Dismissal

In Teal organizations the decision about whether a person will stay with the organization belongs with that individual and/or their team. Forced dismissals are infrequent because people are given clear indications if they are not a fit so that they can choose to leave voluntarily. In many cases a parting of the ways happens by mutual consent in the process of self-managed conflict resolution. Only when everything else fails do organization founders fire people, but this is also initiated by the team or a conflict mediation panel.

Wholeness

When you don’t have a fear that your boss may fire you at will, it’s easier to show up fully at work. If you’re not being judged and do not depend on adhering to a set of rules to stay in the job, you tend to bring your whole self to the workplace.

Teal organizations don’t reduce dismissals to cold, contractual transactions that avoid dealing with the emotions and pain. Instead, they accept and work with those human issues to turn departures into a learning experiences that can meaningfully enhance the person’s and the organization’s future path.

Evolutionary purpose

Giving people the opportunity and encouraging them to actively find a new role in the company when they are not performing well or when their current role is no longer needed contributes to the organization’s ability to listen and understand what it is trying to become, to fulfill its evolutionary purpose.

AES introduced a generous severance program and a loan fund to make post-acquisition layoffs mostly voluntary and less traumatic.

AES has demonstrated a distinctively Teal approach to layoffs due to structural overstaffing after buying power plants previously owned by governments. After the acquisition, AES had to lay off hundreds of people and managed to do that relatively painlessly through a special voluntary severance program. Here is Dennis Bakke‘s, CEO, perspective on the matter:

"The right size of a workforce is equal to the number of people needed to make the workplace fun. Having too many employees demoralizes colleagues and causes turf battles. A very astute AES plant manager in Northern Ireland told me that arguments over turf are good indicators that the facility has too many people. No one worries about who does what when there is enough work to go around. My belief that business should not carry unneeded employees does not mean that they should be given pink slips and hustled out the door. Departing employees need time to make the transitions to new work. Organizations should be generous with severance arrangements. We encountered overstaffing almost every time we made an acquisition. One of the first things we did after acquiring a business was to set up a generous and voluntary severance program. Only rarely were individuals asked to leave. In Panama, AES created a loan fund for employees who took the severance package. A year later, I traveled to a celebration lunch with former employees who had left the company. Seventy-one new businesses had been started by these former employees, most of whom tapped the AES loan fund. Even with generous voluntary severance arrangements, the changeover from a company you know to one you don’t can be traumatic. I strongly believe that these difficult transitions are a necessary evil that forces employees and organizations to adjust to a dynamic world. Part of the joy of work is learning new roles and taking on new responsibilities. Job security is attractive gift wrapping, but seldom is there anything of lasting value inside."^[2]

In the Holacracy model, a person can be removed from their roles but still stay in the member pool and take time to hunt for new roles. If this fails, a custom dismissal process, such as a peer removal, can be initiated.

See ^[3]

Holacracy does not prescribe a specific process for dismissals. Starting and terminating people’s contracts originally lands in the scope of the top circle, who can then assign that authority as they see fit. For example, there can be an HR role that has authority to hire and fire. Or in the partnership model (as in HolacracyOne) there is a partnership removal process with partner peer review (similar to Morning Star).

Because there is no fusion of person and title, the lead link in any circle is free to make a decision and remove somebody from a specific role. The person is not fired in this case, but remains in a member pool and must pitch for other roles. If no new role can be found, the person either leaves voluntarily, or a custom dismissal process is triggered.

Dismissals can be initiated by any individual, using the conflict resolution process if needed.

At Morning Star, the process is almost identical to the one used at Buurtzorg, except that it is initiated by an individual rather than a team. Morning Star views a dismissal as the final step in a conflict and therefore uses its conflict resolution mechanism to deal with the situation. The process starts when one person asks another to leave the organization. Suppose that someone finds that a colleague has fundamentally breached a company value (perhaps the person made an important decision without requesting advice from colleagues) or that a colleague is failing time after time to live up to his commitments, despite a number of previous attempts to improve the situation. She can initiate a conflict resolution process, asking her colleague to resign. If the person asked to leave does not agree, a four-stage conflict resolution process begins:

In a first phase, they sit together and try to sort it out. In the discussion, the person asked to leave can suggest ways to restore trust. Or perhaps he will come to see that he has irrevocably lost the trust of his colleagues and that he is better off looking for work elsewhere. If they can’t agree on an outcome, another colleague is called in as a mediator. If necessary, in a third step, a panel of colleagues is asked to mediate. As a last resort, Chris Rufer, the founder and president, is asked to join the panel. People asked to mediate or sit on a panel take their role very seriously. Morning Star’s principle of not using force against anyone is at stake. They are not a jury, passing a verdict on a colleague. Their role is to explore every possible way to restore trust in the relationship. The process can take a long time if needed. Only when the person who has been asked to leave sees that colleagues genuinely tried to find a solution and that none could be found, will he come to accept that resignation is the reasonable outcome. Therein lies the power and legitimacy of the process.

