Trimming the Fat?

Trimming the fat in business refers to reducing costs on unnecessary or unproductive expenses, often through layoffs. Decisions are based on the belief that letting people go is necessary for the long-term viability and success of the company.

However, this raises important questions about the value that companies place on people. It’s concerning that in a world where many companies are eager to hire for growth and investment, people are often treated as dispensable assets rather than essential contributors to the organization’s overall purpose and values.

Zoom beat expectations in terms of earnings. But the company is facing slower sales growth. And business headlines informed us of the abrupt firing of its president without cause last month.

This now former President, Greg Tomb joined the company in June with a $45 million stock grant that would vest over four years, in addition to a $400,000 base salary with an 8% bonus target. And in other news, trimming the fat at Zoom impacted 1,300 employees as part of a 15% reduction in force.

Surely,Trimming the Fat is Not the Answer?

As someone, who has spent a great deal of life working in global strategy, it is painful to see how little “innovation” we have when it comes to people. Instead of visiting The Great Wall of China with my team, I spent hours in my hotel room on WebEx calls with endless spreadsheets to find ways to trim the fat. Zoom didn’t exist back then and Eric Yuan was a vice president for Cisco Webex.

I was doing my best to advocate for the amazing people we spent months and months finding and hiring around the globe. But the senior executive in charge was keen to trim the fat of a very lean and successful team. Mostly because of personal bias. The people were disposable. But to me, each was a gem with a human story.

And this week, Zoom’s CEO and founder, Eric Yuan announced that he is reducing his salary by 98%! And forgoing his 2023 bonus. He claims it’s due to the “mistakes” he made when growing the company.

But did you know that in 2022, he received an extra $800,000 in ‘other’ compensation. And his net worth is estimated at $3.8 billion. At the height of the pandemic, when zoom became a household word, it was $16.4 billion. So how does a fat trimming of $490,000 help the company—apart from hiring a few engineers to build his new vision of AI? It may be an interesting PR move but what is the greatest opportunity for Zoom now?

Those who lack a curiosity to learn about what’s truly happening render discernment irrelevant within their own echo chambers.

What’s Possible?

Maybe being more conscious when hiring people is a first step in stopping this insanity. In tech, there are always looming layoffs on the horizon. But maybe with all that personal non-human capital, another investment could have been made around the opportunities and jobs created for 1,300 human beings? Perhaps a fraction of the billions could compensate for the “mistakes” and create an opportunity for managing the company holistically?

But we can’t change what happened at Zoom. But can we no longer focus on trimming the fat?

A dear friend of mine working at a start-up was “laid off” in December but it was more of a furlough. He is back at work now and is more committed to the company than ever. When his CEO told him that he had his back, he really did. There are no guarantees and yet, it’s up to each of us to create a healthy relationship with the unknown.

Imagine what happens when people are involved in the company; not just measuring “engaged” or “loyal” employees.

What happens when layoffs are no longer an option for conscious leaders? Perhaps we would run organizations very differently than the past few decades? Maybe we would establish a level of trust and experience us walking our talk; not just making announcements?

Where is the true innovation in business today when it comes to people and what truly matters? Communities and trusted relationships have the potential of changing everything when we do.