Time Capsule: Cerner Layoffs In Review: Why Marching People Out Makes Sense, But Sickouts Don’t

I wrote weekly editorials for a boutique industry newsletter for several years, anxious for both audience and income. I learned a lot about coming up with ideas for the weekly grind, trying to be simultaneously opinionated and entertaining in a few hundred words, and not sleeping much because I was working all the time. They’re fun to read as a look back at what was important then (and often still important now).

I wrote this piece in January 2008.

Cerner Layoffs In Review: Why Marching People Out Makes Sense, But Sickouts Don’t
By Mr. HIStalk

Cerner laid off a bunch of people last week. Since I’m a typical 401K investor (not in Cerner stock) but also a wage slave, I can’t decide whether I’m a bourgeois capitalist pig or an oppressed member of the unpropertied proletariat. So, I’m waffling on how I feel about it.

It was only 97 people out of 7,800 employees worldwide (sorry, “associates” as Cerner calls them, although that feel-good term rings a bit hollow after hearing them admit to canning a bunch). That’s just over one percent of the workforce, probably a few weeks’ worth of resignations. Rumors put the real number much higher, and I believe them since I’m a conspiracy theorist when it comes to big corporations.

On the other hand, Cerner came clean by announcing it voluntarily. Antsy investors smelling “growth slowdown” leapt from their Google Alerts to their online brokerage accounts to dump the stock, sending share prices down eight percent. It wasn’t quite as bad as the aftermath of Neal Patterson’s infamous “tick, tock” e-mail of 2001, which dropped CERN nearly 25 percent, but was the opposite reaction than you might have expected given that shareholders usually love cost-cutting announcements.

Here are the gripes I’ve heard from current and former associates:

• Cerner marched the former employees out after giving them news. Of course they did, and rightly so. How many workplace killings involve separated employees who seemed normal until they cracked? There’s no way to forcefully end the employer-employee relationship that doesn’t involve loss of dignity. March them out while they’re still in the first stage (denial) before they hit the second (anger). It’s cold, but responsible.
• Cerner targeted management and older workers. Layoffs are about bang for the buck, which means going after expensive and often marginally value-adding middle management. Lots of those folks are mid- to late-career. Voluntary demotions take too much time and energy. It’s easier to cut the cord. Cerner is smart enough to have had HR test the list to make sure federal discrimination laws weren’t broken.
• The Chief People Officer betrayed employees. Only the hopelessly naïve would mistake an HR person to be an employee advocate. Cerner is guilty of using the trendy, stupid, and overly chummy Chief People Officer title that may have misled some slow learners, but make no mistake: the CPO is a top-ranking company executive, not a friend of the working man or woman. Workers, by definition, are oppressed to some degree.
• Management kept people who were well-connected, including obvious incompetents, while marching out good employees. Painting targets on backs is an inexact science. Managers are told how many casualties to create and then quickly make a list. Fairness isn’t guaranteed, even when it’s sought.
• The company was hiring at the same time it was marching people out. Companies want quick contributors, which means hiring for very specific experience (which is probably how most employees got their jobs in the first place). That’s sad, but reality. The door revolves.
• Unaffected employees should have a protest sickout to bring Cerner to its senses. That seems rather stupid given that the company just axed a bunch of people. Those paper tigers are just as terrified of losing their Cerner paychecks as those laid off were. An effective protest would be to leave Cerner and go to work for a competitor.
• Clueless VPs who are exactly like Dilbert’s point-haired boss are the problem. No news there.
• Customers will rise in protest at the cuts. That’s a comforting myth often expressed by those canned as they huddle in awkward and temporary support groups. It never happens, but the thought keeps people sane until they finally realize that they aren’t going to be returning to Cerner and should instead look for wonderful opportunities that will make them glad they got axed (which for some strange reason is often exactly what happens.)

Personally, I’m blaming Meditech. They’ve dominated the industry for 40 years by hiring cheap, obedient new grads and giving them skills with minimal market value elsewhere. More directly related to Cerner, Epic Systems does the same thing. Cerner is getting heavy competition from both, so that strategy appears to be working.

Perhaps Cerner is simply rebalancing its people portfolio to allow it to compete effectively, shooting for some predetermined kids-to-gray-hairs ratio that seems to work elsewhere. As a bourgeois capitalist pig, I don’t blame them, as painful as it unfortunately is to those affected.