Layoffs done the Nokia way

I’m always amused at how life in the corporate world resembles a Dilbert comic. In an example of life imitating art (or in this case, life imitating a hilarious comedy), Nokia shut down its Kirkland, Washington office in 2009. What followed was a textbook example of how not to do a layoff.

The first problem was the delivery and presentation of the news. Some of the people at our office (myself included), were suspicious of a last minute yet mandatory all hands meeting at an offsite location early in the morning with just a vague description about important strategic changes. The first half of the presentation ended up being a conference call. A high level manager called in and droned on in a deadpan monotone voice about big strategic changes with Nokia with respect to its web services. It was left (intentionally?) vague and dragged on far too long. The second half of the presentation was made by another high level executive, but at least this one was in the same room as us. However, he gave a nearly identical presentation to the previous speaker, and even went so far as to reuse some of the same slides.

Obviously at this point, people were getting annoyed and wanted him to cut to the chase. The speaker ignored one of my coworkers who stood up and said “Excuse me? Excuse me? This is ridiculous!” Finally, he presented us with a slide of all the Nokia office locations in North America. I asked, “Where’s Kirkland?” and the room erupted into laughter. They had fired everybody by showing us a slide of a map. We were no longer on it.

The speaker tried to lighten up the mood with some jokes. “At least you guys don’t have swine flu!” The awkward silence that followed was broken up when one of my coworkers pointed out: “Haha, yeah, because we don’t have medical insurance anymore!”

The whole situation was made more ridiculous by all the recent hires we had just made. One of the new team members had just relocated here from the Vancouver office, merely weeks before this happened! He had sold his house too. Another had recently relocated all the way from Finland. To put it lightly, all the recent hires were a bit annoyed at the situation.

The fact that the high level management could not coordinate with the lower level management and institute a hiring freeze showed a lack of leadership, a lack of basic consideration for employees, and an inability to execute. This was apparent prior to the layoff, when Nokia announced its move into web services and launched the Ovi brand. Nobody in the company really took ownership of Ovi, dictate exactly what it was or what it was supposed to represent, nor did anyone give a clear vision or strategy around it. Not to mention the millions of dollars Nokia spent setting up its Kirkland office, only to flush the money down the toilet less than 6 months after we had moved in to our new location.

The lack of common sense was apparent when they announced we would build a replacement product prototype. Even though the layoff was announced in April, many employees (myself included) would stay until the end of the year, helping ship a new (but related) service. What do you think a bunch of people who are told they won’t have jobs in a few months will do when asked to work on a new product? Well, we spent a lot of the time discussing interview questions, interviewing with other companies, playing poker, and doing the minimum amount of work needed to maintain professional integrity. In stark contrast, prior to the layoff, this same team had worked late on weekdays and came in on weekends in order to ship its last two sprints on time.

One of the things I’ve learned over the years is that its not productive to point out problems without at least offering some solutions. This is something I picked up from the Twango (the first startup company I ever worked for, and the one that Nokia acquired and then dismantled) founders. So here are some simple tips from me on how to correctly lay people off. Do I really think some high level executive is going to read this? No, not really, but I include this in here because I do believe in constructive criticism, and this entry wouldn’t be complete without it.

1. Keep the presentation short and simple. Nobody really cares about a company’s big strategic changes if they aren’t even sure about their future with the company. In a situation such as this, they are more worried about supporting their families and paying their bills. Something such as the following would suffice: “We are sorry, and there’s no easy way to say this, but we have to lay everybody off. Anyone who would like to stay and listen to the reasoning behind this decision may do so, but the rest are free to leave. HR will be following up with individuals shortly”. Don’t try to make any jokes, because the audience isn’t in a good mood.

2. Institute a hiring freeze as soon as the decision to do a layoff is made. In the case of Nokia, they had decided on shutting down the Kirkland office months in advance, so it was pretty inexcusable and inconsiderate that they kept hiring people from all around the world.

3. If you are going to keep some employees around for a few months, don’t delude yourself into thinking that a severance package is going to motivate them to do good work. See point 1. They are thinking about their families and how to best support them. Their main focus will be on finding new jobs, and the last thing on their minds will be helping the company that is going to terminate them in a few months. Keep them around in advisory roles and to do knowledge transfers, but nothing else.

4. Don’t try to squeeze as much as possible work from your employees before cutting them. Some of the more grizzled veterans pointed out that Nokia’s layoff mirrored that of other layoffs: The months preceding the layoff involved working long hours on a death match. So there’s two reasons why this is a bad idea. The first is that death marches are a bad idea. There’s already countless articles on this. Suffice to say, squeezing two to three months worth of work into one month means that corners will be cut, and not enough time will be devoted to design, implementation, and testing. The second is that now you have shipped something that wasn’t given enough time to bake, and now you have no one left to maintain it – you’ve gotten rid of them! The sad state of Ovi Share today is that a lot of its key functionality was cut out in the sprint in order to ship on time. The thinking was, “oh no problem, since we’re doing rapid iterations we’ll just do it in the next sprint!” Well, except no one had communicated to us that there wasn’t going to be a next sprint. What’s funnier is that today Ovi Share has gained millions more members, but the missing functionality has never been added back.

5. Make sure laying off people in your R&D division is the appropriate course of action. Layoffs are a part of life, but they are a short term solution to save some money. However, R&D is the backbone of any long term strategy. Without it, your products will become irrelevant, much like Nokia’s mobile phones today. I’d like to think our team was Kirkland was strong; we had lots of veterans with years of experience. As evidence of this, everyone found employment before or immediately after their termination date, despite the economy.

This botched layoff, in addition to being funny, is symptomatic of bigger problems within Nokia. I’m not surprised to find that today, Nokia’s stock has plummeted down to 8 dollars a share. While it still does have a dominant market share of the smart phone market in Europe, its hard to imagine how much longer this advantage of theirs will last (as today’s smart phones become tomorrow’s low end phones). With that said, I did enjoy my time at Nokia, and hope they can find the effective leadership required to turn things around. Any company that has had such a long and successful history, and the logistical ability to coordinate manufacturing and shipping millions of phones on a global scale is one that should be able to turn itself around.

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