Ben Horowitz: Layoffs, promotions, and job transfers

Original author: Ben Horowitz
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Stanford course CS183B: How to start a startup . Started in 2012 under the leadership of Peter Thiel. In the fall of 2014, a new series of lectures by leading entrepreneurs and experts of Y Combinator took place:


First part of the course

Ben Horowitz: When Sam first sent me a letter asking for this lesson, he wrote: “Ben, could you give a 50-minute management lecture?” I immediately thought: “Here you go, I just wrote a 300-page management book . It turns out that my book was too long. "

I didn’t have time to reduce the material by 300 pages so that I could tell it in 50 minutes. As Mark Twain said, "I did not have time to write a good short letter, so I will write a long one." But for that matter, I will explain only one of the concepts of management.



I notice that CEOs most often have problems understanding this particular concept, starting from the moment when their company is still small and ending with the stage when their company becomes truly large. In theory, it [the concept] is very simple, but succeeding in its implementation is not easy. This concept was well reflected in their song Sly and the Family Stone: “Sometimes I'm right, but sometimes I'm not. All that I believe in is in this song. ”

This is an audio version of today's lecture, so those with a very subtle musical taste can leave right now.



When you make some serious decision, you need to fully understand how people will interpret your actions. You need to evaluate your decision, not only from your point of view or from the point of view of the person with whom you are discussing it, but also from the position of all other people who are currently not near you. In other words, when making important decisions, you should be able to evaluate them from the perspective of the company as a whole. It is necessary to analyze the point of view of each employee and then take it into account when forming your own. Otherwise, your decisions will have not very useful “side effects” and potentially dangerous consequences. All this is not easy to implement, because during the decision you are under tremendous pressure.

The lecture plan will be as follows: we will consider four situations with you. First, I will talk about demotion, which causes great anxiety. Then we will discuss promotions that are also associated with strong feelings [ in this translation, only these two cases will be considered, the rest will come out in part 2 - approx. transl.]. After that, we will analyze one of Sam's blog posts - I did not warn him about this. I decided to make him a little nervous for inviting me to give such a short lecture after I wrote a whole book about it.

Then I will tell you about the person who best applied the science of management in practice the best in history. I wear a t-shirtwith his image as a tribute to him. We will discuss how he managed to do something that no one could have done before or after [ In a nutshell: François-Dominic Toussin-Luverture led the only successful slave uprising in human history, culminating in their victory and the creation of an independent state of Haiti (true , in its original form, the state did not last long) - approx. transl.]. He was fluent in the technique that I will talk about in this lecture.


Demote or fire


So, here is the first situation that we will analyze: you have a sales director, and the question arises, reduce it or dismiss it. This example is based on a real situation that happened when I worked with one CEO. In general, the situation was as follows: he hired an excellent sales director, who began to work harder than anyone else in the company and carry out everything that was required of him. Everyone liked him, because he worked hard and was generally not a stupid person, but some tasks were too tough for him. He did not have enough knowledge and skills to carry out what the company required of him and simply cope with the competition from other employees. Thus, the executive director could not leave him in this position, despite the fact that the person was an excellent employee. The question is whether to fire this person, or simply demote him, after which he will be subordinate to someone else. The second option sounds good. Let's look at how you make such a decision.

In this case, you are in the role of executive director. This situation turns out to be really difficult if an employee comes to work every day at six in the morning, works until ten in the evening, and at the same time tries the most in the company. In this case, it is very difficult to say: “Well, I'm very sorry. You tried very well, but for your efforts you do not get a rating of "excellent". You get "bad" because I'm firing you. "

No one wants such a conversation. Demotion in this case seems correct from the point of view of the executive director, as the employee may remain in the company. After all, he tried so hard. He is a great example of a truly dedicated worker. He also has many friends in the company, so from the point of view of corporate culture, such a decision will in any case be successful, since the person retains work. After that, I can hire someone who will solve my problem, but I do not need to create additional difficulties.

Here's what the sales director might think of this: “I don't want to be demoted, but I want to be fired even less because it will be much harder to explain to my next employer. If you look at it from the other side, they didn’t even lower me - I just got a new job a little lower rank. "

And the last thing that gives such a solution: employees feel that the company appreciates them all. The management brought them to the company, concluded an agreement with them and made it possible to develop together with the company. In this vein, we had a conversation with that CEO. And I told him: “Wait a second. Let me find out this: what share in the company's earnings can this sales director claim? ” He asks me: “What do you mean?” I answer him: “I would like to know the specific meaning. Does he own a stake at the vice president level? Does he own a share of 1.5% or 0.4%? ”

This made the director think. Then he replied: "The share of this person in the company is diluted to 1.5%." And to this I answer him: “Good. Imagine that you work as an engineer in your company. How would you feel about the person who used to be the head of the sales department and owned a 1.5 percent share? How much do your engineers get - 0.1% -0.2% of the company's profit? And how after that they will relate to a person who is no longer the head of the sales department and at the same time owns 1.5%? ” Then he said: “Nuuuu ...” To which I replied: “That's it. How honest is that? Are you going to reduce his share in the company? Are you ready to go for it? What do you think, how productively will it work after that? Finally, will employees respect him even after his demotion? ” After all, they knew him as a person with a high status, and now they’ve lowered him. Another employee will tell him: “I knew you when you were the head of the sales department, and now you became a regional manager and after that you will tell me what the hell to do? Are you saying that I have to call this and that? It seemed to me, or have you been demoted? Who are you to point me? I am a promising specialist and I will become the next head of the company's sales department. ”



All these points matter. At first glance, it might seem that you are solving a problem with one person, that you are dropping or firing only one employee. You wonder how everything will affect this person.

