Name: Why Fortune ranks Cisco as the best place to work despite layoffs
Uploaded: 2023-04-03
Duration: 14 min 40 s
Description: CEO Chuck Robbins says clear communication is one reason Cisco has topped the list three years in a row. The company aims for honesty and transparency even when it comes to delivering tough news, like recent layoffs.

CEO Chuck Robbins says clear communication is one reason Cisco has topped the list three years in a row. The company aims for honesty and transparency even when it comes to delivering tough news, like recent layoffs.

Why Fortune ranks Cisco as the best place to work despite layoffs

Photograph by Christopher Lane for Fortune

Leadership

CEO Chuck Robbins says clear communication is one reason Cisco has topped the list three years in a row. 

Fortune ranks Cisco as the best place to work 

Chuck Robbins is CEO of one of the largest tech companies in America, Cisco Systems. The company is also a great place to work. According to Cisco's employees who responded to a fortune survey, Cisco is ranked number one on Fortune's annual list of the 100 best companies to work for. This is the third year in a row. The companies come out on top. What's Cisco's secret to keeping employees happy. Robin says the key is honest communication and we, we talked to our employees about any of the issues that they want to talk about. And I think it's really important today because I think employees want to work for uh human beings. They don't want to work for executives. But I think the biggest reason is that we have great people and they love coming to work because they get to work with their peers who they have so much respect for Robin sat down with fortune to talk about why Cisco is so popular with the company's 83,000 employees. Even though the tech giant recently laid off 4800 workers most recently here in our area, Lenovo and Cisco announcing people are losing their job. HP said it would cut as many as 6000 jobs over the next three years. Joining names like Amazon and Cisco who also plan layoffs. Chuck I have to ask you this though. I know the survey for the best companies to work for a list was given to your employees last summer. And then since then, Cisco laid off 5% of its workforce and people are still processing that news. Can you say why you think Cisco is the best place to work? Every company is going to have to make tough decisions. Every company is gonna have to make. And there's a lot of companies making the same decision right now. Ours is for ours was for reasons of reallocation to growth opportunities. Many of the others are simply cost reductions. And so I think it's how you do it and look, nobody likes it. I don't like it. It's the worst thing we ever have to do, but when we do have to do it, you have to do it the best way possible. Will we see more layoffs? Do you think more companies are going to announce a second round of layoffs? Like we heard from meta, the Facebook parent that they recently announced that they're going to do a second round. 10,000 more people. Well, that's one of the things that we try to avoid is because you don't want to do that if you can avoid it now it's not always avoidable and certainly there are enough dynamics in the world right now that the future is somewhat unpredictable. Uh So it's very difficult to say what's gonna happen. Uh We don't have any plans to do that. Uh And, uh, but again, the world is, is really, there's a lot going on. Yeah, a lot is going on. I mean, what is this a meltdown moment? I don't think so. I think that look, there was, there was a huge demand surge for a lot of the companies and they hired quite significantly and I think now as they adapt to demand signals, they're seeing they're having to adapt. Uh again, we, we did, we had more balance through the cycles. And so uh I think that there's a few things that, that I think can make this different. Number one, the pandemic exhibited the power of the technology in ways we've never seen it before. No one believed that we would maintain productivity, have people working, have them being effective. And the technology actually held up at a scale that it wasn't never built for. And so I think what that leads us to is that government leaders around the world CEO S, they all now have a whole different perspective on the power of technology, the strategic value of technology. And I think they're embracing using technology and aspects of the business that they wouldn't have otherwise. And there's also an understanding that if if I don't invest as a leader and my competitor does, then I'm going to be left behind very quickly. Um I think the other thing is that the CEO S of today and a lot of the executives of today, if you think about our careers, we cut our teeth through times of pretty much cause a crisis. If you go back starting in the dot com days, all the way through financial crisis and then into some of the things we've dealt with in the last 56 years, pandemics wars. I mean, so we're, we're operating in an environment where we expect the next one. We don't know what it is, but we know what's going to come. And I think if we all just decided to, let's just stop spending till things become normal again. Things, this is normal. I think this is what we think anyway, given what we've had to deal with over the last five or six years. Well, you're