Do you agree that the current situation is asuncertain as it is portrayed in this statement? Why or whynot?
This is the reading:
The toll the new coronavirus has taken on an economy that washealthy at the start of March came into clear relief when thegovernment said Thursday that 6.6 million Americans had applied forunemployment benefits the week before.
No one weeps for the corporate bosses behind the decisions tolay off many of those people, but these bosses are struggling asthey make the toughest calls of their careers. MarriottInternational Inc.'s CEO told analysts this surpasses the magnitudeof 9/11 and the 2008 financial crisis combined. In a letter toemployees , General Electric Co.'s CEO said this is an era wherethe unknowns outweigh the knowns.
Business leaders live by the calendar, attaching forecasts,projects and goals to a specific date or period of time. No oneknows when state-issued mandates to stay at home will lift, andthat renders a calendar about as useful in 2020 as an eight-trackplayer. It is like stumbling around in the dark.
As quarterly earnings conference calls take place in the comingweeks, expect to hear a lot of "we don't know," "it's hard to say,"and "I wish I had a crystal ball." These terms aren't typical forthe managing class.
"CEOs are wired to take action," Jerry Colonna , a formerventure capitalist who now counsels top executives, told me thisweek. "It's really hard when they don't really know what action totake. It's like taking a bucket to extinguish a fire and notknowing if the bucket is full of water or confetti."
Bahram Akradi, the Iranian-born founder of the Life Time Inc.health-club chain , is one of those CEOs looking for water in thebucket. I've talked with Mr. Akradi often in recent weeks about howhis company is navigating the crisis.
The answer: It isn't pretty. Revenue has all but dried up,nearly $1 billion in new developments are on ice. "These are thefacts," he told me during a Wednesday FaceTime session from hisChanhassen, Minn., office. "Empty parking lots are a fact."
Like many honchos I talk to, Mr. Akradi would like politicalleaders to set a firm date to reopen businesses and end rigidsheltering rules—even if that date is several weeks in the future.He also wants everyone's bills across the country to be postponedin April. For instance, mortgages or car payments due this monthshould be deferred to May.
Topping the list of concerns Mr. Akradi can control: the 38,000people on his payroll. He likens Life Time to a boat in troubledwaters. "We are in a big, massive storm," he told employees March25. "We have no idea how long the storm is, or how bad it's goingto get. What I'm trying to do is make sure I keep everybody on thisship staying intact and alive. That's all."
Eight days before, when he closed more than 150 clubs in 30states, he recorded a video message telling employees Life Timecould weather a two-week shutdown without breaking much of a sweat.After that, he'd have to get creative.
Last week came another video in which he had to explain whyroughly 36,000, or about 90%, of employees were going on furloughas of Wednesday. The move included a commitment to pay 100% ofaffected workers' insurance premiums and an extra $10 million for afund to help employees with essentials that unemployment checkswon't cover.
This isn't how he wants it. "They've been with me 28 years,busting their rear ends." Now he's encouraging them to buy only thebasics and try, if necessary, to negotiate favorable terms withpotential creditors.
Mr. Akradi, 58, cut jobs before , during the financial crisiswhen a slowdown in discretionary income slammed several industries,including fitness. Even cutting under 200 jobs "felt like death,the ugliest thing I've had to do in my life." How much worse is itthis time? "It is not even in the same orbit."
The day after my last chat with Mr. Akradi, I talked by phonewith ZipRecruiter Inc. founder and CEO Ian Siegel as he kept an eyeon two children at his home in Southern California. Mr. Siegel'shad just finished a roller-coaster of a month that included layingoff or indefinitely furloughing 500 people, roughly a third of thestaff.
"All the way up to March 9 we were in a boom economy, and thenliterally overnight we were in a recession economy." Job seekersuse ZipRecruiter to search and apply for jobs posted by companieson its website. Not all hiring has stopped, but listings rapidlydeclined starting March 10.
He had to decide whether the abrupt decline was a "shock to thesystem or the new normal." Without an accurate compass, he decidedto plan for the worst-case scenario. "We knew we were going to haveto make hard choices fast or harder choices later." Heintentionally cut to the bone.
Mr. Siegel, 46, and his management team took about a week tofigure out what to do. Keeping 700 employees would be manageableconsidering the company's liquidity and revenue levels. It likelygives ZipRecruiter enough head count to pivot back to growth ifthere is a sharp boost in hiring at the end of this crisis.
The process was gut wrenching; "definitely the hardest decisionI've had to make." Mr. Siegel informed each displaced employeeindividually via videoconference, making it clear that each one wasconsidered valuable. He hopes to rehire many of them.
Here's an important thing Mr. Siegel takes away from thisprocess: A red hot startup like the decade-old ZipRecruiter can besobered at a moment's notice.
"I really thought we were hardened, that we were operationallyinvulnerable," he said. The steps he took last month were"humbling."
These CEOs believe they will emerge and their businesses willeventually resemble what they looked like a month ago. Mr. Siegelsaid making necessary cuts now means the enterprise can continue tolive another day and Mr. Akradi says CEOs like him are as crafty asthey are tenacious.
"I'm never going to be faster than the bear," Mr. Akradi toldme. "I just have to be faster than a lot of other folks."
Good advice, but outrunning the other guy just got a lot harderto do.
