Gini Dietrich

Corporate Transparency: Communicating Changes

By: Gini Dietrich | August 17, 2009 | 
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zappos-culture

When the Zappos/Amazon deal went through on July 22, my friend Travis Dudfield asked my opinion on the communication to Zappos employees. I told him to let the media storm die down and I would write a blog post about it.

So here it is!

There was A LOT of criticism about how Tony Hsieh communicated the sale to his employees, beginning with the fact that he told everyone they still have their jobs and that he used email, video, and Twitter to spread the message.

I’m not there every day, and I don’t know what it is he is legally allowed to say, or what he’s not allowed to say, but I will tell you that in his letter (see it here) he is as transparent as he can be with an acquisition of this size. And using the social networks to spread the words goes to what he believes in and the core values of the company. So why would he do it any differently?

Let me tell you something that happened at Arment Dietrich at the beginning of this year. Before Thanksgiving last year, there were some insecurities among my colleagues that there might be lay-offs. The rumors were not warranted and I put the kibosh on them, telling all in a staff meeting that there were not going to be lay-offs.

But on Christmas Eve (Christmas EVE!), I received a certified letter from a client stating that, because of the ecomomy, they were terminating our contract effective immediately. Then, right after Christmas, but before the new year started, I received another letter in the overnight mail stating that our largest client was cutting their budget by 65 percent.

I got through the holidays without further incident, but went  back into the office right after the first of the year and knew something had to change or we wouldn’t be able to make payroll by the end of February.

So we laid off. We cut deeper than we probably needed to, but I wanted to be sure the business was in a position to survive any more cuts so we didn’t have to go through that again and so my colleagues could focus on the job at hand and not worry about lay-offs later in the year.

It was not fun. And I got a lot of flack for telling everyone before Thanksgiving that we weren’t going to have lay-offs. Some even called me a liar.

The fact of the matter is that, before Thanksgiving, I was transparent and honest and gave them all of the information I had at the time. No one considered I went through the entire holiday season knowing I was going to have to make a hard business choice after the new year because some of our clients were inconsiderate about the timing of their decisions (even though I understood they needed to happen before year’s end).

I didn’t lie. I didn’t withhold information. I was transparent with all of the information I had at the time.

So even though I’m not in Tony Hseih’s shoes, and my situation was not a major and public acquistion, based on what I know about him and the culture he’s built, the information provided in his communication is what he knows now and can legally tell his employees.

Will they lay off? Maybe.

Will the culture change? Maybe.

Will Tony, Fred, or Alfred leave? Maybe.

Did he share all of the information he could within legal boundaries, as soon as he could? I think he did.

About Gini Dietrich


Gini Dietrich is the founder and CEO of Arment Dietrich, an integrated marketing communications firm. She is the author of Spin Sucks, co-author of Marketing in the Round, and co-host of Inside PR. She also is the lead blogger at Spin Sucks and is the founder of Spin Sucks Pro.

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7 Comments on "Corporate Transparency: Communicating Changes"

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Brad Farris
7 years 5 days ago
Gini: I 100% agree with you. I was confused by the flack he got at the time, and thought he did a great job being transparent, but also complying with all the things his legal advisors were telling him. Being transparent means not just telling what it is (no layoffs) but also why. (I’m building a business and as long as our clients hang in there with us, I’m planning to take an earnings hit to continue growth, but if the revenue changes, up or down, we will have to react to that when it happens. Right now, I don’t… Read more »
Laura
7 years 5 days ago

Hi Gini- I enjoyed your post. Typically, people see the side of things they want to see – their side – and often disregard the other side of things. I think it’s just human nature. But if we all tried to do that a little bit more, things would be smoother.

Molly Fulton
Molly Fulton
7 years 5 days ago

Great post, Gini.Going through a somewhat turbulent and uncertain time at work myself, I totally get this dilemma. It brings to mind some trite but true sayings like: “Hindsight is 20/20” and “When you know better, you do better”. The desire for transparency is often tempered with uncertainty and the desire not to be either alarming or careless. A tough balancing act indeed!

Kendall
Kendall
7 years 5 days ago
I love transparency but would hardly call this an example of transparency! Honesty about firing, executive moves, etc are non restricted by any law. What I find totally disingenuous is that EVERY company I have worked for in an acquisition says the same nonsense even while they all know privately what is going down. It is uncanny how often that is the case. I have assisted or drafted docs for 20+ acquisitions and this sort of release was drafted for each of them. So yes, when someone comes out and does not even ACKNOWLEDGE that changes WILL happen, it feels… Read more »
Lorri Wyndham
7 years 5 days ago

I think that Tony Hseih handled it well, in a one thing at a time way. I wrote my thoughts on the topic here http://www.p29consulting.com/augustnl.htm

Dave Van de Walle
7 years 5 days ago
I once worked for a guy who took over our department and said, in as many words: “There will be turbulence. We will also work together to get through the turbulence. That’s what I know right now.” He set the bar at the right height; not too low nor too high. Turbulence was probably the right word, too — he had access to all the instruments, altimeters, cabin pressure, etc. Unless the plane was going down and we needed to brace for a crash, we’ll never know how bad or good it was at the front of the cabin. So… Read more »
Heidi Goldstein-Sidley
6 years 11 months ago
Gini,The following was reprinted by Vistage around that same time in 2008. As many members were either initiating or contemplating layoffs . While I don’t agree with every detail I think it gives a broad roadmap to follow. We were in your very shoes and we followed most of this advice and our layoffs in january went as best as they could have. The important things to remember are: • Everyone is affected… those who are laid off & those who remain, • Plan & script, • Over communicate. The following is the reprint. ___________________________________________________________ I have been involved in… Read more »
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