This blog post is the seventh in a series that is a deep dive into what I call The Principles of Truly Human Leadership, from the revised and expanded 10th anniversary edition of my book, Everybody Matters: The Extraordinary Power of Caring for Your People Like Family, available now.
A couple weeks ago, on his “A Bit of Optimism” podcast, I said this to Simon Sinek:
“Layoffs are a broken part of our society. It means your business model failed. You let people down.”
I explored this issue in a recent post that generated quite a few reactions. It’s clearly on the minds of a lot of people. As recently noted in a CNBC article, layoffs are up 65% from a year ago and at the highest level since 2020.
Last year, there was an article in Psychology Today about the impacts layoffs have on a person. They compared it to a break-up or a divorce:
The reason for your layoff may not be personal, but your experience and perception of it can make it feel personal. Although similar to a breakup, losing a job just hits differently because there’s so much more wrapped up in those 40-plus hours a week that you spend doing said job.
For many people, a job is more than just a source of financial security; it contributes to a sense of purpose, accomplishment, and self-esteem. Without this sense of purpose, you might find yourself questioning your skills, value, and your place in the world, making the loss feel like a blow not only to your career but also to your personal history and identity.
Cue negative core beliefs, which turn up the volume on feelings of inadequacy or failure. These deep-seated beliefs are rooted in past experiences of rejection and loss. Suddenly, it's not just about losing a job; it's a full-on attack on your self-worth, making a layoff feel like a personal confirmation of every negative thought you've ever had about yourself.
For quite a while, I’ve quoted this statistic from a Gallup poll: The number one determinant of happiness is a good job, which is defined as meaningful work among people who you enjoy.
What happens when that is gone? The negative impact to the person, their families, their communities and the people who remain at that workplace is immeasurable.
Layoffs should be the last resort for executives and boards after all other options have been exhausted. Furthermore, we senior leaders and board members should own our role in this failure and handle the transition with as much compassion as possible.
Unfortunately, this is not often the case.
When advisors to the board or senior leaders suggest layoffs are necessary to achieve financial targets, or make structural cost adjustment that analysts expect, it is clear to me that the train of thought is focused on the investor and not focused on the lives in their span of care.
One of the fundamental ways we demonstrate care is through a robust business model— or engine— that provides our team members with the security of a job. A culture of caring then becomes the premium fuel that enables the business model to perform to its potential.
The Engine and the Fuel
Several years ago, professors from Harvard University wrote a case study on the impact of our people-centric culture within Barry-Wehmiller.
I was there when it was introduced to a group of about 160 global executives at a leadership event. They discussed our case study for more than an hour.
At the end, Jan Rivkin, the chair of the MBA program, said to this group, "Is Barry-Wehmiller successful because of its culture or its strategy?"
They discussed it for about 10 minutes more and then voted. 75% of the people said Barry-Wehmiller is successful because of our culture.
Then Jan asked what I thought. I stood in front of this group of very prominent global executives and said:
I understand why you think our culture is the foundation for our sustained value creation, but let me give you my perspective.
The foundation of our 30-year track record of over 10% compound growth in share value is that we built a robust business model in the late 1980’s and we stayed true to that model where the core strategic focus is a balance of markets, technology and customers combined with financial stability.
A useful analogy is that of a Ferrari engine. It will run on 85 octane fuel, but it won’t run to the potential of the designers of the engine. However, if you put 91 octane fuel in the engine, it will optimize the design of the engine. On the other hand, if you put premium fuel in a Toyota engine, it will not allow that engine to race a Ferrari.
So, think of your business model as the engine and the culture as your premium fuel. A good business model is the foundation for caring for your people and your culture is the fuel that activates that engine and produces the power of the design.
We have continued to evolve and grow our cultural initiatives, but at the same time, we also have to make sure we never take our eyes off the performance of our business. It is the way our team members make their livelihood and support their families.
This requires a constant focus on the vibrancy of the business model and the organizational design, -- always challenging it – to ensure it is creating value and safety for all stakeholders.
When you truly care about your people, you not only need to give them an environment where they feel like they matter – where their gifts and talents can thrive – you also have to make sure their livelihoods are safe and secure with a well-designed business model.
People and Performance in Harmony
One of the things we have proven at Barry-Wehmiller is that in business, you don’t have to sacrifice economic value creation in order to care for those you have the privilege to lead.
It’s not a one or the other proposition. We call it people and performance in harmony.