right, you've been through a lot of crises. In fact, uh, you've been through layoffs before the first time, was shortly after you joined Cisco more than, you know, 20 years ago. And I understand that, uh, it was the first for Cisco to have those layoffs and most of the people at the company had no idea of how to do a layoff and you all had to go through training. What did you learn from that experience that helped you get through the recent layoffs at Cisco. It was very hard. Uh back then, you know, you having those conversations with a human being sitting in on the other side of the desk from you or in a, in a, in a conference room. Very difficult, hardest thing. Uh One of the hardest things that you have to do, um which led us to just say, ok, if we are going to have occasions where we have to do this, then let's figure out how we can do it in the best possible way. And I think we, we placed a couple of 1000 people that would have otherwise left the company and we found jobs for them internally through the process that we had. So how did you go about in your thinking process of how to make this as easy as possible for the people who were laid off? Well, we do have uh uh a team of folks that, that lead our people organization that are very innovative and I think a lot of that probably has something to do with why we've been number 13 years in a row here. And so that team is just very thoughtful about how we go about it, thoughtful about the programs, thoughtful about what, what, what can we do to have the least impact on our employees as we possibly can? Was it generous money that you offer the people laid off or something? Is it something I think I think it's more the, the, it's the process and it's the, it's the honesty and it's the proactive effort to find them other roles inside the company. Because if you just, if you move 2000 people out that actually have the skills that you need in the other places and it's actually more expensive to go hire other people and bring them in. So it actually makes sense for us as well. So, I think that's the biggest, biggest thing. What did you say to the people that were laid off? What did you say to them? We were just honest about why we had to do it. It's, it's never easy. But I think that in general, the feedback was uh while it's never anything anybody wants to go through, we did get people saying that you, you're doing it probably as well as you possibly could. Well, despite all the turmoil that's going on in the tech industry, you're actually very optimistic about the future. And you said recently that Cisco is at the beginning of a massive growth environment and you're so confident that you raised Cisco's outlook for 2023 help us understand what's going on. Well, I would, I would attribute that to three things. The first is that roughly probably 90% of our customers have five key initiatives that they're all focused on that. We play a super critical role in cyber security, multi cloud architectures, hybrid work applications. Uh rearchitect and sustainability. And we have a big important role to play and all that and our technology helps them do that. The second is we transition our business model to more of a recurring model. So now 44% of our revenue is coming from recurring uh sources like software subscriptions. And so we have that available and we'll continue to renew those over the next year. And the third is the, the component challenges that we've had in the supply chain have begun to ease in many areas which is allowing us to shift more of the backlog that we built up from this great demand that we had over the last couple of years. So I'd say in a nutshell, those are the three things that give us some optimism. We always talk about the power of technology and everybody's interested in it. But these days, we see many companies not just in tech that are holding off of making big plans, big investments, they kind of a wait and see mode. So what makes Cisco different our customers? They still understand the strategic value of the technology investments that they need to make. So it's, it's, I don't think it's not just us, but I think that the reduction in spending and technology, most of our customers say that will be the last thing they do. The last thing they cut. I know there are a lot of things that are going on that you're excited about at Cisco. But what are one or two opportunities you're most excited about? Well, cyber security, obviously a threat landscape is, is huge geopolitical tensions. We're adding massive connectivity in the world. So helping our customers protect themselves and the scale at which we do it is is massive. The second one is uh actually sustainability. I think that at the, at the center of all the sustainability efforts that our customers have, it's around connecting industrial systems. It's about putting in new systems that reduce their uh electrical and energy consumption. So that's another one that we're super excited about and then hybrid work. You, you spent some time in our New York office and how we built this as a great example of how, how do we embrace hybrid work and make this place a great place for our employees to come, Cisco also has $20 billion of a cash cushion. What are you gonna do with that? Well, first of all, we try to take care of our shareholders so we service our dividend, continue to grow it