Are Cisco Employees Valued, or Just Casualties of Management Missteps?

Cisco Executive Briefing CenterLast Monday evening, as I was passing Cisco Systems headquarters on West Tasman Drive in San Jose, I knew something was up by the presence of three TV news vans with their antennas fully extended. A little while later, I heard on the radio that Cisco was laying off of 5,000 employees (of an approximate 70,700 population).

I and others in the Silicon Valley have known Cisco has been in trouble for a while. Competitors have been eating into its traditional networking equipment market. Cisco’s attempt to diversify into the data center server business has been surprising, especially given the commoditization of Intel-based servers. Many here in the business and tech community thought that this was a serious business mistake, especially in a depressed economy and where margins have been ever-shrinking.

While I wasn’t surprised to hear about the layoffs, I was surprised to hear of so many employees being cut at once. Then Tuesday’s New York Times contained even more unexpected news:  Cisco’s layoff would hit not 5,000, but 7,000 employees and another 3,000 who’d take early retirement, all by the end of August. That’s approximately 14 percent of the company’s employees.

I guess Cisco management is having a hard time making up its mind -– do we cut 5,000 or 10,000 employees? I wonder if the numbers have any relationship to their bonuses.

It’s distressing to see employees laid off because of the business missteps made by those few in control of a company. For those affected, the impact on their lives and self esteem will be felt for many years. The impact to the community and economy could be devastating for much longer.

How a layoff is conducted can say a lot about a company, whether it will make it in the long term, and if it really does value its workforce. Let’s see what happens with Cisco. Will the laid off employees be offered any retraining or employment counseling benefits? Will it cover any medical benefits or will they be tossed over to COBRA?

My advice to Cisco’s remaining employees: Watch how the company treats your friends and soon-to-be-former colleagues. This will tell you whether or not you’re valued as a member of the organization.

Companies have a responsibility not just to their investors, but to their employees, business partners and community. If it’s honest and truly values its employees, they partner and work together.  If it’s deceptive and treats employees poorly, you part ways. When dealing with the company, the same dynamic should be considered by vendors, suppliers, creditors and customers, since  as it reflects on the organization’s integrity, reputation and goodwill.

So the question: How will Cisco deal with the layoff of so many “valued” employees? Will Cisco management continue as before, or will there also be an adjustment in the direction of the Company? The answers will be telling.

Note:  The author owns shares of stock in Cisco Systems, Inc.

Comments

  1. BY Mike says:

    I wonder how many of those who were jettisoned could have been saved if the folk at the top took a pay cut? Oh, I know that’s crazy talk but still, a few 50k/year jobs can be saved if folk at the top, making millions of $/year in salary, bonuses and such are willing to tighten their personal belts.

  2. BY bill says:

    cisco doesn’t care about their soon ex-employees because they are actively hiring H1B workers from India. These people are darn right callus and evil. On top of that they took a perfectly good business and totally trashed it.

    • BY R. Emmett O'Ryan says:

      Bill,

      Thank you for your comments.

      If you believe that Cisco is indeed hiring H1B VISA workers as replacements for those permanent employees who are being laid off and you have proof, I would recommend that you contact the California State Employment Development Dept. (EDD) in Sacramento and let them know of your concerns. Their website is http://www.edd.ca.gov . I am very sure that they would be interested in this or any misuse of H1B VISA workers. Sanctions from Cal EDD can be very severe.

      As for how they are running the business, I do question their business plan and the results. Cisco does not seem to have a good long term strategy – at least not what I’ve seen so far.

      Thank you,

      Emmett

      • BY Mike says:

        Many businesses lack a (good,) long-term strategy; they have a short term strategy called “maximize shareholder value”. Strategy never extends beyond the next quarter, meeting the projected numbers, and showing an increase in revenue and profits. Long term viability? LOL.

    • BY Mohit B says:

      Hi Bill,

      I’m Indian and have had worked with several IT companies. Ur perception here is bit incorrect. You certainly call blame Indian for this. I’ve had seen thousands of people been replaced by big organizations in there country and at times such steps make impact on us as well.

      There is no personal malice but trust me its all companies over night policies. Big companies kink there own polices and people in there own way and later people like us suffers.

      I do understand your concern but peculiarly calling Indian people as culprit is not at all good!
      All I can advise is this – Don’t just rely on job, these days its essential for all of us to have a side business.

      let me know if you are interested to start any venture? India have huge requirement of Network and IT support and they are investing ample amount of money in it. Your vital knowledge on networks and my skills together can help us to stand strong next to Cisco one day!

