Layoffs à la Fairchild

The “20 Questions with John East” series continues

You wouldn’t think that layoffs would be a subject that I’d want to talk about in my stories of  “Silicon Valley the Way I saw it.”  The subject is just plain distasteful!!  — Still  — layoffs were a major part of the valley’s culture back in the day.  To give a true picture of how it felt to work at Fairchild in the early 70s, this story must be told.

When Les Hogan and his heroes joined Fairchild, Fairchild had been losing money. As I look back on it, I imagine they might have been in the middle of a cash crisis.  Also, in looking back it seems that there wouldn’t have been a quick fix.  TI clearly had a superior cost structure to ours.  Our wafer sort yields weren’t good at all and we didn’t have an inexpensive plastic package to match the one that TI had developed. The picture from the top couldn’t have been rosy. One day Les Hogan was interviewed by someone in the financial press.  He was asked what he intended to do to stem the losses. His answer,  “That’s not a problem. We’re going to reduce the headcount by a third. That will get our spending back in line.”

That quote made the front page of the business section of the local newspaper.  It probably felt good to the investors when they read it, but it felt really, really bad to the people who worked there.  That was not what we wanted to hear!  And that was the beginning of some serious layoffs.

Once they started, it seemed like every Friday somewhere in Fairchild there were layoffs. TGIF didn’t apply at Fairch!! Everyone would go straight to the cafeteria Friday mornings. No one bothered going to their desk. Everybody was scared to death. Everybody needed their job and knew that there was a very good chance that they would lose it in the next few minutes. Lots of gallows humor. Lots of camaraderie. Everybody loved everybody else. There are no atheists in foxholes.  And then, they started.

There was a very well known “journalist” who covered the semiconductor industry in those days.  His name was Don Hoefler. I never met Hoefler.  I think he had worked at Fairchild at one time and that there was bad blood when he left. Maybe he had been fired?  Maybe an “Off with their heads” casualty? He started writing a weekly industry newsletter. It was always very negative towards Fairchild. Needless to say, the upper echelon at Fairchild were not enamored of Hoefler. I heard several times that anyone caught in possession of one of Hoefler’s newsletters was subject to being fired   – but that might have been just a rumor.  After all, we all read it (being careful not to get caught) but so far as I know, no one was ever fired for that offense.

One of Hoefler’s newsletters dealt with “Layoffs Fairchild style” describing how Fairchild employed three unique tactics for implementing lay-offs. The paging system layoff, the locked door layoff, and the retroactive layoff.  How did those work?

The Paging System Lay-off
This was the standard.  I witnessed this one many, many times.  —— It’s Friday morning. We’re all huddled together in the cafeteria.  Around 9AM the paging system cranks up. “Bob Martin 2867”.   —–   Everybody knew what that meant. Bob Martin (who was a real person and a really delightful guy) knew what it meant too. Bob or some similar victim would stand up and start shaking hands. After he said goodbye to everyone, he’d walk over to the phone and call 2867. 2867 was, of course, the HR department (Called “personnel” in those days). “Bob, this is Bill, can you drop by to see me?” That would be the last that anyone would ever see or hear of Bob Martin.

The Locked Door Layoff
I never saw this one, but Hoefler swore it happened.  I think it may have been used up at the R&D facility  — that’s where the best kept technical secrets resided. There was great fear in those days that company secrets would be stolen by people leaving the company. The Basic Data Handbook was the result of a lot of work that Fairchild rightly didn’t want to fall into the hands of the start-ups who were trying to eat Fairchild’s lunch.  On the other hand, anyone who was leaving for any reason would be tempted to take a copy of it on his way out.   How could you keep that from happening?

According to Hoefler, if you were going to lay off someone in possession of a lot of key knowledge, then the way to do it was to have the facilities department change the lock on the victim’s door the night before. Then, when the victim arrived in the morning and found his key wouldn’t open the door, he’d go see his boss who would then lay him off. That way he had no pre-warning and couldn’t sneak the key information out before the axe fell.

The Retroactive Layoff
This happened if you were unlucky enough to be selected for downsizing when you were out on vacation.  When the victim returned he was informed that he had been laid off and that there was good news and bad news:

“The good news is we gave you two weeks of severance pay.”

“The bad news is you were laid off three weeks ago.”

Perversely enough, I don’t think it was as bad for the victims as it might seem at first blush.  The valley was rife with start-ups and many of them were hiring.  I’d venture to guess that the victims got jobs that were as good or better in short order and that their careers played out better than they might have if they’d stayed at Fairchild.

This story may seem a bit frivolous  —  not to any particular point.  But there is a point.  It’s a snapshot of how Fairchild was back in the day, and to a lesser extent how the entire semiconductor community was.   It was seen by all and consequently shaped the thinking of future generations.  Jerry Sanders,  for example,  watched this unfold and used  it to mold some of the management theories that he would later employ.  (See my week #11 AMD story when it’s published in four weeks).  Jerry,  by the way, once said:

“Being fired by Fairchild was the best thing that ever happened to me.”

Next week.  RTL, DTL, TTL.  What was it?  Who cares?

See the entire John East series HERE.

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