Fire All Bosses! Is This New Strategy a Company-Saver?

[00:00:01.510] - Alice

Welcome to Books in the Biz, a podcast that looks at both the financial and operational sides of success. Please welcome our hosts, Dan Paulson and Richard Veltre. Dan is the CEO of Envision Development International, and he works with leaders to increase sales and profits through great cultures with solid operations. Rich is CEO of the Veltre Group and a financial strategist working with companies to manage their money more effectively. Now on to the podcast.

[00:00:30.070] - Dan Paulson

Thank you, Alice. Gosh, she's so polite and spot on every week. What can you say? How are you doing, Rich?

[00:00:40.310] - Rich Veltre

I'm doing okay. How are you, Dan?

[00:00:42.090] - Dan Paulson

I'm good. I'm good. So we are back for another episode of Books and the Biz. As always, we find different interesting things to talk about, and this week is no different. In fact, I had shared an article with you about But the new fix to corporate culture is to fire all the bosses. God, I love this idea. Let's just fire all the people in charge and just let the inmates run the asylum. Is that the gist you got out of this?

[00:01:17.070] - Rich Veltre

Yeah, that's the gist of what I got out of this. It's a little bit of a scary thought, but yeah, that's what I got out of it.

[00:01:28.360] - Dan Paulson

Yeah, it's pretty It's going to be interesting that the way you're going to solve all your problems is by getting rid of that middle fluff, as it seems like the CEO is calling it, that we will remove all the middle management out of the way. And we will then put So basic concept is we're going to put the employees in different work teams for different projects that they're doing. And then once that project wraps up, that team would disband, and then another team would form out of the pieces of that. On the books, that sounds really good. And I'm just concerned if there's no guidance at all, is that going to work?

[00:02:11.140] - Rich Veltre

I don't know. I think somewhere in the article, somebody used the word anarchy. I think part of that struck me because I'm sitting there and I'm saying, the article talks about this is from Bayer Healthcare CEO. It's like he got together with a consultant and they came up with, well, this worked at a... Let me see, it was the Netherlands. It was a Netherlands home health care company. And I'm like, you're talking about comparing a home health care company in the Netherlands to bear global health care.

[00:02:45.530] - Dan Paulson

Well, whatever is good for them in Europe, it's got to be good for us here because it's all the same. We're all just people.

[00:02:52.840] - Rich Veltre

I mean, I don't know if that works. I'm always told it doesn't work. But But I think the strange part is, part of me is sitting there saying, you almost want to get it. You almost want to understand it because, yeah, okay, there's an awful lot of fluff And we always find it. We always find that these bigger companies, you wind up with a lot of fluff. And most of that comes from they hire before they really think about it. It's like, we have an initiative, and this is going to be the initiative, and I need 500 people. Yes. So what do they do? They hire 500 people.

[00:03:32.930] - Dan Paulson

Yeah. Even if they only need 100, they hire 500 because they assume there's going to be attrition. Yeah. So there's- And more must be better.

[00:03:40.980] - Rich Veltre

So in essence, I'm looking at this and I'm saying, okay, so if you were to go in and actually look at this and start to take out the 400 people that maybe you don't need, then I understand the concept, right? Because you can take some of that out. But I mean, they seem like they're not even sure how many. It's almost like this blatant, we're going to cut all of these people, and all the people that are left are going to be put into a new structure, a new leadership. I don't know, a new leadership thing. But you've taken all the leaders out. So who's teaching all of the new leaders to be leaders?

[00:04:22.130] - Dan Paulson

Exactly. And I think that therein lies the problem, because I agree with you. I think there's more often than not a lot of excess in corporations, because like we talked about, they do over hire. The problem is, it's not like a switch where you can say, okay, we're just going to take everybody out and everything's going to be fine. I don't know if you've ever been through any corporate downsizing. I was fortunate or unfortunate enough to participate in one after a merger acquisition between two large corporations. And there's a lot of uncertainty that follows when you do get rid of what you consider all the excess pretty much overnight. And that's where I guess I really struggle with it, because the people that are left over are trying to figure out where's their role in all this? What are they going to be responsible for? Who do they report to? What's the charge or the expectations? Because now you've eliminated a certain layer of communication or greatly decreased it. What's going to be left of the managers that are still there? Or are they going to have 20 work teams reporting to them and they've got to try and juggle all their objectives and make sure things work?

[00:05:36.810] - Dan Paulson

I don't know if that's going to be the case or not.