Because Morning Star views a dismissal as a private conflict between two persons, everyone is under the understanding of full confidentiality (as is always the case with the conflict resolution mechanism). As a result, no data exist of how often this happens. . Some more senior employees report that they have been part of a handful of panels over the years. They are advocates for the method. The panel discussions are never easy they report, but they do help people reach fair and reasonable outcomes^[4].

Dismissals are self-managed, using a mediated conflict resolution process.

Dismissals are self-managed, using a mediated conflict resolution process.

At Buurtzorg, if someone has lost the trust of the team, they try to find a mutually agreeable solution. If that doesn’t work out, the group calls in the regional coach or external facilitator to mediate. In almost all cases, the presence of a mediator brings resolution. In some cases, the person and the team decide on some mutual commitments and give it another go.

In others, after some deliberation, the person comes to see that trust is irrevocably broken and understands it is time to leave. If no agreement can be found, and as a last attempt to settle the matter, team members can ask Jos de Blok, the founder, to mediate. In the rare case where even that fails, they can ask him to put an end to the person’s contract (legally, he is the only one who can do so)^[5].

A novel alternative to dismissal in a time of crisis

When CEO Jean-François Zobrist was faced with critical decisions, he readily looked to the workforce for help. More than once, on impulse, he went around the shop floor, asked everybody to stop the machines, climbed on a soapbox and shared his problem.

His first major crisis happened in 1990 when orders plummeted in the wake of the First Gulf War. there simply wasn’t enough work to keep workers busy. Capacity and costs needed to be reduced. There was one obvious solution: fire the temp workers.

But at FAVI, no one was really considered a temp worker. For reasons related to labor laws in France, new recruits were hired as temp workers for 18 months before being offered a full contract. Most were already considered full members of their teams. By firing them, FAVI would rescind its moral commitment to them, and it would lose talent it had invested in, with a recovery perhaps only a few months away.

With no clear answers, Zobrist found himself on the soapbox and shared his dilemma with all employees (including the temp workers whose fate was being discussed). People shouted questions and proposals. One said, “This month, why don’t we all work only three weeks and get three weeks’ pay, and we keep the temp workers? If we need to, we will do the same thing next month as well.”

Heads nodded, the proposal was put to a vote, and unanimously agreed. Workers just agreed to a temporary 25 percent salary cut. In less than an hour, the problem was solved and machine noise reverberated around the factory again.

AES introduced a generous severance program and a loan fund to make post-acquisition layoffs mostly voluntary and less traumatic.

AES has demonstrated a distinctively Teal approach to layoffs due to structural overstaffing after buying power plants previously owned by governments. After the acquisition, AES had to lay off hundreds of people and managed to do that relatively painlessly through a special voluntary severance program. Here is Dennis Bakke‘s, CEO, perspective on the matter:

"The right size of a workforce is equal to the number of people needed to make the workplace fun. Having too many employees demoralizes colleagues and causes turf battles. A very astute AES plant manager in Northern Ireland told me that arguments over turf are good indicators that the facility has too many people. No one worries about who does what when there is enough work to go around. My belief that business should not carry unneeded employees does not mean that they should be given pink slips and hustled out the door. Departing employees need time to make the transitions to new work. Organizations should be generous with severance arrangements. We encountered overstaffing almost every time we made an acquisition. One of the first things we did after acquiring a business was to set up a generous and voluntary severance program. Only rarely were individuals asked to leave. In Panama, AES created a loan fund for employees who took the severance package. A year later, I traveled to a celebration lunch with former employees who had left the company. Seventy-one new businesses had been started by these former employees, most of whom tapped the AES loan fund. Even with generous voluntary severance arrangements, the changeover from a company you know to one you don’t can be traumatic. I strongly believe that these difficult transitions are a necessary evil that forces employees and organizations to adjust to a dynamic world. Part of the joy of work is learning new roles and taking on new responsibilities. Job security is attractive gift wrapping, but seldom is there anything of lasting value inside."^[6]