InformationWeek

February 28, 2000

Secret CIO:
Not Just Any Branch Office
Closing one of our oldest offices has had a greater impact than other closings, where I didn't know the people involved as well

By Herbert W. Lovelace

Herbert W. Lovelace ike most large companies, we have factories in different locations as well as various branch offices to serve our customers. Over the years, we've expanded and contracted these facilities to meet the changing requirements of our business.

It's fun when we're in the expansion mode: Opening a site and hiring new people gives us the feeling that we're the masters of all we survey. The other side of the coin isn't so pleasant. In the years I've been employed here, several of our manufacturing locations have been scaled back and a few have been sold to other companies.

When that has occurred, those of us in corporate headquarters have been somber and respectful of the departed--but since we knew few of them personally, I suppose we reacted as we would to an earthquake in a distant country. We were saddened and distressed for a while, but quickly returned to our daily tasks. Thus, what happened recently wasn't a unique event for us, but it had a very different impact.

Phil Whitestone, our CEO and my boss, has been concerned about our earnings for quite some time. The country is in an economic boom, but our profits--and stock price--haven't kept pace with the good times rolling across the nation. Phil is not a happy camper, especially since he's very sensitive to any comparison to his predecessor as CEO, the man who grew the business mightily and whom we all called Mr. Big for his magnetic personality and business acumen.

Therefore, it came as a shock to us to learn that Phil's latest task force had recommended the closing of one of our oldest branch offices--the one in which Mr. Big started and the one that we viewed as embodying the spirit and ideals of the company. We assumed that Phil would veto the idea. Those of us who have access to the company's detailed financial reports know that the profit contribution of that branch had slipped in the past few years, but was still respectable. More important, though, the branch exemplified the pride and heritage of the company. People at that branch lived and breathed the company and its values. Frequently, we would ask one of them to hop on a plane to help out a lagging office, or simply to make a speech about what the company meant to their community. Often, when sales were down in another unit, a quick tour of the branch was arranged to show how to drum up business.

The final announcement of the closing was brief, but full of the appropriate words expressing appreciation for the contribution made to the company by the branch office. Several sentences were devoted to explaining what would be done to help the former employees through their career transitions, and it was hinted that a generous severance package was available to all affected. A few fortunate ones were offered relocation to another of our facilities. For those who were not, other employment will not be easy to find; the branch's hometown is small and closely knit. For all of them, family lives will be disrupted.

I've learned a few things by watching--and feeling--the pain over this closing. I'm hurt by it. I know and have worked with many of the people who are affected. They are decent human beings who gave a great deal of themselves to the company. They shared with me over the years many of their dreams and aspirations--goals that, for the most part, will not come to pass. I've also learned that this closing has affected me much more than any of the others in which I did not know the people as well. For that, I am somewhat ashamed.

I recognize that companies have to save money. It's not easy to live in a world in which customers demand outstanding service at the lowest possible price and stockholders expect the highest possible return on their investments. What really bothers me is the pain suffered by decent people to achieve these goals. It's hard to accept this level of disruption for an amount that will be lost in the rounding of the numbers in our next quarterly earnings statement.

Herbert W. Lovelace shares his experiences (changing most names, including his own, to protect the guilty) as CIO of a multibillion-dollar international company. Send him E-mail at lovelace@home.com, and read his online column, "Ask The Secret CIO", where he will provide real--and sometimes whimsical--answers to your questions.

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