Interview Transcript
I've learned this the hard way because when I took over as Chief Executive of Reuters in 2001, not only was there what seemed at that time to be a significant recession in financial services, but it was just after 9/11, and Reuters itself was not in good competitive condition. I had to take out a lot of cost in a hurry and had to do it not in a particularly nuanced way. We took out something like 5,000 people out of what was, at one point, 19,000 at Reuters. And that was probably the most difficult thing I've ever done.
Having to do that has conditioned in some way the way I've managed ever since. In that, I never want let the business go so off the rails that one would need such an extraordinary program again to do it.
The only way I know to motivate people through a period like that, and it's not just everyone else, it's about motivating myself and my managers as well, is, you got to believe in the goal. We felt, those of us who came through that period 2001, 2003 at Reuters, that this 150-year-old company was a force for the good, deserved to live to see another day. And although it was very painful to often say goodbye to friends in the process, we had to focus on how do you make a 150-year-old company, and give it another 150-year license, and how do you create a stable employer for all the families that stay. And sometimes you need to do that tough medicine, but it ain't a lot of fun.
Why do we have to have such a boom and bust cycle? I think the US economy is uniquely sympathetic to the lay on a lot of people, and then take them out during difficult times. Obviously, some of the more socialized countries have more stringent rules about laying folks off. The downside then is, you don't add jobs.
If you look at what's happening in Europe right now, it's all of the contractors that are in deep trouble, because people haven't wanted to add permanent jobs in Germany, in France, in Italy because it's hard to get rid of them.
I'm not sure what's the best political answer, because if you make it too difficult to eliminate posts, nobody ever wants to add them. If I have to know that this is a job that will be in the company for 50 years, I'm going to take a lot longer to create that new job, or maybe I'll do it on a contract basis, rather than bringing on a permanent employee.
Our experience here, let's take Thomson Reuters right now through this recession, we have been eliminating some positions. But that's far more driven by the logic of the integration of the acquisition of Reuters by Thomson, than by the recession itself.
We have been careful over the last couple of years, in part I think because of my difficult experience at Reuters, and Thomson's always been an efficient company as well. The jobs that are going, by and large, are the jobs that were the overlap, and we haven't had to announce special purpose layoffs, other than in very particular circumstances.
Boosting Morale During Massive Layoffs
CEO, Thomson Reuters
Thomson Reuters CEO Tom Glocer tells the story of having to cut 5,000 people in 2001, an experience that changed his business ethos forever. He also answers the question of how businesses get too big in the first place.
June 2, 2009 | In Business & Economics
Discuss
Ben Sims on June 6, 2009, 10:25 AM
It’s a tough thing to have to layoff people. Mr. Glocer brings up an important point, that after layoffs business leaders must keep the staff that remain motivated. It’s not easy.
Brian Reston on June 7, 2009, 10:47 PM
Glocer offers one of the most studied approaches to macro economics in all of business. Here’s another good clip in which he respondst o George Soros’s prediction that financial services will contract by 50%:
http://bigthink.com/ideas/boosting-morale-during-massive-layoffs/related_links
Luke Star on June 16, 2009, 11:46 AM
I know some people who were fired from Reuters circa 2001 (Glocer mentions these firings in this interview), and it was brutal.
I’m a little ticked off, to say the least, about how the majority of the banter (by Glocer and others) seems to be primarily, if not solely, about making the firing process tenable for those who stay. What about improving the firing process for those who are fired?!
For instance, Glocer says in this interview, “The only way I know to motivate people through a period like that, and it’s not just everyone else, it’s about motivating myself and my managers as well, is, you got to believe in the goal.” He’s not talking about those fired here, he’s talking about those unfired. Sure, he’s a CEO, and he has the company to think about, but what about the human element?
But the way, I’m no human resources expert. I’ve been fired nearly as many times as I’ve been hired. I’m just saying this because I don’t have the answers either. And I just realized that in this comment/post, all I’m doing is complaining; that I’m not offering any solutions. Does anyone else have any solutions?
