February 16, 2023

Layoff Globally, Suffer Locally

Layoffs always suck (unless you are a shareholder), but these latest cuts are about to create new challenges for tech companies who have reduced headcount across the world but aren’t pulling out of regions. Here's the question; how does a company continue to run globally while consolidating locally?

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A spreadsheet bro explains his global cost-savings plan.

Consider this scenario: a US company massively reduced their employee footprint across Australia. It turns out, the place is super expensive. They have decided to run Australia out of Singapore – also super expensive. But one expensive place is cheaper than two. The spreadsheet bros who created these cost-reduction plans don't always take into account the challenges of managing international operations remotely. This includes cultural and working style differences, as two big examples. How does this impact the team? How about clients? These questions don't usually make it into the spreadsheet because simple cost reduction is sexy. These dudes haven’t been this fired up since Limp Bizkit played Woodstock ‘99.

Jokes aside, consolidation is the new global business calculation and it's not just this one company doing this.

And forgive me for saying the quiet part loud, but many of these layoffs are a prelude to moving more resources to places like the Philippines where the cost of living is nearly 70% lower than a place like Syndey. (Spreadsheet bro high-five!) My humble little team in Manila has seen a recent uptick of inquiries looking for support from the very companies doing these layoffs.

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2023 Q4 Earnings Call

The spreadsheet gang has already hit the bars and left the rest of us to handle this new fragmented team org chart.

So let’s talk about what it takes to effectively manage overseas teams. Because the people who do this well, will be positioned to lead globally in the future and help grow markets once the economy recovers.

Downsizing scares people. If you inherited a team from another country, it is likely they do not know you and therefore do not trust you. They also are likely to think that you do not understand their market. They are probably correct.

What are we to do in this fractured global environment?

I use this A.D.A.P.T. framework to help clients expand and sell into new markets, and I find that it can also be useful to create a plan to manage international teams. Here's how to get started:

Accept (or Analyze) – The best global managers I have ever met all have one thing in common. They do not try and fix an engine in mid-flight. In fact, they hate that expression. They don’t focus on moving forward, they accept that new teams and new markets are different, and they spend time analyzing why they are different. What that means is that rather than focus on numbers and goals right away, they focus on the people and place. (Check out the case study on Mr. Axel from my book) The two best ways to analyze a new (or foreign) market is through primary and secondary research. Secondary research includes using cross-cultural data to get a high-level understanding of how working styles vary across the globe. Do that quickly and then focus on primary research - most importantly, taking the time to speak with local employees, partners and customers to better understand the best practices needed to succeed in their home markets.

Diagnose –Using the market research, run any processes you currently use through a diagnostic to look for any areas that may cause misalignment. If you don’t find any misalignment, it’s highly likely you have missed something. Specifically consider how you communicate, build connections and rapport, schedule and run meetings and negotiation techniques. These all vary across regions. If this sounds like paranoia, congratulations, you are starting to get it.

Adjust– This is where specific changes to your working style get made. Consider working with local counterparts or regional experts as you make these adjustments. If you are on your own in a new market, pay close attention to the behaviours around you and find local friends and advisors to develop necessary messaging and communication changes.  

People – Clearly communicating these adjustments to all relevant people is critical. It’s all about the people. In fact, this newsletter could be one word. People. We all know this, but yet you are still reading and I am still writing. Oh well. Extra time should be included to communicate why any changes are being made. This is an excellent opportunity for teams to learn about foreign markets and how their business can continually localize and innovate.

Test – When managing overseas teams, things rarely go as planned. When dealing with regional and cultural variations there are always exceptions and misunderstandings and sometimes adjustments go wrong. Test everything and make a habit of re-testing systems and approaches every few months.

It seems that a lot of these consolidation plans have not been fully thought out, but this can be an opportunity to step up and lead teams the right way. So, let's do the best we can as we all jump into this new mosh pit of fragmented globalized business adventures.

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