Corporate America has a bad habit that Dave Ramsey isn't shy about calling out: layoffs. Not because companies are struggling to stay afloat but because they want to boost profits and stock prices. In a rant, Ramsey made it clear that this isn’t leadership – it’s exploitation.
"These people actually had lives and salaries," Ramsey said, explaining that they get treated like units of production and “crap."
He was talking about the 2024 layoffs in the gaming industry, when Activision Blizzard, Xbox and Riot Games cut thousands of jobs, even though their parent companies were far from broke. Meanwhile, executives like Xbox's Phil Spencer took home $10 million a year and former Activision CEO Bobby Kotick reportedly earned the equivalent of $77,000 an hour.
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Ramsey calls this behavior shortsighted. Companies prioritizing short-term gains over the long-term health of their workforce and businesses are sabotaging themselves. "If you get rid of all your talent, four years later, you’re producing boxes of crap because all your talent left the building. But you helped stock price for two quarters."
Leadership Done Right
Ramsey contrasted this greed-driven mindset by pointing to Satoru Iwata, the late Nintendo CEO. During tough times, Iwata didn't lay off employees to make up for losses. Instead, he took a 50% pay cut and convinced other executives to reduce their salaries by 20%. He reasoned that morale matters.
Iwata explained that reducing the number of employees for better short-term financial results would decrease employee morale and not strengthen Nintendo’s business in the long run.
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Nintendo weathered the storm and maintained its reputation for quality and innovation. Ramsey believes this is what real leadership looks like – sacrificing personal gain to protect the people who make the company successful.
Ramsey's Own Experience
During the COVID-19 pandemic, Ramsey faced a similar challenge. His company's live events division – a $27 million operation – lost all its revenue overnight. Yet Ramsey didn't lay off a single employee. Instead, he relied on cash reserves and made a bold promise to his team.
He told them that if things got bad, the company would use its cash reserves. If that ran out, leadership would stop taking pay. Only then, if absolutely necessary, would they consider furloughs.
The team pulled through and the company ended the year making more money than expected. Ramsey's approach was as much about protecting jobs as it was about building trust and loyalty. "I got incredible loyalty because we gave them incredible loyalty," he explained.
For Ramsey, it all boils down to ethics. He urges business leaders to treat their employees the way they'd want to be treated. He said that layoffs should only happen when there's no other choice, like when a business is losing money and can't make payroll. But if you're laying people off to pad your profits, you're not a leader – you're a disgrace.
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