[00:05:39.890] - Rich Veltre

Yeah, I've been fortunate. I really have not lived through a major corporate downsizing. And now I work with more medium small size business up to 100 million, which is not really 100 % comparable to something like a bear health care. But the fact that the matter still remains, whether it's a small company or a big company. So you take a zero off of the numbers, and suddenly, they run very similar. Because really, only talking about one extra zero somewhere on the next level of company. So my big thing, though, is as you build that level of revenue and that level of operations, the The idea of not having a leader in there just brings me back to one place where we had a group that was 16 people on a team, which is about what Bear is talking about having on a team. When there's nobody in there telling them what to do, it's like taking 16 rowers in a crew boat, right? You put eight on either side. But if nobody says row at the same time, the boat goes in circles.

[00:06:57.170] - Dan Paulson

Right. Or if they get the boat going straight, the 80/20 rule applies. 20 % of the people are doing 80 % of the work. So you got the guys that are just paddling to beat the band. And you got some people that are just sitting there with the aura on their lap going, wow, this is fun. This is easy. Just keep chugging along. And then there's some people in the middle, and it's like, which way do I row again? Do I row on this side? Do I row on that side? Should I be pushing the other way or not? That's typically what you tend to see in any organization. Even if you have what I call fairly If you have good leadership or enough people, you still have the communication problem. I have yet to find an organization that has perfected communication from top to bottom. And this goes for companies that are a few people all the way up to hundreds of thousands. The issue only compounds itself over time.

[00:07:51.520] - Rich Veltre

Yeah. And the thing is, too, it seems to me like it goes back to a rudimentary set of experiences. My son is in high school, and he has to do a group project. And immediately I go, oh, God, another group project.

[00:08:06.260] - Dan Paulson

Because all everybody- Does that mean he has to in the group project, too?

[00:08:09.670] - Rich Veltre

So all they want to do is get on the best students team. You want to be on the best students team, because that person is not going to allow anything to drop. They're going to make sure that they get an A on that project, and you're just going to be... You can just ride along if you want to. And so So when I look at something like this, I say, okay, but you're taking all the leaders out, or potentially taking the leaders out. I mean, I hope you have something that you're designing that's going to be like, look, we're going to foster the next leaders, and those people are going to be able to step up and guide the team. Because look, you could row that crew boat. You could row that with 16 people, if only one of them sits there and says row, row, row. As long as somebody is keeping momentum going, they'll go in a straight line and they'll win the race. So I'm looking for that extra piece. And maybe that's the next article that has to come out. I don't know.

[00:09:12.050] - Dan Paulson

That's the one from the consultant that they hired to say, You really don't need middle management. Just cut them all out, which then should be a lesson. And be careful what consultants you hire, because you might just get stuck with what you got there. But it's one of One of those interesting things here where I think there's some good intention by it, because we've talked before on some of these episodes about creating autonomy amongst your team, allowing them to spread their wings and do things, in some cases make mistakes, but manage those mistakes. In essence, it almost sounds like in the article, that's what the CEO is trying to do. He's trying to empower the team to come together and solve the issues and have some critical involvement in producing successful outcomes. The challenge I always have with something like this is back to who's saying row, row, row. If you haven't established an organization that can function like this. It's not something where you can just walk away and hope it's all going to work out fine. Even when you do have some pretty good communicators, there's all these different layers that you got to get the message to, and then there's the whole accountability piece and whatnot.

[00:10:35.840] - Dan Paulson

So from an operations side, I can understand why you'd want to do this. I can also see where this is going to be a total cluster in the beginning until you figure it out. And it's true in many, especially large organizations like this, this might be the flavor of the month. We'll try this for a year. It'll fail miserably. And then the CEO will go on to make $10 million more, and the employees will be back to square one, and they'll rehire all the middle management back. So that, to me, is where I see from an operations side, maybe this ends up. Again, we have limited information based on the article, but I have a lot of questions on how this is going to work. I mean, from a financial side, and you can chime in here, I'm assuming part of the reason for doing this is this freeze up quite a bit of cash when you don't have to pay somebody, probably a company this size, probably a pretty good six-figure income to be there and guide these teams along.

[00:11:41.230] - Rich Veltre

Yeah, I think there's definitely a Be careful the profit motivator, right? Because it's a disguise. You cut all these costs. And is there severance involved? It's a lot more complicated than you assume that somewhere along the line, it does It doesn't benefit the company. It doesn't benefit anybody else, because if you lay off 20 % of your workers, you got 20,000 people hit in the unemployment line. So I think the other thing that is interesting is this is almost what I could call a do or die. And the article actually alludes to that. They don't use do or die. They use more elaborate Wall Street Journal terms. But essentially, they said this is either going to hit or it's going to miss. I mean, there's no gray area in what he's doing. He's basically got a plan that says either I'm going to knock it out of the park, or I'm going to strike out miserably, and I can't play anymore. It's over. And it alludes to it in the article, which I thought was pretty good reporting, actually, because nobody was fluffing this up. They basically said it's either you're going to win or you're going to lose.