Nathan McFarlane on June 20, 2009, 12:33 AM
Sorry, Luke Star there is no “human element” as you mentioned above. Glocer kept the smile on his face as he spoke about the lay offs, I am not saying he took pleasure in it, but it is highly unlikely that he lost much sleep over it. People like him get to the top because they are willing to do things like he did.
Maybe Reuters had to lay off some people, but 5,000? What happened? Its unthinkable. I personally could never do this- i would be haunted forever by the immeasurable amount of human suffering and hardship that occured as a result. Thank goodness we have a semi-decent social safety net many parts of the world. —-Two decent people work very hard for many years, then one gets laid off and has to wait on line for food stamps while the other continues to live comfortably. A tragedy without an obvious solution.
logan marshall on June 30, 2009, 6:34 PM
I tend to agree with Luke Star’s (two comments above) comments about Glocer’s (and other executives’) seeming callousness toward the human element of companies’ roles in our society, not to mention our economy. But, I also understand that executive roles require making tough decisions which may or may not dramatically affect the life outcomes of its constituents/employees.
The role of the private business in a social economy is extremely tough to define — not only from a pragmatic vantage point, but also moral and political reasons.
At the core of these problems, I think, is a problem with American business culture. Or perhaps the problem isn’t with business culture, but American culture in general. The is a certain lack of concern for country and compatriots that characterizes the behavior of many executive-level decision makers in the US.
Again, however, the issue is more complicated than it seems. The notion that the US’ general welfare hinges on the success of its private companies is important. But ‘success’ shouldn’t mean lining the pockets of companies: it should involve reinvesting into the company to encourage growth on the company-level not the individual level, in addition to fostering an innovative environment and team-minded mentality among co-workers.
The Japanese haven proven to be much more effective at this, I must say, from what I know about how their executives interact with their colleagues at work and how their general day-to-day engagement with their companies’ matters differ from American executives’.
Jessica Liebman on July 27, 2009, 12:25 PM
I’m particularly interested to see how this idea shakes out in the law industry. Some of the largest, most successful firms have had to shed thousands of employees. They were simply too bloated. Will that “big firm” model fall to the wayside? What do people see as the future of that industry?
Catherine on July 29, 2009, 2:52 PM
This shows an old paradigm of leadership. In 2001, Reuters was mostly a European organization with little market penetration in the Americas. Reuters in 2001 got too bloated because it is the REUTER’s culture to add a manual process to everything. There is no system automation.
Today’s new challenge for Thomson Reuters is that this is now a GLOBAL organization that is trying to integrate both cultures which are in a collision course. Your management team is laying off people based on cronyism centered on PROTECTING jobs in EUROPE/LONDON and laying off the US positions. Your are going down a path of more beuaracracy and less efficiency and it all comes down to a lack of ACCOUNTABILITY.
As you mentioned layoffs are part of the business cycle, but it is heartless to layoff people with good performance track records. Instead your management team should be targetting the poor performers of the organization first. Then your management team should focus on identifying the talent in the organization and flowing in to poor performing areas. Currently you have mismatched talent but instead of terminating talent, your team should be flowing that talent.
The next big challenge that you will face is that as soon as the market rebounds, your talent will flow right out of your organization because of the lack of respect your management team has shown to its people.
Rakesh Vazirani on September 27, 2009, 11:13 AM
I’m a little late on this one.
While Companies are focusing on their ability to attract, develop and retain top talent to remain viable and competitive in the short and long terms, TR is lagging behind.
I’d also like to share my personal experience as regards to Logan Marshall’s comments above. I’m afraid that the scene on the ground in Japan is a lot different from what is made available to the outside world.
Japanese organizations harass employee behind closed doors to force them into resigning voluntarily.
http://search.japantimes.co.jp/cgi-bin/fl20090818hn.html
http://pawahara.blogspot.com/
No points for guessing, the organization where such harassment is blatant.
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