on an annual basis. Second area is we'll continue to do strategic acquisitions and uh you know, the market is probably getting to a place where some of that makes a lot more sense than it did two years ago. Well, it seems like one of the places that you're investing in, uh are these new offices that you referred to a couple of times in our conversation. We're here in this huge newly designed space in New York City, lots of collaboration areas, high tech devices, people might be surprised that you're spending money on this, given that you're not forcing your employees to come into the office. So why are you doing this? Well, I I used the phrase once that said, let's make the office a magnet instead of a mandate. And so we're really trying to create spaces and environments that employees want to come and spend time in that they feel safe, that they feel like they can collaborate with their peers and they feel are modern. So we're, we're modernizing fewer offices and helping our employees come together more effectively. So is this part of your growth plan too sure if our employees are happy, they're more productive, what's different about these offices than everywhere else in Cisco? They're incredibly smart offices. We, we actually know where people are spending their time. We know how many people are in the office. We know the air quality. Uh we can do simple things like we have our conference rooms connected to the H B AC system so that if a, if a room is empty for two hours, the cooling goes off and then 15 minutes before the next meeting, it'll crank back up again. Just a lot of a lot of the integration is just, is really well thought out. How do employees feel about this? What's been the reaction are they showing up in the office? They are showing up here. This is one of our, our most frequented offices by our employees. So we're really there. The calls in effect is not lost. And I think that, uh we're, we're, we're gonna do this in lots of other. So do you want people to come into the office? Uh, you know, there's this whole debate going on about working in the office or working from home. And some people believe that the more you collaborate with your coworkers, that you'll be a more successful competitive business, it it, it varies by group within the company. So when I say we want to make it a magnet, not a mandate in some area, some areas we have said, hey, you need, we need to have these groups in together three days a week. Engineering is one where our leadership and engineering feel like it's valuable for them to be together. Uh But in general, I think if you create an environment, people want to be in, in our business, others have different reasons for how they want to go about it. This is just the approach that seems to work for us. Chuck, let's talk a little bit about leadership. How have you changed as a leader since you became CEO in 2015? I probably realize how frequently you have to communicate uh and how openly and honestly, we're going to have to communicate with our employees and that's much different. I mean, we, we've always been honest, but the, the notion of the topics that we're willing to actually talk to our employees about has changed significantly, I think that's probably the biggest difference and the number of things in the world that CEO are expected to speak on uh has changed very dramatically. How do you feel about that? I was joking with my board recently, I said whenever we get to a point that we're doing succession, the questions, we're going to have the candidates answer today versus the questions I answered seven years ago are dramatically different. I mean, given what's going on in the world, it's just a completely different mindset. What would you say is the most important question for new CEO S I think really understanding their comfort with, dealing with geopolitical dynamics. I spend way more time on issues in Washington and other places than I ever dreamed I would. So it's a lot of these intangible things that are completely unrelated to the technology strategy of the company which you also have to be able to understand. So it's going to take a very diverse skill. You've been CEO for eight years, that's a long run for most CEO S who run a Fortune 500 company. And as you know, a part of a great leadership is having a great succession plan and you brought that up a little bit in our conversation right now. You're young, you're energetic. So don't take this the wrong way. But what's your timeline for naming the next Ceo of uh Cisco? Well, first of all, thank you for calling me young and energetic. I don't get that very often, but uh uh there is no timeline. I mean, I've obviously talked to our board about it, but I'm having a great time. I, I love what I do. I love leading these teams. I love the impact that this company has on a global basis, love the impact we have in our communities. And as long as I'm passionate about it and the board wants me here, I'm going to be here as you look back on your Cisco years. Um What have you done? You're most proud of. What's your biggest accomplishment? Probably what we're talking about here, creating an environment where our employees actually provide the feedback to you and your organization with great places to work that actually lead us to be number one. That, that makes me very proud, makes me very proud.