[00:12:54.360] - Rich Veltre

That's it. This is a pretty big gamble, if you think about it.

[00:12:59.210] - Dan Paulson

This is a huge gamble. And we're not talking about, well, if this fails, it's a couple of hundred thousand dollars, and we'll regroup, and we'll do this all over again. We're talking about a multibillion dollar multinational company That could put itself on its heels and it really creates some issues here. And as you're talking about, I don't know how many staff they would be laying off or displacing as a result of taking the middle management out. But I would I have to think that's already a pretty significant number. I think it said in the article, bears about 100,000 employees, if I remember right, internationally? It was a high number. Well, could you imagine if that workforce gets cut by 40 %? Where do those people go? And typically this stuff never happens at the best time in the world. In other words, it frees up your future. But then where does your future take you? If we're seeing inflation and stuff climb, and we've talked And we talked about that in other shows, that's definitely going to affect your ability to get rehired. And if it's not successful, well, you don't have that to even hang on your resume that, hey, I participated in this experiment at Bear, and we knocked it out of the park, which is why I'm unemployed.

[00:14:18.190] - Dan Paulson

That's not what's going to be happening.

[00:14:22.220] - Rich Veltre

Yeah. And the other thing I think that scares me a bit is the fact that they mentioned that once this is implemented, They're going to have 5,000 to 6,000 self-directed teams in the organization. And I was just talking to a company recently that was actually their whole profit center, their whole offering, is to get control of the projects that you don't have control of. So in other words, they're designing systems to track what you can't track. So interestingly enough, they're going out to these bigger companies that have thousands of software development projects, of programming getting done, and there's no system to show people whether or not they're making progress. So this is where I get a little worried when you start talking about five or six thousand teams. Now you need a whole infrastructure infrastructure to replace the infrastructure you got rid of in order to track the six thousand projects that these people are working on.

[00:15:39.810] - Dan Paulson

So you're going to later on- What numbers do you have to spend to get something that tracks 5,000 to six and unique work teams.

[00:15:47.920] - Rich Veltre

Yeah. This isn't like, oh, I'm going to buy Asana tomorrow, and we're going to be all good. This is on a scale that's unprecedented in my eyes. You can't design a small business design system around tracking that global operation. You just can't do it. It just doesn't fit.

[00:16:09.050] - Dan Paulson

Well, and even if you... Okay, let's say you implement this system, say, we're going to monitor, use software to monitor what these 5,000 to 6,000 teams are doing. That's still 5,000 to 6,000 teams that somebody or a group of people are going to have to oversee the data. Just to understand how the data works, because the data is not going to reveal itself, per se. I mean, somebody's still got to be there to read it, even if it's AI and you get some interpretation of it, you still have to take that information and then go out and redirect the teams that are They're performing. That requires a body. I don't think we're going to send a robot out to do that yet. I could be wrong. Maybe bears figured out something we haven't. But bottom line is, pretty much every company still needs people, and those People are still getting the guidance from somebody.

[00:17:02.900] - Rich Veltre

Well, you probably know better than even me, anything that I've seen. But essentially this is a funnel, right? Right. I mean, what you're doing is taking out the middle of the funnel. So Does that mean that 6000 project reports are going to go to the CEO's desk because he doesn't have the funnel of people to go through and decide what's really important to get to his desk? Because essentially, that's what you wind up You're essentially saying, I don't need this middle management. So now my funnel is wider. So at the top, you're going to have more to do. Is that what your goal was? I don't know any CEOs who want more work on their product.

[00:17:44.940] - Dan Paulson

Especially that work. That's not going to work well for them.

[00:17:48.560] - Rich Veltre

I mean, to review data reports. It's not resonating clearly with me. And maybe, like I said, maybe it's because I'm missing the key piece in there.

[00:17:59.140] - Dan Paulson

It could be, but But I'm not seeing it either. And I'm seeing, okay, you've got 5,000 to 6,000 teams. What productively can one person oversee and still make sure those teams are efficient and are actually getting stuff done? And when you're talking about teams of the size that they're talking about, 5 to 6,000, you probably need one manager or project person overseeing no more than four to five teams. And I think that might even be a stretch depending upon the size of the teams and how complex the the issue each team is addressing. So you start adding those numbers back in. And of course, those people aren't going to want to work for free. You're going to have to pay them a good salary to oversee that because it's on them to make sure those teams are successful. Maybe the layer they're taking out is now just pushing that work up to the next layer of leadership in the organization. So we take out the supervisors or the directors and move that to the senior directors and the VPs. I don't know.

