Last Monday evening, as I was passing Cisco Systems headquarters on West Tasman Drive in San Jose, I knew something was up by the presence of three TV news vans with their antennas fully extended. A little while later, I heard on the radio that Cisco was laying off of 5,000 employees (of an approximate 70,700 population).
I and others in the Silicon Valley have known Cisco has been in trouble for a while. Competitors have been eating into its traditional networking equipment market. Cisco’s attempt to diversify into the data center server business has been surprising, especially given the commoditization of Intel-based servers. Many here in the business and tech community thought that this was a serious business mistake, especially in a depressed economy and where margins have been ever-shrinking.
While I wasn’t surprised to hear about the layoffs, I was surprised to hear of so many employees being cut at once. Then Tuesday’s New York Times contained even more unexpected news: Cisco’s layoff would hit not 5,000, but 7,000 employees and another 3,000 who’d take early retirement, all by the end of August. That’s approximately 14 percent of the company’s employees.
I guess Cisco management is having a hard time making up its mind -– do we cut 5,000 or 10,000 employees? I wonder if the numbers have any relationship to their bonuses.
It’s distressing to see employees laid off because of the business missteps made by those few in control of a company. For those affected, the impact on their lives and self esteem will be felt for many years. The impact to the community and economy could be devastating for much longer.
How a layoff is conducted can say a lot about a company, whether it will make it in the long term, and if it really does value its workforce. Let’s see what happens with Cisco. Will the laid off employees be offered any retraining or employment counseling benefits? Will it cover any medical benefits or will they be tossed over to COBRA?
My advice to Cisco’s remaining employees: Watch how the company treats your friends and soon-to-be-former colleagues. This will tell you whether or not you’re valued as a member of the organization.
Companies have a responsibility not just to their investors, but to their employees, business partners and community. If it’s honest and truly values its employees, they partner and work together. If it’s deceptive and treats employees poorly, you part ways. When dealing with the company, the same dynamic should be considered by vendors, suppliers, creditors and customers, since as it reflects on the organization’s integrity, reputation and goodwill.
So the question: How will Cisco deal with the layoff of so many “valued” employees? Will Cisco management continue as before, or will there also be an adjustment in the direction of the Company? The answers will be telling.
Note: The author owns shares of stock in Cisco Systems, Inc.