I had been in Japan with a joint venture between International Harvester and Komatsu, watching Mr. Nevins over the years when we were both much younger. We had some limited professional contact, probably around 1980 or 1981 when I was with International Harvester, and Tom was the Chairman of the Employment Practices Committee at the American Chamber of Commerce.
In March 1997, I looked him up to help us get a big, tough job done in a hurry. We wanted to implement a somewhat unique business model that had been working well for Cadence Design Systems, Inc. Basically we would invest in our distributor, build an even closer relationship with this single main distributor, and have sales related type staff and managers shift over and become employees of the distributor.
Professional services, high value-added key account sales, and professional services on design methods and processes would remain in a greatly scaled down Cadence Japan proper. At the time we had about 200 employees. Our distributor also made choices on who would fit into their corporate culture and who they wanted. I believe it ended up that there were about 80 people who stayed on at Cadence, 80 who were offered positions with the distributor, and almost 40 people, who it was judged would not be happy at the distributor, and would not fit in either organization.
Mr. Nevins job was to help guide us through this process, and to be the communicator and presenter for the people we were unable to offer a position to. Between my initial March 18, 1997 meeting with Tom Nevins, and our day of seminars on May 6, 1997, in front of the hundreds of employees involved, (including the distributor’s related employees), there were about ten meetings with Tom, including one at Hotel Okura with our global CEO, and top executives. Until then, there had been talk from the Japanese side of the local organization, that controlling selection and assignment with this restructuring would be difficult, and everyone in the company should be offered a severance package.
Gradually we built up our own, and our local Japanese management’s confidence in the strategy and end result. Cadence was extremely successful and very profitable. Attempts in the past to dehire two or three of the people being asked to resign, had not worked. A couple of them had gotten their jobs back using lawyers. Many felt that these people would become ring leaders against management if they were placed in the departure pool. Tom’s reaction was, “if my group based methods don’t work, nothing will work. Let’s place them in the dehire pool. It will be alright. We will succeed.”
Our Japanese management, top corporate management, and also locally based expatriate executives found it very difficult to believe that we could succeed. When asked “how many of the (38) people do you think you can persuade to resign?” Tom’s answer was “my vision is 100%.” One of our expats then said, “I just don’t see how you can do it, especially with that small severance package. If you do, it will really be a feather in your cap. I’ll have to see it.”
Mr. Nevins drafted the documents to employees, especially the group he was in charge of, along with the resignation letters.
The night before on May 5th we had a dinner explanation and pep talk party, opening up the inner circle wider. Our global CEO, Tom, and others presented the game plan, to about 15 more key people, what would happen the next day, and why it would work.
The next day May 7th was the big seminar of all involved employees. There were several hundred from our company and the distributors operation. Cadence wanted closure even sooner than Mr. Nevins usually attempts. The resignation letter signing deadline was 2:45 the next day on May 8th, 1997. If people had not signed, everyone had to go to the TMT seminar room, mostly to get motivational and outplacement training, and to better understand their legal positions and options. As usual, Tom would not let us fire anyone who would not sign, but they would have to face a bit of an unknown future in terms of pay level, and how effectively they can be used.
Tom’s process is not about beating anyone up on one-on-ones, or the group basis he prefers, or coercing people into signing the resignation letters. It is about passionate and full communications. I guess if you ask for the understanding and cooperation of people the way he manages to do it, people are pretty decent and they will cooperate. They have to believe the process is fair, and everyone will be treated the same — no special deals. You can also be powerfully persuasive without getting personal, pointing out weakness and damaging the individual’s self-esteem. Tom manages to pull it off without making people angry and resentful.
Tom Nevins succeeded again. The day before at the seminar announcement, our Senior V.P. of Human Resources had agreed on the spot to extend the signing deadline by one day until 2:45 on Friday May 9th. However, on Tom’s home turf at the TMT seminar room, he asked everyone to help him out by signing that day, May 8th, because he had another commitment the next day.
They did it for him, also all 38 of them signed-up by about 3:00, and many of them hung-out with us, drinking beer and listening to music and snacking at TMT. The individuals whose dehiring attempt had failed in the past, the so-called tough, troublemakers, had the most fun. They did drink the most beer too. (Mr. Nevins told me he had been a little worried about this one, because the evening before at the close of his seminar almost no one touched the food and drink at the hotel, even though they were encouraged to do so, and they normally have a few drinks and eat. Instead they all cleared out of the room pretty quickly.)
If you are going to do a designated staff reduction within two days from start to finish, this is the way to do it. How big was the extra severance package? A simple formula this time — just 4 months salary for everyone. It can also be said that the sector was and is a fairly hot one, they were good people, and some of them were our top performers. We just knew that they wouldn’t fit into, or want to go to the distributor.
Tom Nevins told me that one of the most rewarding experiences for him, was that our bilingual Japanese president, at the end of the exercise, went out of his way to invite Tom to an expensive Japanese restaurant in a private room. He never uttered even a word of English, and just kept telling Tom he was really sorry for questioning and opposing Tom’s involvement in the beginning.
Tom tells me the Japanese President’s message was, “we (Japanese and foreign executives too!) just can’t, I just couldn’t imagine that anyone, especially a foreigner in the Japanese language, could pull that off. It really is amazing. You really have developed a set of skills and a talent. I learned a lot, and you had a big role in pulling off that challenge I was stuck with.”
Robert G. Hartley
(former) Group Director, Human Resources
Spectrum Services Group
Cadence Design Systems Inc.
(current) Vice President
Global Compensation & Benefits
Applied Materials, Inc.