Firing someone you deeply admire and like

When the Virtusa stock began trading on NASDAQ in the first week of August 2007 under the ticker symbol VRTU, it was a matter of great pride for all of us. Taking a company public with a listing on NASDAQ was like a dream come true for most of us in the Management team. JP Morgan Securities was the sole book-running manager for the offering, with Bear Stearns & Co. being the lead manager.

We had barely learned how to run a public company to a quarterly rhythm, and under constant scrutiny, when we felt the early tremors of the credit crisis that eventually brought down the edifice of the world financial order like a pack of cards. In an ironical twist, Bear Stearns, our lead manager, was the first to fall and was forced to eventually merge with JPMorgan, our sole book runner, in a stock swap that valued it at a fraction of what it was valued just two days before the merger!

Events unfolded faster than we could imagine. The Virtusa stock, like the rest of the markets around the globe, went into a free fall and employee stock options were soon under water. Clients began cutting discretionary spends; some even cancelled, and revenue projections went for a toss.

Towards the end of 2006 we had brought on board a very senior HR professional for the Americas and Europe

Virtusa had never believed that it was just another IT services company that leveraged cost arbitrage as the basic building block of the business. It took great pride in being able to partner with the CIOs of client organizations in shaping and executing their IT strategy. This called for some non trivial IT and business consulting capability. Most of these high caliber consultants were located close to the clients (in the US and Europe) while the delivery teams were largely based out of Asia. To strengthen the quality of engagement for the high caliber consulting teams located in the client geographies, we decided to hire a rock star HR Head for Americas and Europe. After a long search we found the perfect candidate in Chris Carter and brought him on board towards the end of 2006.

Chris was an unusually clear thinker and deeply passionate about nurturing talent. The consultants loved him. In a very short span of time, he was able to up the game and create the kind of clarity and positive energy never seen before. His understanding of the interplay between business needs and talent strategies was amazing. I had a deep admiration and liking for Chris. Whenever I visited Boston, I would make it a point to stop by his place at Needham, a picturesque and charming suburb of Boston, and he did the same when he visited India. During one of my visits to Boston just before the financial crisis, we got talking about interesting travel destinations. Ladakh was on top of the list for Helen, Chris’s wife. Located in the northern tip of India, Ladakh is surreal and dreamy. When I told her that summer would be a great time to visit, I don’t know what made her remark, in what later proved to be prophetic, “if you don’t fire Chris, we will make this trip next summer”. I just laughed away the comment. Several years later Chris told me that they still have a clear memory of this exchange and it comes up when they reflect on this chapter of their lives.

The financial crisis changed everything

In the weeks following the collapse of Bear Stearns and Lehman, the Management team was constantly on conference calls trying to understand the implications of the day’s developments. There seemed to be no end to the bloodbath. Analysts were all forecasting a long global winter. We saw revenue come off faster than we had feared. After some serious deliberation, we figured out that the only way to calm our investors was to take some hard calls on costs, especially people costs. After going through every line item we identified costs that were to be pruned and people who were to be let go of. Chris’s name was on the list along with several others. I knew we would have a lot of difficult questions to answer on this, but tough calls needed to be taken in the larger interest of the company.

We worked out a separation package beyond what was in the contract. Chris accepted this decision with dignity and poise. He gracefully agreed to also communicate the company’s decision on letting him go to his team, besides communicating the decision to also let go of one of his team members! In this latter conversation he couldn’t completely mask what he truly felt about this decision and said so; “the company is now no longer keen on a gold standard”. Walls have ears and our General Counsel was in the adjacent room. He was of an amiable and friendly disposition, but years of legal baggage colored the way he looked at this comment. He strongly recommended that we declare the package we had worked out for Chris void and instead stay with the separation terms laid out in the contract. I had to tell him that his view was legalistic and myopic, and that under these circumstances this comment was better overlooked and forgiven.

After the implementation of the headcount cuts, we had a town-hall in our Boston office, with consulting teams in other cities joining on a conference call. Obviously everyone was disappointed though not many questioned the decision. Most official communication on such occasions is a bit of a sham. But I still haven’t figured out if there is a better way to do this. But the good thing is that irrespective of what the official line is, people always know the truth. That has been my consolation whenever I have had to communicate messages that had an element of fuzziness or obfuscation (with all good intent of course).

Lessons that I learned

• It is not easy to take tough calls especially when it is not fair on the individual and there is no performance or attitude issue. However, in the larger interest of the company and on some rare occasions, these calls need to be taken and executed, however unfair they may seem.
• My 8-year-old daughter was inconsolable for a very long time when she got to know. Don’t talk about these things in front of children who will never get the ways of corporate life!
• Expect the individual to vent. And in the process say a few things that under normal circumstances may seem like spreading negativity. Be very indulgent. Don’t take a legalistic or a hard position. At the same time, do not make statements that distance you from the decision and imply, “I really do not support this decision but it is a call the organization has taken and I am just implementing it”. Take ownership for the decision because you are the organization.
• Offer to help. And be genuine.
• Never ask a terminated employee to be the communicator (certainly not the sole communicator) of his/her termination to his/her direct reports. It puts the terminated employee in the very difficult position of explaining & defending his/her own termination when the direct report inevitably asks "why?”. The business leaders who made the decision need to be the primary communicators of the decision (with appropriate collaboration with the impacted individual on messaging - if possible).
• Don’t cut off the relationship. But don’t be intrusive in trying to preserve it. Allow things to settle down and work slowly at restoring the relationship.
• On occasions like these (and several other involving M&A etc) messages need to be crafted carefully but in spite of your best efforts they will be a little opaque. But don’t fret too much. People know the truth irrespective of what you say.

To this day, Chris and I continue to be the best of friends! The mutual respect and liking hasn’t diminished one bit.

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)