Halley Suitt And Mary Hodder Smack Down Glenn Kelman

I have commented recently on the newly-commonplace coldbloodedness that all the gung ho entrepreneurs and investors are spouting, where an eagerness to cut the throats of employees is now seen as a mandate from heaven and a civic virtue. As I twittered a few weeks ago:

[from 11:45 AM November 18, 2008 from web in reply to khartline]

@khartline I am sick of the macho 'shoot the stragglers' rhetoric the VC/CEO cult is chanting now, like there is virtue in coldbloodedness.

The indominable Halley Suitt takes exception to a recent post by Glenn Kelman, in which he has internalized the bloodthirsty self-congratulatory tone that is endemic in Silicon Valley these days -- 'hire slow, fire fast' -- while never mentioning taking a pay cut himself:

[from The First-Time CEO’s Recession Survival Guide by Glenn Helman, comment by Halley Suitt

CEO’s who earn 5x the salary of the guys they are firing should also figure out something about loyalty — the CEO should be the FIRST ONE to step up to the plate to take a cut in pay.

If you earn $250K annual and you’re going to show your board how macho you are by firing 5 people who earn $50K and not taking a pay cut yourself, you’re a jerk, and so are the people on your board — why not rethink it — save at least four of the best people by cutting your own salary to $50K and retaining your staff. The ROI in tough times by staff loyalty and your increased “good guy” reputation will be impressive. Be a mensch.

I don’t see much of THAT type of courage in Silicon Valley lately. All this bravado about cutting back and getting ready for hard times rarely includes the leader taking a hit … prove me wrong if this is not the case.

Another woman bucking the trend is Mary Hodder, who likewise jumped in on the guest post by Helman:

After you are a first time CEO (you can only be that once) you never look at employees the same way again. You may have had employees report to you before, but you weren’t in charge of all aspects of the company before the CEO position, as well as their livelyhoods.

People are relying on you to pay the bills, and make things stable enough that they can focus on their jobs.

I agree with Halley about CEOs having the courage to take a pay cut to retain people. When CEOs gloat publicly about laying people off as though they are doing something great for the company, I have the same reaction: did you take a pay cut, to help the company, the economy and your people along by being able to retain one or two of the staff you were going to lay off?

I find those announcements about layoffs by startups appalling because they don’t come with the CEO announcing his or her own paycut and explanation that they managed to keep one more person employed in a tough economy. There is balance and morality, where we need to staff as leanly as possible, but also think about how the economy grinds to a halt with high unemployment? For many of the startups that Techcrunch covers, who rely to some degree on ads/pageviews and consumer revenues to create their businesses, they are actually contributing to the economic problem when they lay people off.

Laying people off is not something to gloat about. It’s something to take seriously and show balance. morality and thoughtfulness for the company, the employees, and the economy going forward, as well as your own sacrifice.

To be fair to Helman, he never discusses a paycut, one way or the other. What Suitt and Hodder suggest is that before firing people, the CEO should look to make whatever cuts can be made -- in expenses, salaries, investments -- first.

There is a certain cavalier and MBAish attitude in tech -- and perhaps throughout American business as a whole -- where the senior execs are viewed as the stars of startups, and the engineers and other staff are considered dancers in the chorus line that can be swapped in and out like so many interchangeable pieces in an assembly line. Economy falters? Turn the dial down. Upturn in fortune? Turn the dial up.

What has been lost is the social contract between a business leader and the people that work for the business. Start-up CEOs believe that their primary social contract is with the investors, and maybe a small circle of founders. The other employees are treated like Aeron chairs or conference tchotchkes. A necessary expense; a means to an end.

A sharp downturn in the economy -- like crises in general -- can certainly bring people's core psychological beliefs out into the open. In the Valley, we are seeing a surge in social darwinist rhetoric, with the implicit message being that this new underclass -- those poor schlubs being laid off from panicked, cash poor start-ups -- have no one to blame but themselves. After all, they are picking the underperformers, right?

But the back story is the story. While the VCs and CEOs spin out interviews and panel sessions in which a sharp knife and a clean conscience read like a Greek morality play with the executives and investors as the heroes, the reality is much bigger. The gyrations of the managerial class -- and the efforts they take to deaden their feelings -- are just as much a tragedy as the outcome of their actions.