      Give a thought to it.

      Mohit

      • BY Jon Greaves says:

        I don’t agree with you, I think there is an impact of H1B visas on the employment of American qualified IT professionals. Another report I saw today is about Indian IT workers coming to US on B1 visas (business visas) and working for companies anywhere from 3 to 6 months and then transferring that job to the next person creating a chain of illegal employees. US consulate in India are aware of this problem and they are trying to screen people who are trying to break the law. These days Linkedin.com is full of people who want to sponsor H!B folks when the unemployment is in double digit. Would Indian allow us to work in their country at the market rate?

      • BY Mohit B says:

        Hi Jon,
        Why not, you surely can work in India! Currently im working with people from Europe and US they’ve valid visas to work here for a year or 2 and later their contract can be renewed.

        They’re drawing good money but would like to highlight that Indian market and people are demanding. we all face pressure in every office and same is here as well, so better to be candid on this.

        But it would we prudent to check the orgz roots, as there are couple of crook around who make innocent people their victim.

        Im from Delhi which is capital of India its safe and secure place for all to work.
        Drop me a line and let me know what are your key competencies.

        I know there is bleak sign in US IT market but again begin as a Indian I’m ready to extend my arms to help you in all better ways.

        Regards,
        Mohit B

  3. BY Kris says:

    I know lot of people who we were hired in cisco and I will not rate them very high. What is even worse Is company promotion is not perf based. Very political place. The moral for is low for many years. I feel sorry for some good guys that will lose job. Mostly the good ex employee will find better job and will be glad that they are out. Cisco is not the way it used to be.

  4. BY Lariti says:

    If only it were so simple. When a company is in financial distress, its ability to deal with the costs of reducing the costs associated with layoffs obviously depends on the overall financial resources of the company. I have no idea how leveraged Cisco is right now, and certainly there is many a company that loses ground because of the ineptitude of its management. My understanding of the Cisco situation is that employees are being offered some severance, though I haven’t seen details.

    I do agree that there are many measures that a company can take vis a vis their employees when facing the types of problems Cisco currently faces – but whether or not it does is also often governed by the type of company – public or private. Cisco, as a public company, is bound to optimize shareholder value, or its management will definitely run afoul of its rights and responsibilities. If that means downsizing without benefit of providing severance to employees, they will need to explain their actions. In the private sector there are no mandates for employer behavior; we allow companies to judge for themselves how far they need to go with employees. Progressive companies try to soften the blow of layoffs with severance, even if minimal, since they may have to hire people back. it’s good business to offer a hand instead of a boot when showing someone the door. But it’s not always possible.

    It’s never great to be on the losing end of a layoff, but it’s also not accurate to state that every layoff means a company doesn’t know how to treat its customers, whether employees, vendors, creditors, or other suppliers.

    And a 1% layoff is serious for those individuals affected – but if that’s what Cisco needs to do to start turning itself around, so that it can reenter growth mode, well, that’s capitalism, like it or not.

    Some of the jobs are in its Mexican affiliate, which is being sold to Foxconn, so China wins there, but the reality is that Cisco will remain a large and important employer.

    The bigger issue is demand – without more sustained demand for its products (and we’re in almost no-growth mode in this country, so how can that demand be there), it’s amazing that the cuts weren’t deeper. I for one, would expect that larger cuts will follow if the business climate doesn’t improve within the next six months.

    • BY R. Emmett O'Ryan says:

      Hi Lariti,

      Thank you for your comments. You make some good points.

      In your comment, “it’s also not accurate to state that every layoff means a company doesn’t know how to treat its customers, whether employees, vendors, creditors, or other suppliers,” I don’t think this is the message I was trying to convey. The fact that a company does a layoff does not mean that it is a “bad company.”

      What I was saying is that HOW a company deals with its employees during a layoff should be a factor considered when dealing with this same company in the future as it shows the character and integrity of the organization. Many of us in the tech world and in business like doing business with organizations that show respect for their current customers, employees, etc. If this is not a priority, then obviously how they treat one shows how they may treat another.

      As for Cisco management, they have made a number of classic business missteps. How they recover from this and again how they deal with the upcoming layoffs will speak volumes to those of us in the tech world and the business world.

