Sometimes running a business is brutal—but how you handle it is everything

Hello, and welcome to VIP: Value in People, my biweekly newsletter. Here, I’ll engage with you on what matters most to the customer service experience. Thank you so much for being here. If you want to know more about me or VIPdesk, click here !?

It’s been a rough week at VIPdesk, and I need to talk about why.?

Recently, we learned that one of our clients folded without warning. It’s a tragedy for the entire ecosystem of a business, for the owners, the employees, and for those of us who did business with them. The pandemic hurt so many businesses, which also hurt those who owned, supported, and worked for them, so this isn’t new territory for us. But there is a right way to handle bad news.?

Which means there’s also a wrong way. And unfortunately, the wrong way is becoming increasingly accepted as “normal” or “the cost of doing business.” But it’s my belief that businesses have a responsibility to their people—even when they fold. Here’s what I mean.

We’ve worked with this client, a large beauty brand, as their outsourcer for many years. We loved and supported them through their growth, so when we received no communication from them about their shutdown, we felt blindsighted. Perhaps we shouldn’t be surprised; their own employees barely received notice. One afternoon, an email was sent out and a meeting was held to let them know that their positions were terminated—effective immediately. No severance, nothing. For us, no notice whatsoever. It’s been over a week, and we still have received no communication. I can appreciate that we are not their top priority right now, but we are the front line for customer service, and all roads lead to customer service.?

In turn, we were forced to lay off our amazing team members that were dedicated to their brand. Awful doesn’t even begin to cover it. The situation has been weighing heavily on me and my team, and as I turn it over and over in my mind I wonder, how can a large private equity firm simply foreclose on a business and have zero responsibility??

I was told by a “transition company” that our contract will transfer, but the liabilities won’t. We’re unlikely to be paid for prior invoices. Depending on your perspective, that may sound like a normal course of business, but I find it shocking. If one were to miss a single car payment, my credit would be impacted, and more.

One of the unsettling aspects of this experience has been the comments I heard from my counterparts in business? “That’s just how private equity works.”? I’ve also heard things like:?

“Didn't you plan for losses?”

“Didn’t you see this coming?”

“Yep, stuff like this happens.”?

“Well, maybe you can support the new company?”

“Don’t you have other work for your team?”

On and on and on…?

This may be how private equity works. Stuff like this does happen. They find a way for it to be technically legal.?

But that doesn’t make it right. ?

What about our responsibility to each other as human beings??

The impact on people when a company folds cannot be overstated. Our team gave their hearts and souls to their work. Regardless of the business’s financial situation, they deserve respect from either the outgoing owners or incoming new owners.?

VIPdesk isn’t perfect, but we do our best to operate by our values. When we held our meetings with our impacted team members, we were transparent, sharing everything that we knew. They deserved to know why this was happening. We offer outplacement support services ourselves, helping team members with resumes, interview skills, and job opportunities. We will pay severance. These team members are our top priority for new opportunities. It’s the right thing to do.?

No one wants to wind down their business, but that doesn’t mean you can’t do your best to do right by those you work with and those who work for you. This isn’t the first time we’ve experienced a business closure as a partner. Based on those experiences, here’s what I believe an organization shutting down should consider:

• A well-designed communication plan and presentation, staged for each audience. This includes investors, executives, employees, and partners.?
• A pre-determined financial exit plan that includes severance for your people.?
• Support services for those impacted.?
• Communication points of contact for employees and for partners.?
• A PR firm to share a straight forward message that is appropriate for the situation, and to manage the social media fallout.?
• To hold meetings to support each audience and to answer their questions.?
• Finally, while I know it’s legal to do so, I don’t think anyone should relaunch a brand that left anyone or any business unpaid.

I didn’t intend this newsletter to be a rant about what happens in business, but I’m disturbed by how normalized it is for us to just shrug when things like this happen. Why do we think this is okay?

I’m of the opinion that everyone should work in a restaurant at some point in their life. It teaches you not only a lot about service, but also about how to (and how not to) treat others. Then, when things go badly, perhaps there would be more consideration and compassion for the humans behind the brand. But that’s just my hope.

Businesses grow and become successful on the backs of hard-working people. Private equity and owners that exit and repurchase are only able to do so because of the people that allowed them to get there. It’s the people that make the difference.?

I’m currently at a conference and have heard a message that I know to be true for myself, my company and our team: “This too shall pass.”? I am forever grateful for my team, who handled this sad news with grace. We move forward, even more committed to recognizing the value in people.

Thank you so much for reading! Make sure you don’t miss an issue by clicking “subscribe” in the upper right-hand corner!

You can learn more about VIPdesk Connect here .