When you balance people and performance, that means one in sacrifice of the other. My co-author Raj Sisodia introduced us to the concept of harmony instead of balance.
In harmony, things come together and they amplify each other. They create something better, more beautiful.
The fact is, business growth and people growth aren’t separate ideas; they’re complementary pieces in creating value. We call it a virtuous cycle. The investment we make in growing our people ultimately helps to grow the business; when we grow the business, it provides greater opportunities for our people to flourish.
At Barry-Wehmiller, we do everything we can to create an environment in which our people can discover, develop and share their gifts and know that who they are and what they do matters.
But we also have to be creating economic value in line with our investors’ expectations to make all of that possible. We do that through the various services our companies perform, such as the building of capital equipment and offering consulting and other services. Our businesses provide the vehicle, the economic engine, through which we can enrich the lives of our team members.
If we broke even or lost money every year, our message about focusing on people wouldn’t carry much weight. Furthermore, if our business model was focused solely on our people, it likely wouldn’t allow us to provide them with the most fundamental way we show we care: by giving them a secure future.
And without a successful business model that allows our business to grow, we wouldn’t be able to provide opportunities for our people to grow.
It’s not just enough to be a successful business that creates value for your shareholders, or to be a great place to work. We believe we need to create a compelling vison for the future for our people, who place their trust in us.
Purposeful People Planning
A leader’s primary responsibility is to design a business model that is robust, continually evolving and capable of performing to the expectations of all stakeholders.
This foundation gives team members a grounded sense of hope for the future, allowing them to plan their lives with confidence, knowing their work provides the income and stability their families need.
I’ve seen well-intentioned leaders fail—not because they didn’t care about their people, but because their business models were unsustainable. When businesses collapse, it’s the people who suffer most. Job losses don’t just impact the bottom line; they ripple through families, destabilizing financial security and taking an emotional toll.
Layoffs are not a strategy—they are a symptom of deeper issues within the business model or leadership. Boards must recognize that every decision they make affects all stakeholders, not just shareholders. When evaluating business performance, they must see layoffs as a failure of leadership or strategy, not a routine cost-cutting measure.
Trust is the foundation of a thriving organization, and nothing erodes trust faster than treating people as expendable. If we want our teams to be engaged, committed, and innovative, we must build business models that honor and protect the very people who make success possible.
One example of a transformative practice we’ve adopted is the Business Excellence Staffing Model, which we refer to as “Purposeful People Planning.” This approach challenges leaders to apply the same intentionality to organizational design as they do to product innovation, ensuring work processes continuously evolve to meet organizational goals. This is a powerful and important leadership skill and dramatically reduces the need for layoffs.
While I had long valued innovation in product design, Purposeful People Planning revealed the critical importance of applying that same focus to how organizations are designed.
Continuous improvement is critical in leadership. We should always be reevaluating our organizational structure and processes to make sure they are providing value to and meeting the needs of our business and our people. For example, the use of natural attrition as a way to provide opportunities for the team to explore workflow re-designs before automatically replacing someone who leaves.
If, as we do at Barry-Wehmiller, “we measure success by the way we touch the lives of people,” we are making a commitment to each person that joins our organization that they have a future in our care.
We cannot simply hire to meet today’s demands and lay those people off tomorrow. We owe it to our people to be intentional about our future, to insure our collective future.
A Force for Good
Financial and employment safety is crucial in the creation of meaningful work for those within our span of care.
With that security and caring, empowering environments, our team members can come together to share their individual gifts—marry their passions to their skills— in the creation of value for themselves, for others, for the organization. We should do our best to help them see the joy and happiness that is realized from achieving our shared vision together.
When our team members feel secure and are part of caring environments where they have opportunities to become their best selves, they are happier and healthier because they feel valued and understood by their leaders and teammates.
When they feel fulfilled by the time they’re spending away from their homes and families, they are inspired and energized instead of stressed. And when they are with their loved ones, they share that joy and fulfillment instead of the stress and bitterness of feeling unappreciated and insignificant.
But our people have to feel safe. And they need to feel cared for.
One of the fundamental ways we demonstrate care is through a robust business model— or engine— that provides our team members with the security of a job. A culture of caring then becomes the premium fuel that enables the business model to perform to its potential.
Leaders of every organization owe this to those who put their trust in us and layoffs will be an abusive “management” practice of the past!
This is foundational if business is to be a force for good instead of destruction.