As the New Testament book of Acts comes to a close, it recounts the final voyage of the Apostle Paul, as he traveled to what would be his final destination: Rome. Along the way, the ship carrying Paul and his fellow travelers encountered a particularly nasty storm in the middle of the Mediterranean Sea:
Now when the south wind blew gently, supposing that they had obtained their purpose, they weighed anchor and sailed along Crete, close to the shore. But soon a tempestuous wind, called the northeaster, struck down from the land. ... Since we were violently storm-tossed, they began the next day to jettison the cargo. And on the third day they threw the ship’s tackle overboard with their own hands. When neither sun nor stars appeared for many days, and no small tempest lay on us, all hope of our being saved was at last abandoned.
Apart from it being about Paul and recorded in the The Bible, there is nothing particularly special about this piece of the story. The notion of throwing cargo and other pieces of the ship’s equipment overboard in a time of peril in order to save the lives of the passengers and crew is as old as the notion of maritime law itself. In fact, the principle of “General Average” — that the loss incurred from the jettisoning of cargo in time of peril will be shared equally among all financially interested parties — can be traced as far back as the Lex Rhodia from 800 BC.
Of course, the moral basis for such reasoning hinges on correctly understanding the difference between people and cargo. Unfortunately, history is littered with examples of when that moral distinction was lost.
Heading for Jamaica in 1781, the ship Zong was nearing the end of its voyage. It had been twelve weeks since it had sailed from the west African coast with its cargo of 417 slaves. Water was running out. Then, compounding the problem, there was an outbreak of disease. The ship’s captain, reasoning that the slaves were going to die anyway, made a decision. In order to reduce the owner’s losses he would throw overboard the slaves thought to be too sick to recover. The voyage was insured, but the insurance would not pay for sick slaves or even those killed by illness. However, it would cover slaves lost through drowning.
The captain gave the order; 54 Africans were chained together, then thrown overboard. Another 78 were drowned over the next two days. By the time the ship had reached the Caribbean,132 persons had been murdered.
When the ship returned to England the owners made their claim — they wished to be compensated the full value for each slave lost.
“In order to reduce the owner’s losses he would throw overboard the slaves…”
The haunting image of Jason deCaires Taylor’s underwater sculpture, Vissicitudes, (pictured above), poignantly memorializes this morally depraved business decision.
What do these maritime stories from 2000 and 200+ years ago have to do with anything?
1) January 26, 2016: “With markets in turmoil, State Street looks to slash costs even further”
The company’s profits rose to $547 million in the fourth quarter, a 17 percent increase over the same period the previous year. That’s despite a small decline in fee revenue over the same time frame, and a much more significant drop in net interest revenue. In total, revenue fell by 3 percent year-over-year, to $2.54 billion.
State Street achieved the profit spike on the back of significant cost-cutting; its expenses for the quarter were down nearly 10 percent year-over-year, coming in at $1.86 billion.
In a conference call with analysts Wednesday, CEO Jay Hooley and Chief Financial Officer Michael Bell were frank about the company’s outlook for 2016. With global markets off to such a poor start this year, State Street will likely rely on managing expenses to improve its financial performance, they said.
State Street already announced in the fall that it was laying off 600 employees, the majority of them in Greater Boston, a move that will save it $50 million. It’s also kicking off a sweeping, multiyear digitization effort that is supposed to save it tens-of-millions more in 2016.
2) March 15, 2016: “State Street to lay off hundreds of high-level employees”
State Street is laying off hundreds of employees, the majority of them executives and other senior-level staffers — cuts that come on top of the 600 layoffs announced this fall.
State Street expects to lay off more employees in the future in connection with the Beacon initiative. The number of upcoming job cuts is not yet known, according to McNally. “As for future plans, we can’t speculate, but as we have previously said, we will continue to evaluate the needs of the organization to advance our long-term strategic priorities, but we will also continue to hire in key areas of the business that are growing, such as data and analytics, or in areas where we need to add expertise,” she said.
- Despite the storms, the good ship S.S. StateStreet netted Q4 profits of 21.5%, representing a 17% year-over-year profit growth;
- Despite both healthy profit margin and profit margin growth, the layoffs of hundreds more employees was announced yesterday, on top of the 600 people already laid off last fall;
- Despite the previous two facts, more layoffs will be coming later this year.
(I chose State Street as the example because of the timeliness of yesterday’s news story. It was pure serendipity at work when I discovered State Street’s brand logo:
Yes. For real.)
In his latest book Leaders Eat Last, Simon Sinek takes aim at the notion that organizational health is furthered by treating its people this way:
This is what it means to be a leader. This is what it means to build a strong company. … To sacrifice the numbers to save the people and not sacrifice the people to save the numbers. … These organizations are among the most stable, innovative and high-performing companies in their industries. Sadly, it is more common for leaders of companies to see the people as the means to drive the numbers. The leaders of great organizations do not see people as a commodity to be managed to help grow the money. They see the money as the commodity to be managed to help grow their people.
There is a word for captains who toss people overboard to save the cargo. “Leader” is not that word.
[Header image credit: http://www.underwatersculpture.com/sculptures/viccisitudes/]