, but I worry about the vendors, the clients, and especially the employees I'd be letting down. Of course, it will be worse if we go out of business. Can you give me any advice about dealing with these issues? Are there any books that might be helpful to someone in my situation? --Susan

Although it's probably not much consolation, you certainly aren't alone. We've talked to hundreds of CEOs in the past few months, and many of them are struggling with the same issues that keep waking you up in the middle of the night.

While there are obviously no easy answers here, we thought it might be helpful to hear from a couple of veteran entrepreneurs. "I understand what Susan is going through," says Martin Babinec, founder and CEO of TriNet, in San Leandro, Calif., a 13-year-old, five-time Inc 500 company with 280 employees. "I've had to lay people off on more than one occasion, and those decisions were among the hardest of my life.

"But an odd thing happens as you struggle with the decision. It forces you to ask fundamental questions about why you're in business. What are you working for? What will the business be like in 5 or 10 years? How will people in the company benefit from its long-term success? Is that worth the sacrifices and hard decisions you have to make along the way, including those that cause pain for others?

"Because let's face it: you can't build a successful business without making some decisions that hurt other people. That's just the way it is. As the CEO, you're respon- sible for the future of a whole community. And the bigger the business gets, the more often you'll have to choose between the community's best interests and those of individual employees.

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The bigger the business gets, the more often you'll have to choose between the community's best interests and those of individual employees.

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"So are you ready to make those decisions in order to achieve the vision you have? If the answer is no, that's fine, but don't prolong the agony. You and everybody else will be better off the sooner you ease out of the business and find another occupation."

We also turned to Ari Weinzweig, who is an avid reader of business books in addition to being the cofounder and CEO of Zingerman's, a $13-million, 19-year-old com- munity of food businesses in Ann Arbor, Mich. "Part of Susan's problem may be that she's carrying the burden all alone," he says. "That happens when you have a parent-child relationship with employees. The CEO winds up feeling as though she has all the responsibility for protecting jobs, which doesn't work well in my experience.

"Susan might benefit from bringing her people into the process of figuring out what to do -- which can be a challenge. I'd recommend she read Stewardship, by Peter Block, which deals a lot with establishing peer-to-peer relationships instead of tra- ditional parent-child relationships. Susan might also look at Flight of the Buffalo, by James A. Belasco and Ralph C. Stayer, or some of the books on open-book management. Those resources would help her think about a business solution, assuming she has time to find one.

"As for the personal side of the struggle, I'd recommend The Corporate Mystic, by Gay Hendricks and Kate Ludeman. Don't be put off by the title. The book does a good job of blending personal and business issues -- and may help Susan understand where her responsibility begins and ends."

The Money Hunt
I recently opened my own jewelry-manufacturing business after working for someone else for 10 years. I have to say I had no idea that the start-up was going to be so tough financially and emotionally. I've applied for loans without success. The banks I've gone to won't even consider lending money to anyone who hasn't been in business for two years. But if I could last two years without the money, I wouldn't need a loan in the first place. Are there any financial institutions that will lend me the $30,000 I need to get started? --Jackie

Probably not, unless you qualify for assistance through a government program. "I would start with the Small Business Administration," says Sam Kaplan, president of Central Chase Associates LLC, in New York City, who has helped raise money for dozens of start-ups, including several of his own. "Somebody there can help Jackie figure out whether or not she's eligible for one of the federally subsidized loan programs. She should also check with her state's economic-development office, which might have other programs to help companies like hers.

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Bo Burlingham

Burlingham joined Inc. in 1983. An editor at large, he is the author of Small Giants: Companies That Choose to Be Great Instead of Big. The book was a finalist for the Financial Times/Goldman Sachs Business Book of the Year Award in 2006. Burlingham is also the co-author with Norm Brodsky of The Knack; and the co-author with Jack Stack of The Great Game of Business and A Stake in the Outcome.

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