Good-to-Great Organizations Do Not Rely on Lay-offs as a Strategy

Important words from Jim Collins in Good to Great:

The good-to-great leaders were rigorous, not ruthless, in people decisions. They did not rely on layoffs and restructuring as a primary strategy for improving performance. The comparison companies used layoffs to a much greater extent.

I’ve heard some people say that Jim Collins’ metaphor of “get the right people on the bus, and the wrong people off the bus” is advocating lay-offs as a central tool the managers strategy. That is an utter and complete misunderstanding. A careful reading of his chapter on “First Who, Then What” in Good to Great reveals the exact opposite. (Note: This misunderstanding does not just, or even mainly, reside with folks that are trigger-happy with layoffs; it also comes from sincere people that I’ve heard express concern about business ideas being wrongly used in the church. The great news here is that this is a misunderstanding of Jim Collins’ metaphor, and his teaching coheres with and upholds a biblical view.)

Further, and just as importantly, you need to correctly define who exactly are the people that need to be sent off the bus. It’s not people that are in a department you might be downsizing (which is a bad strategy most of the time in itself, but sometimes happens), for he says “If you sell off your problems, don’t sell off your best people.” (Translation: If you do have to close a department or division, keep the talented people who were working in that department, and are committed to the vision.)

The people you fling off the bus are the people that are not on board with the values of the organization. The people that are passionate for what the organization stands for are to be kept at all costs. You simply cannot have enough of such people.

Yet, so many organizations do the reverse. Their leaders see people, including those most passionate for the vision, as expendable based on how they as leaders are seeking to conceive of the strategy. They have failed to grasped Jim Collins’ core point: first who, then what. That is, you get the right people on the bus first (that is, the people who love the mission and values of the organization) and then, through an empowering management model (rather than top-down approach), you decide where to go.

Or, as John Wooden, one of the best coaches in history, had to say: you move from the people to the playsnot the reverse.

Lay-offs and top-down leadership are absolutely contrary to good to great management.

  • Nandor

    This assumes that in any restructure you keep people with the right skill sets (ie gifts) for what you are trying to achieve. Keeping someone just because they are committed and on fire for the organisation is not enough.

    • Matt Heerema

      If they didn’t have skill then what were they doing on the bus in the first place?

    • Matt Heerema

      He *does* articulate the need for “talented people who are committed to the vision.”