[00:19:03.640] - Rich Veltre

I don't know either. And unfortunately, I have to throw one more little thing in there that I read in the article and just smacked me right in the side of the head. He's talking about 5,000 to 6,000 teams, and they reshuffle them every 90 days. So I forgot about the reshuffling. It just hit me like, whoa, wait a minute. All this stuff we're talking about, and you start putting it together and you go, wait a minute. And then you're starting over every 90 days. Yes.

[00:19:31.140] - Dan Paulson

And that means your project is... You're signing that project is to be completed within 90 days. As you pointed out, teams take time to develop. So you're spending the first 2-3 weeks just getting things coordinated. You're spending the next 2-3 weeks working through the bugs of everyone working together. By then, you're almost halfway through the project and you haven't really even produced anything yet.

[00:19:58.410] - Rich Veltre

And then it's crazy. Go back to our rowing example, right? You get everybody rowing in the right direction and you're doing great. And it's like, oh, you know what? Pull over to the side.

[00:20:09.800] - Dan Paulson

You guys get out. These guys get in. Well, half of you get back in. The other half are going to be completely new. Start all over again. And now you got to relearn everything all over again with working with new people and whatnot. I don't think this is going to go the way they think this is going to go.

[00:20:25.580] - Rich Veltre

Yeah. I'm getting a little bit more scared every second goes by.

[00:20:31.450] - Dan Paulson

Well, I can't make any financial recommendations, but maybe look at where you're investing your money if you got stocks out there.

[00:20:42.400] - Rich Veltre

Yeah, agreed.

[00:20:43.750] - Dan Paulson

So from your perspective, as we wrap this up, what could you do differently here? Let's take a different approach on this. What could you do differently?

[00:20:54.570] - Rich Veltre

Well, I think if your key problem here is you've got too much middle management, I hate I need to say it, but I'm going back to the old 1980s and analyze who they are, and are they functioning properly? And make your cuts if you have to make cuts. I mean, their financials seem to indicate they need to make cuts. So if that's the case, and there's excess in the middle, take that out. I don't know that I'd jump right for a management structure change, or a leadership style change, whatever you want to call this, I don't think I would take a hit or miss attitude towards it. I think you want to try that in certain areas? Go ahead. I think that makes total sense. And at that point, you develop from the bottom up on a smaller strategy, and you build it into something that can be scalable throughout the organization. But I just think putting it out there like this, it's reckless. It almost feels reckless. And I hate to say that because I don't like criticizing I hope he hits it out of the park. And the reason I hope he hits it out of the park is for the 20,000 plus people he wants to lay off.

[00:22:10.350] - Dan Paulson

Yeah, I'm seeing what you're seeing here. If it were me in his shoes Like you said, do a sample group, test it out, work out the bugs, build the systems and the processes, determine what leadership involvement is needed and make that go. If it is a situation where you need to free up some cash, look for where those opportunities exist. Don't put everything on your high performers, but do look for where your low performers are at and start removing them first. I see where there could be some potential for good here. I just don't see the way they're going about it being as successful as they think it's going to be. So I would definitely really look for how do I develop that team, what's needed in Is 90 days the right window? I mean, it might be for a company of 50. For a company of 100,000, I'm not so confident about that. And also what's the directive? How do we ramp up those teams quickly and to be successful together? And then what's the wind down? What's the end game look like? So that way, as you're wrapping up that project, people are already start to gear themselves up for whatever that next team is going to be.

[00:23:27.960] - Dan Paulson

To me, that's really And the approach you have to take on here. If this is all happening in a matter of months, I just don't see where the teams are going to gel fast enough and the results are going to be produced. And they're going to end up with a big mess on their hands, which then requires more resources, more expense to just get back to normal again. So if you're already hurting financially, this could compound your issues within a matter of months.

[00:23:57.160] - Rich Veltre

Yeah.

[00:23:59.500] - Dan Paulson

Well, that was a good conversation, Rich. I think we'll have to do this on another subject. I got something else in mind for next week. But, yeah, it was real interesting to read on this. And thanks for pointing out some of those key issues that I had forgotten about as well. We'll have to watch this one and see how things change. But in the meantime, if somebody is wondering about their financial issues and they need somebody to help figure things out, how do they get a hold of you?

[00:24:29.940] - Rich Veltre

Our email is always the best, rveltre@veltregroup.com.

[00:24:34.750] - Dan Paulson

All right. And you can get a hold of me at danpaulsonletsgo.com. Rich, I think we should also get them to like, subscribe, share this content as much as possible. And we will do the same as we're logging out here. But until next week, enjoy your weekend.

[00:24:51.560] - Rich Veltre

All right. You as well.

[00:24:52.930] - Dan Paulson

All right. Talk to you soon.

[00:24:55.260] - Rich Veltre

All right. Take care.