However, in reality you decide how to relate to those who can not perform their work efficiently.

In this case, we are talking about the highest paid job in the company in terms of employee share in corporate profit. Then the question arises, what is required to maintain this share? Is it enough to just try or is it necessary to achieve some kind of result? In different situations, the answer will be different. It may be a person who was not immediately hired from another company to the position of sales director, a person whom you have promoted in the past - then he may simply not be paid the theoretical share. In this case, you are likely to make a different decision, however, you should understand how it will affect all employees, and not just the person whose position in the company is currently being discussed.

What to do with a request for promotion?


Second example: an excellent employee asks you for a promotion. He is an excellent worker, not the same as in the previous example. The first thing that comes to your mind is that he is really good and asks for a raise for a reason. He asks about it because he thinks that he deserves a promotion, and at the same time you don’t want to lose an employee. He worked well, and you want to be fair to him. Are you sure that if you give a raise to this person, then everyone will be grateful to you, and things will go uphill. Great, so be it!

As a leader, you understand what you would like to do when someone asks for a promotion. But what if you look at it from the side of the employee? How does he feel about promotion? You must understand how employees come to the decision to ask you for a promotion. It does not happen that they woke up one morning and suddenly decided to ask to raise them. People think about such things for a very long time. They compare different options. They may also be offered from other companies. Perhaps they have been discussing this with their spouse for a long time. This is a very important step. If you give them a raise, then most likely they will be very happy. It may, of course, happen that they will be suspicious of this. But this is unlikely. In most cases, they will behave like this :



For those not in the know, it's Bobby Shmurda and Rowdy Rebel doing Shmoney Dance . This is exactly the reaction you get. And there will be many more situations when you can, for example, say: “Do you know that my employees read Cheryl ’s book ? They really “accepted the challenge,” as she writes in her book, and I want to reward them for their work. ”

Do not get me wrong, I do not criticize Cheryl - a lot of useful things can be learned from her book. However, you should consider how employees who have not asked for a raise will feel. Perhaps they did their job better than the employees who asked for a promotion, and they reflect as follows: “Good. Therefore, I did not ask for a raise and did not receive it, but these people asked and received. What does this mean? ” Firstly, this means that you are biased in assessing the merits of employees. You simply give a raise to the first person to ask for it. They think: "So, I should either ask for a promotion, although this is unusual for me - I just do my job - or I need to quit and get a job in a company that objectively evaluates good work." This way you can upset a person a lot, who did not receive a promotion. Do not think that when one walks around the office while dancing and singing, the rest will not notice it.

They will be beside themselves because of this increase. You can give the employee an increase in full confidentiality, but still it will become known to everyone.

The team will conclude that each employee now has a responsibility to his family to ask for a promotion, because if he does not, he will lose the competition. You can ask any executive director with extensive experience, and he will tell you that this is true. If you give out promotions to those who just asked for it, as a result, a whole crowd of employees will start asking you about the same. So you show how employees need to behave.

What to do in this situation?

The correct answer is to follow the formalities to preserve the corporate culture.

And I know that this causes disgust among start-up people: “I don’t want to follow a lot of formalities and don’t want to create a lot of special procedures. I want everything to be natural. We will do yoga and smoke only organic "weed." Sorry, that would, of course, be argued by Peter Thiel. Most recently, Peter took very seriously the question of who smokes the grass.

However, following formal procedures maintains the integrity of the corporate culture. This means that you intend to analyze all the information. “From now on, we are introducing a special procedure for those who want to be promoted: the employee needs to come and talk with me. I will not give you a raise right away, but I will be glad to hear your story. I will talk with all the employees you work with to understand what I should do best. I will appreciate all the work you have done according to my specific criteria. I will do this from time to time, but not every day. The most common is once every six months, or perhaps once every four months. At the end of this procedure, I will say what increase awaits you - that is, whether you get it at all or not. But I'm not going to move away from the formal procedure and I'm not going to give a raise right away, as soon as they asked me about him. There is a certain order, and that’s all. ”

When I was the executive director, and unit directors were in my subordination, I realized this thing: the higher you go up the career ladder, the more difficult it is to make such decisions, because the people you work with become more assertive. Being the head of a department often has to be very assertive, as is usually the case in most companies when people rise to this level. I talk with them in this vein: “Listen, you can argue with me as much as you like after the procedure is complete and after I give you a raise, but you know what? I will not hear what you say. I have already finished the process. I analyzed your arguments, and the arguments of other employees. I run a company with a lot of people, and you get what I think will be right for you. ”

Having a specific procedure makes workers more relaxed, so they don’t have to worry about whether they ask for the promotion they deserve, or whether they were simply refused the way they look. A person may not be too pleasant in communication, and not be a member of your golf club, and generally not behave the way you would like. But he does not need to worry about this because the employee knows the formal procedure. You will analyze the work of all employees, and then give him what he deserves. This is a more effective way to solve this problem, and it takes into account the opinion of all employees, and not just the person who came to discuss his promotion with you. Announcement: You can familiarize yourself with the continuation of Ben’s lecture in the coming days, and today



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