Breach of Trust

BACKGROUND: In March 2017, a company decided to reduce employee cost across two product lines due to declining revenues and weak customer demand.

WHAT WENT WRONG: The top 10 leaders decided to rationalise costs by laying off some employees. However, two of them from the decision-making team gave an early heads-up to their favourites. Those, in turn, shared it with others and soon it became an open secret with employees confronting their managers about the impending layoffs. The leaders feigned ignorance, and the strongest performers started to leave. Stories of possible layoffs also appeared in the media. To limit the damage, the Chief Executive did a townhall, assuring no layoffs would happen. But the leadership team met again and decided to go ahead with it after a gap of two months.

TAKEAWAY: The initial denial and the upshot indicate a betrayal of trust that affected those who left and those who survived. It further ruined the credibility of the leadership, especially that of the CEO. The CEO should have confronted the two leaders who breached confidentiality and shared the news with a few employees ahead of others. If layoff is inevitable, it makes sense to convey the same to all employees, but a selected few must not be privy to the information. A layoff is a traumatic moment, but working on it ahead of time makes everyone better prepared to handle the situation. Employers cannot guarantee employment, but they can invest in employability.