      As a recommendation to Cisco management right now, if you are planning on doing layoffs next month, for California employees, I would recommend that you quickly file the California EDD Worker Adjustment and Retraining Notification (WARN) paperwork. You do not want Cal EDD after you. In that state of California, WARN is required of both private and public companies.

      Thank you,

      Emmett

    • BY R. Emmett O'Ryan says:

      Hi Lariti,

      I re-read your note, you say “a 1% layoff is serious for those individuals affected.” When last I heard or read, Cisco’s announcement was a 14% percent reduction (from layoffs and retirement) of employees.

      Has Cisco management again changed their mind – AGAIN? Or should retake high school algebra?

      Thank you,

      Emmett

  5. BY a99weeker says:

    A once wise old man stated on a company intranet site (for all of a couple of minutes before being removed)…. Our focus is:

    - Shareholder Value
    - Customer Satisfaction
    - Employee Retention

    Now, looking at this “biz model”, I can only come the realization it is very backward. Why? To have shareholder value a company must have satisfied customers. To have satisfied customers a company must retain its employees who make the products. To retain the employees, a company MUST make them #1. For without employees a company does not have a product to sell to customers who do not part with their hard earned monies to make a company look solid to potential investors.

    • BY R. Emmett O'Ryan says:

      Hi,

      Impressive points. The “once wise old man” sounds like he has characteristics of “old, bold programmers” I have known over the years.

      Thank you,

      Emmett

    • BY Joe says:

      I used to work with a company that has exactly the same order of priority. Fortunately I am out. The company will still go ok – there are always some employees who don’t or cannot mind being exploited

  6. BY Athena says:

    Having worked at Cisco in a very cross-functional role, Cisco is very top-heavy, has extreme political pressure among the robust Sr Manager ranks, is very dependant on interns and contractors for innovation and all other forms of process improvement. Engineering is top-notch however the churn rate of engineers coming on-board solely for training and certifications(especially Indian engineers) is >50%. Indian engineers are obviously more entrepreneurial compared to the loyal job security loving American types. The center of gravity for the existing problems in my opinion are the excess communications which is 80% erroroneous miscommunication. This miscommunication is directly transferred into the data which I will add later. Add 40 hour weeks of solely redundant meetings on top of an expected 40 hour week of productivity on the employees time and the result is fatigue with excerbates this problem. Excessive meetings are scheduled by uninformed and negligent managers who believe they should earn a living by having conversations and call them meetings.

    I feel sorry for the C-Suite for from my experience conducting business analsis and reporting jointly with contractors, the executives were 100% deceived in the true performance of a a billion dollar quarterly portfolio. A 15% data delta among key cross-functional business units is bad enough but after reducing the sigma and accurately reporting to a level 10 layers down from Chambers, remarkably the metrics were devalued and Chambers shot himself in the foot early this year on bad information. Wall street either knows of this or they are seriously being misled as is Chambers. Cisco is growing year over year and quarter over quarter impressively, the politics and mismanagement tarnishes the data.

    I have to agree on Cisco’s unethical H1B strategy, they should be investigated. There are numerous cases of qualified American engineers who as statistics reveal are more loyal in the longe-term to employers and Cisco who received a phone call interview to get a check in the box. Cisco is eating their own karma for their outsourcing strategy and unethical hiring practices; this includes the bottomless golden pot of money which Indian managers have to award contracts to their former Indian colleagues who’ve started their own local companies to Cisco HQ. Clearly neither shareholders nor employees are a priority for Cisco has insourced a predominant unethical culture as well as retained a management layer that rides on the backs of college interns and contractors while counting their days until retirement.

  7. BY Liberty says:

    Yes, from the perspective of US citizen I would not like foreigners taking my employment. A true patriotic should stand against any malpractice and report to the government. Was wondering ..

    Is this happening only with IT? Or Indians the only one in IT (or in US)? Or these companies are so generous to sponsor H1 for Indians and pay them more? or i wonder why they have branches in India and layoff people there too ? or there no evils in other communities ? or they are called evil because they are talented and workaholic ? or do we take pride in having freedom to abuse foreigners?

    If history has taught us something, every community has got good and evil ones. I think it is totally inappropriate to call them that.

