Move forward
In October, about three months after he started, he made the fateful announcement about job losses.
“This was when the market was still pretty hot and everything was a growth company,” Huff says. “We had to get our house in order, whether it was popular or not. We had to get it done.”
It was a big reduction — between 800 and 900 people. But Huff had been honest with employees, so they knew this was likely coming.
He gave as much notice as he could — four weeks for some and up to seven months for others — so they had time to prepare.
He used the company’s cash to offer severance packages based on years of service so they were taken care of — even giving employees their share of the bonuses they would have received for their work.
“If we have to reduce somebody during the middle of the year, we give them their proportional share of the bonus they would have earned if they would have been here the whole year,” he says. “We want people to share in the value that they had a role in creating. It might have been that they only had the opportunity to create value for six months, but they should participate for six months.”
He didn’t pay it out until they knew what the results were, so some had to wait for that money, but he made good on his promise.
He also had a support structure for people to help with the transition out and offered outplacement services.
He says the key to all of this was being honest and transparent.
“If you’re honest with people, they have the capacity to deal with difficult situations, but what people don’t have the capacity to do, honestly, is work all day and then be concerned whether their boss and their company is being honest with them,” Huff says. “It’s just too much, and it’s too much for the families to go through, especially if you’re a sole breadwinner in your house.
“You need to have a clear view of reality; even if you don’t like the reality, you need to have a clear view of it, and they deserve that. The people that we had to reduce were good people. It’s so important [not only] that you treat them right but that the people who stay behind see that you treated them right. It’s just absolutely critical. … It made a statement — to someone that was staying with us — that we would be staying with them much more credible.”
It created the buy-in and trust needed to move EarthLink forward, and that’s exactly what he got. After the reductions, the company was prepared to move forward, and that it did.
Fast-forward a couple of years, and as a result of Huff’s early decisions, last year EarthLink generated $723.7 million in revenue and $287.1 million in net income — more than $100 million more than the previous year, and the most profitable year in the past five years. The share price has also increased by about $1 a share, bringing more value to the shareholders like he originally sought to do. And through it all, he never got any nasty e-mails or mutinies from employees.
“I think about all of the change that this company went through in such a short period of time,” Huff says. “In most companies, the train would have gone off the tracks. That didn’t happen here. In spite of the massive change, I think people know they did something good here.”
How to reach: EarthLink Inc., (404) 815-0770 or http://www.earthlink.net/
