I’ve watched with fascination as many retail CEOs over the last year are announcing layoffs. Although layoffs are common in retail and other industries, what makes the recent layoff announcements made by Amazon, Meta, Salesforce and other companies unusual is this – the layoffs are being made to make the companies nimble. For example, according to Gap Inc., acting CEO Bob Martin is laying off 1,800 associates:
“We are taking the necessary actions to reshape Gap Inc. for the future — simplifying and optimizing our operating model, elevating creativity, and driving better delivery in every dimension of the customer experience. These changes include the consistent brand leadership structures we announced last month aimed at flattening the organizational structure to improve the quality and speed of decision-making, while in turn reducing overhead expense. The layoffs will release untapped potential across Old Navy, Banana Republic and Athleta.”
In essence, Gap is balancing the need to cut costs with the hopes that having fewer people will help make its operations more efficient while also making the company nimble. Will it work? In my opinion, no. Here’s why:
1. Gap employed 117,000 people in 2020; 97,000 people in 2021; and 95,000 in 2022. Gap has now terminated an additional 1,800 people. I question how this will have a material impact on the company.
2. Terminating people isn’t all that it takes to “release untapped potential” within an organization. Gap has a history of making dumb decisions from choosing the wrong CEOs to signing partnerships with the wrong people like Kanye. Achieving potential is correlated with leadership and culture.
3. Walmart employs 2.1M people worldwide and they operate over 10,500 stores globally. Walmart’s size isn’t a hindrance to their success. Gap can’t blame their lack of success on their size. It’s a foolish argument.
Size doesn’t matter when it comes to being nimble. Being nimble is related more to leadership, organizational structure, and an ability to accept and encourage honesty, than having fewer workers. Dr. Kate W. Isaacs of Massachusetts Institute of Technology, has done a phenomenal job of applying science and research to the topic of nimble, and I agree with everything she has written on the topic. Kate’s research on Purpose-driven companies is brilliant. Learn more about the topic of nimble here.
The issues at Gap are the result of poor oversight by the board and a history of mediocrity. Gap has a leadership and relevance problem, not a nimble problem.
Gap also has a Fast Fashion problem. Shein is killing Gap and Gap has failed to implement their own fast fashion strategy. Gap is very vulnerable.
This is Gap’s last chance. If they hire a Woke CEO instead of a COMPETENT CEO, Gap will go out of business. Gap must become relevant again.