  8. BY Carlo De Luca says:

    I was hired by Cisco as a contractor 11/10. They shut down for the xmas holidays not paying contractors. Then In mid-April they again forced an unpaid furlough week. Looked as if they did not care about their employees/contractors. During that week I put out my resume by May I was hired as a full time worker with another company. Cisco was like do not let the door hit you on the way out there are a dime a dozen that will take your position. They are what have you done for me latley type company, I have worked in both the public and private corporations and I prefer the Private Corp where you are not just a number.

  9. BY Gus says:

    My story in a nutshell:
    - I have been a Cisco employee for about 6 years now.
    - During this time, I have never been in a management role. Instead, I have always remained a “Customer Support Engineer”.
    - During this time I have worked with many brilliant managers, and with some “not so brilliant”. Truth is that at the end of the day, we are not that different from the people that work Juniper or HP, and we exchange employees all the time.
    - Compared with other companies that I have worked for, I do feel that Cisco does make a huge effort to stay “ahead of the game”.
    - I do not think that Cisco cares any less about its employees than other companies. Considering its size, I would actually say that it is above the average in terms of how they treat and value their employees. In summary, I feel I have always been well treated and valued. My only complaint, which is not a major one, is that they know how to make you work hard… However, I think this is pretty much expected in this industry.

    Is Cisco evil because it is laying-off some employees?
    - Absolutely not. This is just an economic reality that cannot be ignored and applies to all companies. Cisco is not the first, nor the last large company to go through major restructuring, which includes layoffs. Don’t like this reality? Neither do I, but I accept it. The alternative is to get a government job, or go into the health-care field.

    One of the problems with this these discussions is that it is just too easy for people, watching the situation from their comfortable chairs, to criticize and condemn Cisco management for their unforgivable mistakes. They all think they know what went wrong and how obvious the solution is. However, reality is that most of these people can’t really put themselves in the shoes of the decision makers and don’t understand how complex and challenging things really are.

    Best regards,

    Gus

    • BY mona says:

      Why so many h1-b in computer field? People from Indian cannot write or spleak correct english making lot of money,not only in Cisco but everywhere in computer industry. My brother is tired by job offers and make lot of money while my daughter who is from USA has no interest in computer. Not me everybody has same problem why our people no good in computer?

      • BY Mohit B says:

        Mona,

        I don’t agree with you that Indian can’t speak English???

        this is baseless allegation, importantly knowledge is more essential instead of strong command on English language, even i can see grammatical and spelling mistakes in your not. So please educated people otherwise they can’t compete in any field. Scolding Indian will not resolve this problem. Get inspiration from countries like Japan, China they are creator or technology and in computers globally and on English language circa 30% people stands strong.

        I understand your grudges but please think practically! on your personal vendetta you can’t blame Indians or any one a culprit.

  10. BY R. Emmett O'Ryan says:

    I had to chuckle this morning as I logged into my email to find a note from a Cisco HR Recruiter saying that I would be perfect candidate for a Software Engineering Manager (for the ASA Product Line) and asking me to send in my resume. Thinking that this was a joke, I went onto Cisco’s employment website and sure enough the position was there.

    It got me thinking, “surely Cisco would offer this opportunity to one of their employees who was on the layoff list rather than recruit someone from outside?” I find this all very odd and certainly question this type of behavior.

    Now would I consider this opportunity? If it was another company, maybe. For Cisco it seems a waste of my time and effort.

  11. BY Sheldon Cooper says:

    I am STUNNED at the sheer destruction of the English language on this thread. Its obscene. It’s not just a missing period, a misplaced exclamation point, or an autocorrect faux-paus…it’s typos, comma splices, subject/pronoun disagreement, dropped commas around clauses, confusing singular possessive and plural nouns…and on and on. /Oy

    Oh, and Cisco is f***ing its employees…just like a good wall-street slave. /Sell yourself to the devil and dont blink when he wants your soul.

  12. BY Anonymous says:

    I worked for Cisco for over a decade and was laid off in August. I had a position lined up w/a company that is associated w/Cisco. I had good marks my entire time working at Cisco. Right before the offer was made, I gained insight that a Cisco VP erroneously contacted the other company and black balled me. I got this information through a confidante. I spoke to an Attorney and he said defamation is very hard to prove. But whoever did this to me certainly knew what they were doing. I contacted the colleauge who referred me into the position. He is a Director at Cisco. He had absolutely no clue who would do that to me.

    As far as I’m concerned I truly hope I get with a great employer who will value me a hell of a lot more that Cisco did after a decade +

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